Bedi & Bedi Private Limited v Haileyburia Tea Estate Limited

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE A.HARIPRASAD** **THURSDAY ,THE 21ST DAY OF MARCH 2019 / 30TH PHALGUNA, 1940** **AS.No. 341 of 2001** **AGAINST THE JUDGMENT AND DECREE DATED 15.11.2000 IN OS NO.65/1998 of SUB COURT,KATTAPPANA** ## **APPELLANT/DEFENDANT:** **BEDI AND BEDI PRIVATE LIMITED, 'CASA GRANDE', 18/3, III CROSS ROAD, NANDIDURGA EXTENSION, JAYAMAHAL, BANGALORE.** **BY ADVS. SRI.M.P.GOVINDAN NAIR SRI.T.P.VARGHESE** ## **RESPONDENT/PLAINTIFF:** **HAILEYBURIA TEA ESTATE LIMITED, KYTHARAM BUILDING, PALACE ROAD, KOTTAYAM 686 001.** **BY ADVS. SRI.JOSEPH MARKOSE (SENIOR ADVOCATE) SRI.JOSEPH KODIANTHARA SRI.ABRAHAM MARKOSE SRI.ABRAHAM JOSEPH MARKOSE SRI.ISSAC THOMAS SRI.CHANDAPILLAI ABRAHAM P.G. SRI.VIPIN ANTO H.M.** **THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 21.02.2019, ALONG WITH AS NO.523/2001, THE COURT ON 21.03.2019 DELIVERED THE FOLLOWING:** A.S.Nos.341 & 523 of 2001 2 # **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE A.HARIPRASAD** **THURSDAY ,THE 21ST DAY OF MARCH 2019 / 3RD PHALGUNA, 1940** **AS.No. 523 of 2001** **AGAINST THE JUDGMENT AND DECREE DATED 15.11.2000 IN OS NO.65/1998 of SUB COURT,KATTAPPANA** ## **APPELLANT/PLAINTIFF:** **HAILEYBURIA TEA ESTATES LTD., KYTHARAM BUILDINGS, PALACE ROAD, KOTTAYAM -686001** **BY ADV. SRI.JOSEPH MARKOSE (SENIOR ADVOCATE) SRI.JOSEPH KODIANTHARA SRI.ABRAHAM MARKOSE SRI.ABRAHAM JOSEPH MARKOSE SRI.VIPIN ANTO SRI.ISSAC THOMAS SRI.CHANDAPILLAI ABRAHAM P.G.** ## **RESPONDENT/DEFENDANT:** **BEDI & BEDI PVT. LTD., 2/7, XII CROSS ROAD, RAJMAHAL VILAS EXTENSION, BANGALORE-560080.** **BY ADVS. SRI.M.P.GOVINDAN NAIR** **SRI.PHILIP T. VARGHESE SRI.THOMAS T.VARGHESE** **THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 21.02.2019 ALONG WITH AS NO.341/2001, THE COURT ON 21.03.2019 DELIVERED THE FOLLOWING:** A.S.Nos.341 & 523 of 2001 3 **A.HARIPRASAD, J. -------------------------------------A.S.Nos.341 & 523 of 2001 -------------------------------------Dated this the 21[st] day of March, 2019** ## **COMMON JUDGMENT** These appeals arise out of the judgment and decree in O.S.No.65 of 1998 on the file of the Sub Judge, Kattappana. A.S.No.341 of 2001 is filed by the defendant in the suit against decreeing the suit in part. A.S.No.523 of 2001 is filed by the plaintiff in the suit aggrieved by disallowing a portion of its claim. Both the plaintiff and defendant are companies incorporated under the Companies Act, 1956. For the sake of convenience, parties are hereinafter referred to as the plaintiff and defendant. 2. Averments in the plaint, in nut shell, are as follows: Plaintiff is a company engaged inter alia in planting and manufacturing tea. Plaintiff has a factory and estate by name Semnivalley estate at Elappara in Idukki District. Defendant is a company engaged in manufacture of various machineries used in the plantation industry. Defendant had earlier supplied a fluid bed drier to the plaintiff for the use of making tea. With a view to expand its production, the plaintiff approached the defendant for purchasing and installing a second fluid bed drier with an out put of 400-450 kgs. of made tea per hour at its Semnivalley estate. Defendant forwarded a quotation for model SG 80 Series II manufactured by the defendant. Subsequently the defendant had also A.S.Nos.341 & 523 of 2001 4 forwarded the technical drawings of the drier. Based on the defendant's assurance that the new model drier would be very efficient in its performance, the plaintiff forwarded an advance of `1,37,000/- to the defendant which was acknowledged by the defendant company. Further the plaintiff forwarded `1,60,944/- by way of a demand draft. As agreed to between the parties, balance price was to be paid to the defendant under the IDBI bill rediscounting scheme availed of by the plaintiff. As per computation of IDBI, the total value of the drier was `9,17,598.50. 3. The drier was supplied by the defendant at the plaintiff's Semnivalley estate in August, 1993. The drier was also covered by a guarantee against all manufacturing defects for a period of 12 months from the date of installation. Plaintiff carried out all civil works necessary for installation of the drier at its factory and requested the defendant to depute a technician to commission the drier. Although the defendant's technician visited the factory, he could not commission the drier. Defendant informed the plaintiff that direct fired heater connected to the drier was unable to sustain the operating temperature required for the drier. Defendant also informed that there was inadequate ventilation above the flared hood which could lead to back pressure in the drier resulting in a possible lack of bloom of the tea manufactured. 4. Accordingly the plaintiff requested the defendant to furnish details of hot air requirement and operating pressure specifications so that it could make necessary alterations. Although the defendant informed the plaintiff that A.S.Nos.341 & 523 of 2001 5 it was unable to furnish the required information, later the defendant furnished certain details regarding hot air requirement in each chamber of the drier. Defendant also specifically stated that the recommended inlet temperature was 260 degrees Fahrenheit. Accordingly the plaintiff made necessary changes and once again requested the defendant to depute an engineer in order to commission the drier. In spite of numerous visits by the technician, the drier could not be commissioned even though the heater was providing necessary temperature. Meanwhile the defendant requested the plaintiff to modify hood of the drier on the basis of a sketch provided by them. That was also done by the plaintiff. Subsequently the defendant's technicians once again visited and conducted a trial run. Even then the direr could not be commissioned. 5. Thereafter the plaintiff requested the defendant to inform about the type and capacity of a solid fuel heater which could be used with the defendant's drier. Defendant informed the plaintiff that it could install No.14 scd special or No.14 cm type solid fuel heater. On that basis the plaintiff installed a 14 cm heater manufactured by M/s.Trade and Industries Ltd., Calcutta. After installation of the new heater a trial run was carried out on 17.06.1995 in the presence of the defendant's representative. Although sufficient hot air was supplied, the drier could not be commissioned for various deficiencies noticed. Subsequently the defendant contended that problems of the drier were on account of the hood installed by the plaintiff. As required by them, their technicians were invited and mistakes were rectified. However, A.S.Nos.341 & 523 of 2001 6 within a short time the drier once again created problems and it was noticed that tea coming out of the drier was unevenly fired. Accordingly the plaintiff sent a letter to the defendant requesting it to convert the drier to an old model manufactured by the defendant. However, no further action was taken at the defendant's end. Thereafter a meeting was held at Calcutta on 15.01.1997 between the plaintiff, defendant and manufacturer of the heater. From there the defendant had specifically undertaken that the defendant's drier would function satisfactorily at an air volume of 17,860 m3/h (equivalent to 10,500 cfm) and at a temperature of 280 degrees Fahrenheit. It was represented that if these conditions were satisfied, the defendant's drier would give fully fired tea. 6. Subsequently, a test was conducted at the plaintiff's factory on 26.03.1997 in the presence of the defendant's representative as well as the representative of M/s.Trade and Industries Ltd., Calcutta and other independent witnesses. Although necessary hot air requirements were provided by the heater, the drier did not produce the guaranteed results. According to the plaintiff, it was evident that the defendant had supplied a defective drier to it, which failed to produce the results guaranteed by the defendant. With these contentions the suit is filed for recovery of a sum of `13,63,437.15 with 18% interest and costs of the proceedings. 7. Written statement filed by the defendant would show the following contentions. According to them, the suit is a frivolous one and the plaintiff has no cause of action against the defendant. A.S.Nos.341 & 523 of 2001 7 8. Defendant had supplied fluid bed drier to the plaintiff in 1986. The said drier was attached to No.16 air heater. It has provided trouble free service and it continues to operate in the plaintiff's factory at Semnivalley tea estate. The plaintiff approached the defendant for purchase of a second drier in July, 1992. The defendant offered model SG 80 Series II drier which had technological improvements over the earlier model supplied to the plaintiff in 1986. After negotiations, the plaintiff asked for a firm quotation for model SG 80 Series II drier as per letter dated 25.11.1992. The plaintiff also asked for a quotation for a direct fired heater and it was submitted on 09.02.1993. Pursuant to these negotiations, the plaintiff placed an order for model SG 80 Series II drier at `7,52,500/-. Including the excise duty and sales tax, a sum of `8,21,730/- was paid by the plaintiff to the defendant towards price of the drier supplied. Additional amounts towards stamp duty, insurance, etc. were also paid. The statement in the plaint that total value of the drier was `9,17,598/- is false and hence it is denied. Plaintiff placed orders for purchase of direct fired heater with another manufacturer. Defendant did not give advise regarding the type of heater to be purchased by the plaintiff. Direct fired heater reached Semnivalley estate only in November, 1993, much after the drier was supplied. Plaintiff carried out civil works necessary for installation of the drier and on getting their instructions, the defendant's engineer visited the factory. On inspection, it was found that the direct fired heater supplied was of inadequate capacity for the drier and would not be able to sustain the temperature required. This was informed to the plaintiff. Defendant's engineer A.S.Nos.341 & 523 of 2001 8 also found that there was no proper exit for hot air coming out of the drier resulting in hot air landing on the booster and cooling fans and thus unnecessarily overheating them. Defendant's engineers advised the plaintiff to modify the hood above the drier and provide adequate ventilation to permit escape of hot air. 9. It is true that on 16.04.1994 the plaintiff requested the defendant to furnish the cfm hot air requirements and operating pressure specifications so that it could make necessary alterations. Although the defendant was not bound to furnish the information, later it was provided to the plaintiff. Still the plaintiff failed to comply with the requirements for proper working of the drier. 10. It is true that a trial run was conducted on 17.06.1995 in the presence of the defendant's representative. It was conducted for 40 minutes only which is quite inadequate for satisfactory assessment of the drier. Failure to operate the drier successfully was not on account of any defect of the drier. In fact it was on account of deficiency of the heater and also defect in respect of the hood installed by the defendant. 11. The drier was operated successfully in the presence of the plaintiff's personnel from 24.06.1995 to 03.07.1995. The manager of the plaintiff by letter dated 01.07.1995 certified that the drier was running satisfactorily and out put of made tea was 420 kgs. per hour. The drier was supplied on 13.08.1993 and as such the warranty expired on 13.08.1994. Still, the defendant continued to offer free service till August 1995. From 19.08.1995 till 01.01.1997 there was no further communication between the A.S.Nos.341 & 523 of 2001 9 plaintiff and defendant regarding performance of the drier. There was no complaint regarding performance of the drier during this period. 12. By letter dated 01.01.1997 the plaintiff enquired whether it was possible to convert the new model multiple temperature SG Series drier to a single temperature drier. Plaintiff was advised that this modification was not possible. Plaintiff in their letter dated 15.01.1997 stated that there appeared a mismatch between the FB drier and Shola heater purchased by them. Plaintiff requested the heater manufacturer to replace the heater with 14 cm heater. But the manufacturer declined the request stating that it was made as ordered. All the trials conducted revealed the fact that the heater was unable to deliver hot air required for a single temperature drying. This was confirmed by the plaintiff's manager. 13. All the allegations contrary to these facts are incorrect. The case in the plaint, that the drier was defective, is without any basis. Plaintiff is not entitled to get any amount as claimed. Suit is liable to be dismissed. 14. Four witnesses were examined on the plaintiff's side and one on the defendant's side. Exts.A1 to A90 are the documents produced and marked by the plaintiff and Exts.B1 to B11 are those exhibited on the defendant's side. 15. Heard the learned counsel for the plaintiff and defendant. 16. On a perusal of the plaint, it can be seen that the plaintiff claimed a total sum of `13,63,437.15 from the defendant and a statement of account has been shown in the plaint as follows: A.S.Nos.341 & 523 of 2001 10 ## **STATEMENT OF ACCOUNT** Rs. Ps. Amount claimed as refund of price of the drier and/or compensation/damages for supply of defective drier : 9,17,598.50 Amount claimed as compensation/damage for loss of reputation, production loss, etc. : 36,00,000.00 Total : 45,17,598.50 Less: Amount realised on disposing of the defective drier : 2,00,000.00 Balance : 43,17,598.50 Plaint claim limited as abovementioned to : 7,17,598.50 Interest thereon at 18% per annum from August 1993 to July 1998 : 6,45,838.65 Total : 13,63,437.15 ========== Trial court after considering the evidence adduced on both sides, decreed the suit allowing the plaintiff to realise `3,13,971.50 together with interest at the rate of 12% per annum from the date of suit till realisation. Claim for interest at the rate of 18% per annum was turned down by the trial court for the reasons stated in paragraph 20 of its judgment. In paragraph 19 of the judgment, the court below has narrated reasons for arriving at the figure granted in the decree. It reads as follows: _“.............When there is no data to work out the actual damages to plaintiff for damages cannot be outrightly discarded. While assessing damages, it is for the courts to apply that degree of guess work necessary for in calculating damages. Here in this case the actual damage cannot be calculated as claimed in the plaint. But adopting a depreciation of 50% for user from_ A.S.Nos.341 & 523 of 2001 11 _March.1994 till August, 1995 and arbitrary sale of the drier by the plaintiff from the actual price of Rs.8,27,943/- after deducting Rs.2,00,000/- received by plaintiff on sale (50% of depreciation is to be deducted from 6,27,943) and awarding the said amount as damage would meet the ends of justice. Defendant received an amount of Rs.18,000/- by way of erection charge of the drier. Hence the difference in price actually paid by plaintiff after adjusting Rs.2,00,000/- received on resale would come to Rs.6,27,943/- (8,27,943 - 2,00,000). Deducting 50% depreciation for user and arbitrary resale from Rs.6,27,943/- the net amount would come to Rs.3,13,971.50, which can be allowed as nominal damage on account of breach of warranty. ….....”_ 17. Both sides are aggrieved by the above findings. The plaintiff would say that the amount determined by the court below by adopting an erroneous method is too low. Whereas, the defendant would contend that the plaintiff has failed to prove its entitlement to claim damages as the plaintiff did not establish any legal ground. 18. Learned counsel for the defendant contended that the drier supplied by the defendant was working perfectly well and the plaintiff could not have any grievance about efficiency of the drier. Actually, the heater attached to the drier, at the instance of the plaintiff, was of an inferior quality and it did not function efficiently, resulting in the reduced efficiency of the drier. It is therefore contended by the defendant that the plaintiff cannot claim A.S.Nos.341 & 523 of 2001 12 damages from the defendant for their own mistakes. Besides, it is contended by the learned counsel for the defendant that mismatch between the drier and heater was the reason for malfunctioning of the drier and this fact had been pointed out to the plaintiff on many occasions. Still they did not take any steps to correct the issue. 19. Per contra, learned counsel for the plaintiff would contend that despite best efforts put in by the plaintiff and even after changing the heater as suggested by the defendant, the drier supplied by them did not function properly indicating a manufacturing defect and nothing else. 20. In order to appreciate these contentions, I may refer to some documents produced on either side. Records in the case would show that the plaintiff had approached the defendant for purchase of a drier in July, 1992. At that time, the defendant offered model SG 80 Series II drier. It is pertinent to note that the plaintiff was using another drier of an earlier model supplied by the defendant. Obviously, the plaintiff must have thought, since the drier supplied by the defendant working in their factory was of a good quality, that they could safely approach the defendant for another drier. According to the defendant, model SG 80 Series II drier was a technologically improved version of the earlier model supplied by it to the plaintiff in 1986. Ext.B1 is the letter dated 27.10.1992 issued by the plaintiff to the defendant requesting to furnish more details about model SG 80 Series II drier manufactured by the defendant. On furnishing the information by the defendant, the plaintiff placed a quotation on 09.02.1993, i.e., Ext.B3. Terms and conditions in Ext.B3 would A.S.Nos.341 & 523 of 2001 13 show that the drier should have been delivered within 12 weeks from the date of receipt of a firm order accompanying the advance. The mode of payment is also indicated in Ext.B3. The defendant had undertaken that the company would provide guarantee for 12 months from the date of despatch against material failure (electronic/electrical equipments not included). This was accepted by the plaintiff and they placed an order and advance price was also paid. 21. The defendant has a definite case that it was not consulted, nor its advice was sought for, regarding the type of heater to be purchased by the plaintiff. The plaint would show that the defendant had delivered the drier at the plaintiff's Semnivalley estate in August, 1993. Admittedly there was some delay in installing the drier in the factory on account of non-completion of the necessary civil works. Exts.A31 and A32 are the documents relating to this aspect. Ext.A31 dated 24.08.1993 would show that civil works in connection with erection of the new drier had been completed and the defendant's Chief Installation Supervisor had to visit the estate on 4[th] September, 1993. Ext.A32 is a letter dated 16.10.1993 which would indicate that erection was not complete by that time. 22. As pointed out earlier, the defendant has a specific case that on inspection by its officers, it was understood that the heater connected to the drier was of inadequate capacity and it was not sufficient to sustain the required temperature. Exts.A10, 15 and 17 are the documents pertaining to the purchase of direct fire heater (DF heater). Ext.A10 letter dated 25.02.1994 A.S.Nos.341 & 523 of 2001 14 issued by the defendant would show that the technician deputed by the defendant had reported that the DF heater was unable to sustain the required operating temperature. The defendant advised the plaintiff to contact the heater manufacturer to rectify the problem at the earliest. 23. Ext.A15 is a letter dated 06.08.1994 issued by the plaintiff to the defendant indicating certain problems noticed at the time of trial run. Plaintiff had requested the defendant to depute an engineer to sort out the problems faced by them. On 14.09.1994 the plaintiff had informed the defendant that they have decided to replace the DF heater, which was not economical, with a solid fuel heater of sufficient strength. 24. It is revealed from the records that the heater originally installed by the plaintiff was not efficient to give sufficient temperature for the drier to function. Therefore, the plaintiff decided to change the heating device to a solid fuel heater. This is clear from Ext.A17 referred to above. 25. Ext.A18 is a fax communication indicating the plaintiff's intention to replace the heater with a solid fuel heater. In reply to Ext.A18 the defendant had sent Ext.A19 letter suggesting No.14 scd special or No.14 cm type solid fuel heater. This letter is dated 19.09.1994. Ext.A4 is a report pertaining to the trial run of the drier. That was conducted on 17.06.1995. The report would show that in the trial run it was observed that tea coming out of the drier was either under fired or over fired. Technical aspects are also mentioned in Ext.A4. 26. Ext.A24 is a minutes recorded in a joint meeting between the A.S.Nos.341 & 523 of 2001 15 plaintiff, defendant and the representative of M/s.Trade and Industries, Calcutta. The meeting was held at Calcutta on 17.01.1997. Ext.A24 has to be considered along with Ext.A4. In Ext.A4 minutes, apart from other details mentioned above, it has been recorded that the heater supplied by M/s.Trade and Industries, Calcutta with a brand name Shola 14 cm. was delivering sufficient heated air and there was no problem of getting the required heat from the heater. It is further observed that the air flow from the heater was sufficient to get the required temperature when all the three fans worked together. Coming back to Ext.A24, it can be seen that the plaintiff's representative explained that there appeared to be a mismatch between the drier and Shola heater (model Super Shola). The defendant's representative stated in the meeting that the drier required 17860 m[3] /h with a single fan (equivalent to 10500 cfm.). He guaranteed that given the air volume at a temperature of 280 degrees Fahrenheit, the drier will function effectively giving fully fired tea. Later it was decided that a joint inspection would be done by the representatives of the plaintiff, defendant and M/s.Trade and Industries, Calcutta within a fortnight from 17.01.1997. In this context, it is relevant to note the contents in Ext.A63 which is a letter written by the defendant to M/s.Trade and Industries, Calcutta dated 02.04.1997. It has a reference to Ext.A24 meeting. The contents of Ext.A63 read as follows: _“Dear Sir,_ _We had a visit yesterday by Mr.Sudhir Prakash regarding problems being faced by them at Semni Valley Estate._ A.S.Nos.341 & 523 of 2001 16 _Mr.Prakash was very agitated as this matter was dragged for a considerable amount of time. The facts of the case are as follows: 1. At the time of supplying the drier he ordered a direct fired heater with an automatic burner. This heater had to be removed a year later._ _2. At this stage he asked yourselves to supply a suitable heater for a SG 80 Fluidised Bed Drier._ _3. Shola Mark II heater was supplied by yourselves to meet this requirement. After installation of this heater the drier suffered inadequate air supply and once again could not be used._ _4. At a meeting in Calcutta between yourselves, ourselves and Mr.Sudhir Prakash it was recorded that the air requirement of the drier was 10500 cfm or 17,500 m[3] /hr. This figure was incorrectly conveyed by our Bangalore Office to Mr.Mehera at Calcutta. It should have read 17,500 cfm and not metre cube. This was a typographical error. We had conveyed our Calcutta Office a figure of 17,500 which was then converted to 10,500 cfm. We repeat air requirement of the drier is 17,500 cfm and not metre cube._ _5. We would be obliged if you kindly let us know the basis on which the Shola Mark II Heater was selected for our drier as no reference was made to us regarding air flow requirements. You have supplied a Shola Mark II Heater for our SG 48 drier to Nivita factory where it is working satisfactorily. However, the Nivita_ A.S.Nos.341 & 523 of 2001 17 _drying chamber is only 48 sqft whereas the Semni Valley drying chamber is 80 sqft._ _We would reiterate that our drier will function to the full satisfaction provided the parameter of 17,500 cfm air is made available from your heater at a temperature of 280[o] F. We shall be grateful if you kindly confirm when trials can be carried out on this basis._ _We do however feel that when a heater was required by Mr.Sudhir Prakash we should have been consulted regarding air flow requirements prior to the selection of the model supplied by yourselves._ _Yours faithfully_ _Bedi & Bedi Private Limited.”_ It is contended by the learned counsel for the plaintiff that all these communications would reveal that the heater was not functioning even on 02.04.1997 though it was installed much before. In answer to this submission, the learned counsel for the defendant would argue that the real problem was with the heater and not with the drier. 27. Ext.A43 is a letter issued by the defendant to the plaintiff indicating that no.14 scd special or cm heater would be more appropriate for the drier at Semnivalley estate. Ext.A79 is the brochure relating to Shola Cellular Multitubular heater manufactured by M/s.Trade and Industries, Calcutta. In the catalogue, the specifications of three types of A.S.Nos.341 & 523 of 2001 18 heaters could be seen mentioned. There is a writing by pen on the printed material that Shola Super was of 14 cm capacity. There is a dispute regarding this writing. According to the defendant, the authenticity of this writing on the printed matter to show that Shola Super was of 14 cm capacity was not proved properly by the plaintiff. This contention is raised in order to impress upon that the heater was inadequate for proper functioning of the drier. Ext.A80 is the invoice issued by M/s.Trade and Industries Ltd., Calcutta showing value of the heater. It contains only the name of the model as “Super”. It does not show the technical specifications of the heater. Ext.A81 is the way bill showing the despatch of Shola heater. 28. All the above documents would show that there was an ongoing dispute between the plaintiff and defendant regarding the efficiency of the heater to support the drier for making properly burnt tea. 29. Learned counsel for the defendant placed strong reliance on Ext.B11 letter dated 18.09.1998 issued by Velmurugan Tea Plantations, Nilgiris wherein it is mentioned that the drier in question along with Shola No.14 heater was purchased by them from the plaintiff's Semnivalley estate, Kerala and they had installed the same in their plantation. According to the letter, the heater was commissioned during March, 1998. Letter further says that the drier was in operation from March, 1998 onwards and it was working to their satisfaction. Learned counsel for the defendant based on this document would contend that the complaint A.S.Nos.341 & 523 of 2001 19 against the drier put forth by the plaintiff is without any basis. 30. Reliance was placed by both sides on Ext.A5 which is a report signed by the representatives of the plaintiff, defendant and M/s.Trade and Industries, Calcutta pertaining to the conduct of a trial run on 26.03.1997. An independent witness (officer in a nearby estate) has also signed. It can be seen from Ext.A5 that the representative of the defendant refused to cooperate with the trial run. Ext.A84 is yet another minutes of meeting held on 15.01.1997 between the parties and the representative of M/s.Trade and Industries, Calcutta. It shows the technical details and the shortcomings in the trial run and further Mr.Kalyana Raman, a representative of the defendant, refused to sign without first taking consent from the defendant company. According to the learned counsel for the plaintiff, these documents would show that the defendant tried to wriggle out of their responsibility in rectifying the serious mistakes of the drier. 31. Learned counsel for the defendant relied on Exts.B7 and B8 letters written by the plaintiff to the defendant. Ext.B7 is dated 01.07.1995. Contents of the letter would show that the heater was working properly at that time and the plaintiff could get 420 kgs. output per hour as on that date. Ext.B8 letter dated 19.08.1995 also says that the drier was functioning satisfactorily as on 19.08.1995. It is the contention of the defendants that from 19.08.1995 till 01.01.1997 there was no communication between the plaintiff and defendant regarding performance of the drier. Learned counsel argued that this would indicate the fact that A.S.Nos.341 & 523 of 2001 20 there was no complaint regarding performance of the drier during this period. It is also contended that by this time the guarantee period was over. 32. Refuting this contention, learned counsel for the plaintiff would contend that the drier used in tea manufacturing industry is supposed to live for a longer period and the manufacturer cannot extricate itself from the responsibility by saying that one year guarantee period was over. In fact, the other drier supplied by the defendant in the year 1986 was functioning even during that period indicating that such machines are supposed to give good results for say about 20 years. 33. Discussions made about the documentary evidence above would show that there are materials to justify the plaintiff's complaint regarding malfunctioning of the drier despite conducting various trial runs and even after changing the heater used along with the drier. At the same time, it can be seen that some documents relied on by the learned counsel for the defendant would indicate that the drier was functioning occasionally without any complaint and it had given only sufficient quantity of made tea of good quality. In this context, it is relevant to note that by relying on Exts.A66 to A68, A73 and A74 learned counsel for the plaintiff contended that on account of the under firing and over firing, plaintiff has suffered great loss. Ext.A66 dated 29.02.1996 is a report and valuation by Carritt Moran & Company Private Limited, Calcutta on inspection of the tea offered for sale. It pertains to the tea produced from Semnivalley estate of A.S.Nos.341 & 523 of 2001 21 the plaintiff. After detailing the leaf appearance and value, it is mentioned in Ext.A66 that the liquor made out of the tea tasted burnt. 34. Ext.A67 is another report by Carritt Moran & Company Private Limited, Calcutta dated 21.03.1996. That also relates to the tea produced from Semnivalley estate showing that the liquor made out of tea tasted burnt. Ext.A68 is another report dated 28.03.1996 showing the same features. Ext.A73 is the batting order indicating the values of different tea determined by Carritt Moran & Company Private Limited, Cochin. It is the definite case of the plaintiff, not effectively disputed by the defendant, that they have another product by name “Chinnar” which is much superior in quality than “Haileyburia”. The batting order would show that Chinnar was costing an average price of `44.63 per kg., whereas Haileyburia was only having `35.13 per kg. Ext.A74 batting order by the same company would show that Chinnar in January, 1996 was costing `47.09 per kg. whereas Haileyburia was costing `41.89 per kg. On these evidence, which are not challenged effectively, learned counsel for the plaintiff would contend that there are enough materials to show that due to malfunctioning of the machinery supplied, the plaintiff had suffered great loss by the reduced quality of made tea which fetched only a lesser value. 35. Now we shall examine the oral evidence. PW1 is the tea estate Manager employed by the plaintiff. He supported the plaint averments. He proved many of the documents referred to above. In spite of cross-examination, not much dent could be made to discredit him. A.S.Nos.341 & 523 of 2001 22 36. PW2 was the General Manger of the plaintiff's company during January, 1992 to May, 2000. He also deposed about negotiations in respect of the purchase of the drier. He adhered to the plaint case despite cross-examination. 37. PW3 was the Manager of Alampally estate, a nearby estate to the Semnivalley estate. He was present at the time of the trial run and at the time of making the joint reports regarding performance of the drier. PW4 was the service engineer attached to M/s.Trade and Industries, Calcutta. He deposed that the heater supplied by them to the plaintiff was perfectly matching with the drier and it was in accordance with the specifications suggested by the defendant. 38. DW1 is the executive of the defendant company. In crossexamination, this witness deposed that normal life of a drier could be between 10 to 20 years. This answer would fortify the case of the plaintiff that they were forced to sell out the drier purchased from the defendant's company on account of its unsatisfactory functioning. Other aspects relating to the exhibits mentioned above have also been deposed by this witness as well. 39. It is to be noted that the oral evidence in this case may not be of much importance since the case of the parties are proved mainly through the documents discussed above. I can unhesitatingly say that the oral evidence adduced are only supplementary to the documentary evidence. A.S.Nos.341 & 523 of 2001 23 40. Learned counsel for the plaintiff contended that the provisions in the Sale of Goods Act, 1930 (in short, “Act”) would justify the plaintiff's claim. It is not in dispute that the defendant sold a drier to the plaintiff for using in its tea manufacturing factory. Therefore, the transaction between the parties is a sale as defined in Section 4 of the Act cannot be disputed. 41. Section 12 of the Act deals with the condition and warranty. It reads as follows: _“_ _**12. Condition and warranty** .- (1) A stipulation in a contract of sale with reference to goods which are the subject thereof may be a condition or a warranty._ _(2) A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated._ _(3) A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated._ _(4) Whether a stipulation in a contract of sale is a condition or a warranty depends in each case on the construction of the contract. A stipulation may be a condition, though called a warranty in the contract.”_ 42. As mentioned above the terms and conditions agreed to between the parties at the time of purchase of the drier can only amount to A.S.Nos.341 & 523 of 2001 24 a warranty as referred to in Section 12(3) of the Act. Learned counsel for the plaintiff would contend that there is a breach of warranty by the defendant giving rise to a claim for damages for the plaintiff. 43. Section 16 of the Act speaks about the implied conditions as to quality and fitness. The provision reads thus: _“_ _**16. Implied conditions as to quality or fitness** .- Subject to the provisions of this Act, and of any other law for the time being in force, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows :_ _(1) Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller's skill or judgment, and the goods are of a description which it is in the course of the seller's business to supply (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be reasonably fit for such purpose :_ _Provided that, in the case of a contract for the sale of a specified article under its patent or other trade-name, there is no implied condition as to its fitness for any particular purpose._ _(2) Where goods are bought by description from a seller who_ A.S.Nos.341 & 523 of 2001 25 _deals in goods of that description (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be of merchantable quality : Provided that, if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed._ _(3) An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade._ _(4) An express warranty to condition does not negative a warranty or condition implied by this Act unless inconsistent therewith.”_ It is the case of the plaintiff that the buyer (plaintiff) had expressly made known the seller (defendant) the particular purpose for which the goods were purchased indicating that the buyer relied on the seller's skill or judgment. In spite of that defect in the machinery caused great loss to the plaintiff, according to the learned counsel for the plaintiff. 44. Section 59 of the Act is the provision showing the remedy for breach of warranty. It reads as follows: ## _“_ _**59. Remedy for breach of warranty.** - (1) Where there is_ _a breach of warranty by the seller, or where the buyer elects or is compelled to treat any breach of a condition on the part of the seller as a breach of warranty, the buyer is not by reason only of_ A.S.Nos.341 & 523 of 2001 26 _such breach of warranty entitled to reject the goods; but he may-_ _(a) set up against the seller the breach of warranty in diminution or extinction of the price; or_ _(b) sue the seller for damages for breach of warranty._ _(2) The fact that a buyer has set up a breach of warranty in diminution or extinction of the price does not prevent him from suing for the same breach of warranty if he has suffered further damage.”_ 45. Section 61 of the Act speaks about the payment of interest by way of damages and special damages. The provision is extracted hereunder: _“_ _**61. Interest by way of damages and special damages** .- (1) Nothing in this Act shall affect the right of the seller or the buyer to recover interest or special damages in any case where by law interest or special damages may be recoverable, or to recover the money paid where the consideration for the payment of it has failed._ _(2) In the absence of a contract to the contrary, the Court may award interest at such rate as it thinks fit on the amount of the price-_ _(a) to the seller in a suit by him for the amount of the price - from the date of the tender of the goods or from the date on_ A.S.Nos.341 & 523 of 2001 27 _which the price was payable._ _(b) to the buyer in a suit by him for the refund of the price in a case of a breach of the contract on the part of the seller - from the date on which the payment was made.”_ 46. On an analysis of the factual and legal issues involved in this case, I am of the definite view that the defendant cannot exonerate itself from the liability of malfunctioning of the drier. It may be true that the heater attached to the drier must have been giving problems during the initial period. But, there is no reliable material to hold that the Shola Super heater attached to the drier was a mismatch and did not give out enough hot air for the drier to function. During the last stage, refusal of the defendant's representative to co-operate with the trial run also indicate that the defendant was not in a position to rectify the mistakes of the drier. Therefore, I find nothing wrong in the trial court's decision to grant a decree in favour of the plaintiff. However, the question regarding quantum still remains to be decided. 47. Learned counsel for the plaintiff in order to buttress his contention regarding the right to claim damages for breach of warranty relied on the decisions in **Cullinane v. British “Rema” Manufacturing Co. Ltd. ((1953) 2 All E.R.1257)** and **Hancock and others v. B.W.Brazier (Anerley) Ltd. ((1966) 2 All E.R. 901)** . The principles in the decisions would show that breach of warranty of performance gives rise to an option to the buyer to claim capital loss or loss of profit. A.S.Nos.341 & 523 of 2001 28 48. Reliance is also placed on the decisions in **Hasenbhoy Jetha v. New India Corporation Ltd. (AIR 1955 Madras 435), National Traders v. Hindustan Soap Works (AIR 1959 Madras 112)** and **Trustees, Port of Calcutta v. Bengal Corporation Pvt. Ltd. (AIR 1979 Calcutta 142)** . The principles enunciated in these decisions are applicable to this case and it cannot be challenged. Learned counsel for the plaintiff relied on the decision in **Eternit Everest Limited v. C.G.Abraham & another (2003 (2) KLT 907)** to reinforce the contention that under Section 16 of the Act when the purpose of purchase of goods was made known to the seller and he sold the same for the necessary purpose, there is an implied warranty that the goods are suitable for the purpose and if it proved to be unsuitable, the seller is liable for damages. These pronouncements are axiomatic. 49. To sum up, it can be stated that the evidence - both oral and documentary - available in the records would show that the plaintiff purchased a drier for tea manufacturing industry specifying their requirements and after detailed deliberations, the product was manufactured and delivered to the plaintiff by the defendant. It was not functioning to the satisfaction of the plaintiff is also clear from the records. However, the plaintiff was responsible for initially connecting a heater of inadequate strength. But, after discussing the matters with the defendant, they have purchased a heater which was proved to be of required strength and still the drier did not function properly. Ultimately the drier was sold to a third party for a price in the year 1998. Therefore the plaintiff is justified A.S.Nos.341 & 523 of 2001 29 in claiming damages from the defendant for the malfunctioning of the drier. 50. From the impugned judgment, it can be seen that the court below has calculated damages in the manner quoted above. In this context, grievance of the defendant will have to be considered as value of the drier was not correctly computed by the court below. It is seen from the judgment that the court below has taken `8,27,943/- as the actual value of the drier purchased from the defendant. Whereas Ext.A30 invoice would show that value of the drier including excise duty and CST would come to `8,21,730/-. It has come out in evidence that the plaintiff sold the drier with heater to Velmurugan Tea Plantations for a price of `2,00,000/-. The court below has adopted a depreciation value of 50% for the use of the drier from March, 1994 till it was sold out by the plaintiff. I find no reason to interfere in this figure fixed by the court below. Trial court ought to have deducted `2,00,000/- from `8,21,730/- instead of deducting the same from `8,27,943/-. 50% depreciated value will come to `3,10,865/- (`6,21,730/2). The sum determinable as the damages for breach of warranty can be fixed at `3,10,865/-. 51. The court below, after considering all aspects, decided to grant 12% interest per annum on the quantum of damages determined, from the date of suit till realisation. Although the plaintiff has raised a claim that interest should be granted from the date of purchase of the drier, I find no illegality in the approach of the court below in the matter of granting interest. The view taken by the court below in this regard is a plausible A.S.Nos.341 & 523 of 2001 30 one and therefore I affirm it. In the result, both the appeals are disposed by modifying the decree passed by the court below in the following manner: The plaintiff will be entitled to realise `3,10,865/- (Rupees three lakhs ten thousand eight hundred and sixtyfive only) from the defendant with 12% interest per annum from the date of suit till the date of the decree of this Court. Thereafter future interest at the rate of 6% per annum for the principal sum till realisation. The plaintiff also will be entitled to get costs through out from the defendant. All pending interlocutory applications will stand closed. **A.HARIPRASAD, JUDGE.** **cks** A.S.Nos.341 & 523 of 2001 31 ## **A.Hariprasad, J.** **A.S.Nos.341 & 523 of 2001** **COMMON JUDGMENT** **21[st] March, 2019**