Court Of Assam,Nagaland,Meghalaya,Manipur,Tripura,Mizoram and Arunachal Pradesh

CASE NO WP(C) 4507 OF 2009

District : Nagaon

Category : 10189 (Other Civil Rules. )

1 ASHOK KUMAR SABOO (HUF) & ANR

PROPRIETOR OF M/S RAHUL

ENTERPRISES A PROPRIETORSHIP

FIRM, REPRESENTED BY KARTA OF

ASHOK KUMAR SABOO (HUF), ASHOK

KUMAR SABOO, HAVING OFFICE AT

40, STRAND ROAD, (4TH FLOOR),

ROOM NO.4, KOLKATA- 700001.

2 ASHOK KUMAR SABOO

PROPRIETOR OF M/S DURGA TRADING CO.,

A PROPRIETORS FIRM HAVING OFFICE

AT 40, STRAND ROAD (4TH FLOOR)

ROOM NO.4, KOLKATA- 700001.

Petitioners

Versus

1 HINDUSTAN PAPER CORPORATION

LTD (HPCL), & ORS

HAVING ITS

REGISTERED OFFICE AT 4TH FLOOR

SOUTH TOWER, SCOPE MINAR,

LAXMI NAGAR, DISTRICT CENTRE,

DELHI- 110092 AND ITS HEAD

OFFICE AT 75C, PARK STREET,

RUBI BUILDING, KOLKATA- 700016

SERVICE THROUGH ITS

CHAIRMAN-CUM-MANAGING DIRECTOR

.

2 CHAIRMAN-CUM-MANAGING DIREDTOR

,

HINDUSTAN PAPER CORPORATION

LTD. HAVING OFFICE AT 75C,

PARK STREET, KOLKATA- 700016.

3 DEPUTY GENERAL MANAGER

(FINANCE)

I/CHINDUSTAN PAPAR

CORPORATION LTD, HAVING OFFICE

AT 75C, PARK STREET, RUBI

BUILDING, KOLKATA- 700016.

4 THE DIRECTOR,

OPERATION,

HINDUSTAN PAPER CORPORATION

LTD. 75C, PARK STREET, RUBI

BUILDING, KOLKATA- 700016.

5 THE CHIEF EXECUTIVE,

HINDUSTAN

PAPER CORPORATION LTD. NAGAON

PAPER MILL, KAGAJNAGAR- 782410

ASSAM.

6 THE DEPUTY GENERAL MANAGER

(FOREST),

HINDUSTAN PAPER

CORPORATION LTD, NAGAON PAPER

MILL, KAGAJNAGAR- 782410,

ASSAM.

7 DEPUTY GENERAL MANAGER

(FINANCE)

I/C HINDUSTAN PAPER

CORPORATION LTD, NAGAON PAPER

MILL, KAGAJNAGAR- 782410,

ASSAM.

8 SRI KISHORE SABOO,

WORKING FOR

GAIN AT 40, STRAND ROAD (4TH

FLOOR),

KOLKATA- 700001.

Respondents

!1 MR. D BARUAH

2 MRK SAHARIA

3 MR. P P DAS

4 MS. S BARUAH

5 MS. R N NEOG

Petitioner's Advocates

^1 SC, H P C L

Respondent's Advocates

CORAM:

BEFORE

HON'BLE MR. JUSTICE B.P. KATAKEY

DATE OF ORDER:31/01/2011

:JUDGMENT

ORDER (CAV)

The petitioners have filed this writ petition challenging the communication dated 21st June, 2005 issued by the Deputy General Manager (Finance) of Hindustan Paper Corporation Ltd., Nagaon Paper Mill, to M/s Durga Trading Company, intimating to remit an amount of Rs.33,16,746/- as liquidated damage after adjusting the amount of Rs.112.68 Lakhslying with the Corporation in the credit of M/s Rahul Enterprises, from the total liquidated damage of Rs.1,45,84,746/- for its failure to successfully perform the contract. The basic ground on which the said communication has been challenged is that M/s Rahul Enterprises and M/s Durga Trading Company both being two different proprietorial firms, the petitioner No.1 being the proprietor of first firm and the proforma respondent No.8 being the proprietor of the second firm at the relevant point of time, any dues payable to the proprietor of M/s Rahul Enterprises under a contract, cannot be adjusted against the dues of the proforma respondent No.8, Sri Kishore Kr. Saboo, in respect of M/s Durga Trading Company.The writ petition was initially filed in the High Court at Calcutta, which, however, has been transferred to this Court pursuant to the order dated 10th August, 2009 passed by the Hon'ble Supreme Court in Civil Appeal No.5537/2008, filed by the respondents Corporation challenging the decision of the Calcutta High Court in the matter of territorial jurisdiction.

[2]The facts relevant for the purpose of disposal of the writ petition may be noticed as under.

A Notice Inviting Tender (NIT) was issued by the respondents Corporation on 5th June, 2002 for supply of bamboo from and beyond railway station of Barpeta Road on North Bank and Goalpara on South Bank of river Brahmaputra, pursuant to which, amongst others, tender was also submitted by M/s Durga Trading Company of which Shri Kishore Kr. Saboo (proforma respondent No.8) was the proprietor.The work order, thereafter, was issued in the name of M/s Durga Trading Company on 30th August, 2002.An agreement was entered into between the proforma respondent No.8 as the proprietor of M/s Durga Trading Company and the respondents Corporation for due execution of the work. The proforma respondent No.8, however, could not successfully perform his part of contract despite rescheduling of supply scheduled by the respondents Corporation for more than one occasion.A notice dated 1st June, 2004, thereafter, was issued by the respondents Corporation to M/s Durga Trading Company to perform its part of contract within 15 (fifteen) days thereof with the warning that in the event of failure to do so, the contract would be terminated and risk and cost sale notice would be issued for supply of the remaining quantity of bamboos.In reply to the said notice, M/s Durga Trading Company sought increase of the rate for supply of the bamboo.The fact remains that M/s Durga Trading Company did not perform its part of contract fully.

[3]Another Notice Inviting Tender thereafter, was issued by the respondents corporation on 23rd June, 2004 for supply of bamboo by rail from and beyond the station of Barpeta Road on North Bank of river Brahmaputra, which , according to the respondents Corporation, is the risk and cost sale notice issued for the failure of M/s Durga Trading Company to perform its part of the contract.In response to the said sale notice, tender was submitted by the petitioner No.1, Shri Ashok Kr. Saboo, as the proprietor of M/s Rahul Enterprises.The said work was allotted to M/s Rahul Enterprises vide order dated 26th August, 2004 and an agreement for that purpose was also entered into between Ashok Kr. Saboo being the proprietor of M/s Rahul Enterprises and the respondents Corporation. In respect of another Notice Inviting Tender dated 17th December, 2003 for supply of bamboo by rail from and beyond New Koch Bihar in North Bengal, another work order was issued by the respondents Corporation in favour of M/s Durga Trading Company vide order dated 25th June, 2004.The agreement in respect of the said work order was entered into between Shri Kishore Kr. Saboo being the proprietor of M/s Durga Trading Company and the respondents Corporation.

[4]Shri Ashok Kr. Saboo, the proprietor of M/s Rahul Enterprise, submitted bills from time to time for the supply of the bamboo pursuant to the work order dated 28th August, 2004.While the respondents Corporation paid the dues against certain bills raised by Shri Ashok Kr. Saboo, as the payment against the bill Nos.37 to 44 amounting to Rs.87,82,202/- were not made, a communication dated 7th June, 2005 was issued to the Officer of the respondents Corporation requesting release of the said amount intimating that he has already completed the supply of bamboo pursuant to the work order dated 26th August, 2004.The said amount, however, has not been paid by the respondents Corporation to the petitioner No.1.

[5]The respondents Corporation, thereafter, issued the impugned communication dated 21st June, 2005 intimating M/s Durga Trading Company that because of its failure to perform its part of the contract fully for supply of 70 ,000 MTG bamboo by rail from and beyond Barpeta Road Railway Station during the year 2002-04, the risk and cost sale notice was issued and the respondents Corporation was compelled to procure the remaining balance quantity of bamboo at the higher rate and by incurring additional expenditure of Rs.1,45,84,746/-, which is recoverable from M/s Durga Trading Company, as liquidated damage under the Contract.By the said communication, M/s Durga Trading Company was also informed that an amount of Rs.112.68 Lakhs lying with the corporation in the credit of M/s Rahul Enterprises has been adjusted against the said dues and requested M/s Durga Trading Company to remit the balance amount of Rs .33,16,746/- with further intimation that in case of failure to do so, legal measures for realization of the said amount would be taken.

[6]It may be noted here that in fact the entire aforesaid amount of Rs.112.68 Lakhs lying with the Corporation was not in credit of M/s Rahul Enterprises, as contended by the writ petitioners themselves.Out of the said amount, according to the writ petitioners, only an amount of Rs.87,82,202/- is in the credit of M/s Rahul Enterprises and lying with the respondents Corporation. It may also be noticed at this stage that it is also the pleaded case of the writ petitioners that by virtue of the written agreement dated 1st April, 2004 the trade name and business of M/s Durga Trading Company was transferred by Shri Kishore Kr. Saboo to Shri Ashok Kr. Saboo so also of M/s Rahul Enterprises, of which Shri Kishor Kr. Saboo was the proprietor.Prior to 1st April, 2004, Shri Kishore Kr. Saboo, the proforma respondent No .8, according to the petitioners, was the proprietors of both the firms, namely M/s Rahul Enterprises and M/s Durga Trading Company.

[7]During pendency of the writ petition before the Calcutta High Court, which was filed in the month of July , 2005, the respondents Corporation instituted Title Suit No.20/2005 in the Court of the learned Civil Judge, Morigaon against M/s Durga Trading Company and Shri Kishor Kr. Saboo praying for the decree declaring that the respondents Corporation is entitled to recover a sum of Rs.1,45,84,746/- from the defendants jointly and severally on account of recovery of compensation towards ricks and costs for short supply of bamboo by rail from and beyond Railway Station of Barpeta Road on North Bank and Golpara on South Bank of river Brahmaputra pursuant to the work order dated 30th August, 2002 and consequent agreement dated 11th September, 2002, with interest, by adjusting an amount of Rs.1,12,68,000/- payable to M/s Rahul Enterprises, with a further prayer to pass decree for recovery of the balance amount of Rs.33,16,746/- with interest.An alternative prayer has also been made for passing a decree for Rs.1,45,84,746/- against the defendants, in the event, it is held that the amount of Rs.1,12,68,000/- payable to M/s Rahul Enterprises cannot be adjusted against the dues of M/s Durga Trading Company and Shri Kishor Kr. Saboo, the defendants.In the said suit, the counter claim was also filed by the defendants therein.

[8]The learned Civil Judge vide judgment dated 13th September, 2010 while refusing to pass a decree declaring that the respondents Corporation is entitled to adjust the sum of Rs.1,12,68,000/- payable to M/s Rahul Enterprises, towards the dues of M/s Durga Trading Company and its proprietor Shri Kishore Kr. Saboo, in the absence of M/s Rahul Enterprises as party defendant in the suit, passed the decree for Rs.7,09,720/- only with interest, against the claim of the respondents Corporation for Rs.1,45,84,746/- against M/s Durga Trading Company and its proprietor Shri Kishore Kr. Saboo .The learned Civil Judge also decreed the counter claim of the defendants therein to the tune of Rs.7,71,784/- with interest.Admittedly as on date, the said decree has not been put to challenge by the respondents Corporation before the higher forum.

[9]I have heard Mr. K.N. Choudhury, learned Sr. Counsel for the petitioners and Mrs. M. Hazarika, learned Sr. Counsel for the respondent Nos.1 to 7.None appears for the proforma respondent No.8.

[10]The learned Sr. Counsel for the petitioners referring to the work orders dated 30th August, 2002, agreement dated 9th November, 2002 executed between Shri Kishore Kr. Saboo, the proprietor of M/s Durga Trading Company and the respondents Corporation as well as the work order dated 26th August, 2004 and consequent agreement executed between Shri Ashok Kr. Saboo, the proprietor of M/s Rahul Enterprise and the respondents Corporation, has submitted that since such work orders and agreements were executed by two different proprietors , the liability of one of the proprietorial firm cannot be adjusted against the dues of another proprietorial firm, as has been done by the respondents Corporation, as reflected in the impugned communication dated 21st June, 2005.According to the learned Sr. Counsel, such a course of action, apart from being arbitrary, unjust and unreasonable is also violative of the fundamental right of the petitioner No.1, Shri Ashoek Kr. Saboo, to carry on trade or business, as guaranteed by Article 19(1)(g) of the Constitution of India.

[11]Referring to the judgment and decree dated 13th September, 2010 passed by the learned Civil Judge, Morigaon in Title Suit No.20/2005 instituted by the respondents Corporation, it has also been submitted by the learned Sr. Counsel that though the respondents Corporation in the said suit instituted against M/s Durga Trading Company and Shri Kishore Kr. Saboo being its proprietor, prayed for a decree declaring that the respondents Corporation is entitled to recover an amount of Rs.1,45,84,746/-, as compensation towards risks and costs for short supply of bamboo pursuant to the work order issued in favour of M/s Durga Trading Company on 30th August, 2002 and the agreement dated 11th September, 2002 and also for adjustment of an amount of Rs.1,12,68 ,000/- payable to M/s Rahul Enterprises, apart from praying for a decree for recovery of the remaining amount of Rs.33,16,746/- from M/s Durga Trading Company and Shri Kishore Kr. Saboo, with the alternative prayer that if such adjustment is not held to be permissible than to pass a decree for Rs.1,45,84,746/- against M/s Durga Trading Company and its proprietor Shri Kishore Kr. Saboo , the learned Civil Judge has refused to pass any decree declaring that the respondents Corporation is entitled to adjust the amount of Rs.1,12,68,000/- from the bills payable to M/s Rahul Enterprise against the dues of M/s Durga Trading Company and its proprietor Shri Kishore Kr. Saboo, by holding that the respondents Corporation is entitled to a sum of Rs.7,09,720/- against M/s Durga Trading Company and Shri Kishor Kr. Sabo, whose counter claim for Rs.7,71,784/-has also been decreed. According to the learned Sr. Counsel, the decree passed by the learned Civil Judge has not been challenged by the respondents Corporation in appeal and hence it attains finality.The learned Sr. Counsel further submits that the respondents Corporation cannot adjust Rs.87,82,202/- payable by the respondents corporation to M/s Rahul Enterprises against the dues payable to M/s Durga Trading Company and hence, the decision of the Corporation in that regard, as reflected in the impugned communication dated 21st June, 2005, may be set aside.

[12]The learned Sr. Counsel appearing for the respondent Nos.1 to 7 supporting the action, as reflected in the impugned communication dated 21st June, 2005, has submitted that admittedly Shri Ashok Kr. Saboo being presently the proprietors of both the firms, namely M/s Rahul Enterprises and M/s Durga Trading Company, the respondents Corporation has rightly adjusted the amount payable to M/s Rahul Enterprises against the dues payable to M/s Durga Trading Company, when M/s Durga Trading Company admittedly abandoned the work for supply of bamboo awarded to it vide work order dated 30th August, 2002 and has violated the terms of the contract entered into on 11th September, 2002.It has also been submitted that even assuming that on 30th August, 2002 when the work order was issued in the name of M/s Durga Trading Company and on 11th September, 2002, when an agreement was entered into between the M/s Durga Trading Company and the respondents Corporation, Shri Ashok Kr. Saboo was the proprietor of M/s Durga Trading Company, the business of the said firm having admittedly been transferred to Shri Ashok Kr. Saboo, who is the proprietor of M/s Rahul Enterprises, with effect from 1st April, 2004, Shri Ashok Kr. Saboo would be liable for the dues of M/s Durga Trading Company in respect of the aforesaid work order dated 30th August, 2002 and agreement dated 11th September, 2002, unless it is otherwise established by Shri Ashok Kr. Saboo that by virtue of the agreement dated 1st April, 2004, which according to the writ petitioners were entered into between Shri Kishor Kr. Saboo and Shri Ashok Kr. Saboo, the existing liability of M/s Durga Trading Company has not been transferred to Shri Ashok Kr. Saboo and such liability remains with Shri Kishore Kr. Saboo. According to the learned Sr. Counsel, such determination can be made by a Civil Court, as it requires examination of the evidences and, therefore, cannot be made by a writ Court in exercise of the jurisdiction under Article 226 of the Constitution of India. The learned Sr. Counsel referring to the judgment and decree dated 13th September , 2010 passed in Title Suit No.20/2005 has submitted that the learned Civil Judge has also not gone into the issue as to whether the respondents Corporation is entitled to adjust the amount of Rs.1,12,68,000/- payable to M/s Rahul Enterprises against the dues of M/s Durga Trading Company, in the absence of M/s Rahul Enterprises as party defendant in the suit.

[13]I have considered the submissions of the learned Sr . Counsel for the parties and also perused the pleadings including the documents appended thereto.

[14]The facts narrated above, are not in dispute.It appears from the pleadings in the writ petition that prior to 1st April, 2004 Shri Kishore Kr. Saboo, proforma respondent No.8, was the proprietor of both M/s Rahul Enterprises and M/s Durga Trading Company, as claimed by the writ petitioners in the writ petition.It has been pleaded by the writ petitioners in paragraphs 4 and 5 of the writ petition that by virtue of distribution of family business amongst the family members, a written agreement was executed on 1st April, 2004, by virtue of which the trade name and business of M/s Durga Trading Company was transferred to Shri Ashok Kr. Saboo with effect from the date of agreement and the trade name and business of M/s Rahul Enterprises was transferred to Shri Ashok Kr. Saboo (HUF), also with effect from the date of execution of the said written agreement.

[15]Agreement dated 11th September, 2002 was executed by Shri Kishore Kr. Saboo as the proprietor of M/s Durga Trading Company with respondents Corporation for supply of bamboo, pursuant to the work order dated 30th August, 2002 issued in the name of M/s Durga Trading Company. The said work order, however, could not fully be executed by the said M/s Durga Trading Company.The work order dated 26th August, 2004 was issued in the name of M/s Rahul Enterprises and an agreement was entered into, between the said firm represented by its proprietor Shri Ashok Kr. Saboo with the respondents Corporation, for supply of certain quantity of bamboo, pursuant to the NIT dated 23rd June, 2004, which NIT, according to the respondents Corporation was the risk and costs sale notice issued for failure of M/s Durga Trading Company to complete the supply pursuant to the agreement dated 11th September, 2002, though nothing has been indicated in that regard in the said NIT dated 23rd June, 2004.It is also not in dispute that M/s Rahul Enterprisse has successfully executed the work of supply of bamboo pursuant to the work order dated 26th August, 2004 and in that respect an amount of Rs.87,82,202/- is payable.The said amount, however, has been adjusted by the respondents Corporation against the dues of M/s Durga Trading Company for its failure to complete the supply of bamboo pursuant to the work order dated 30th August, 2002 in its favour, which has been communicated vide impugned communication date 21st June, 2005.

[16]It is, therefore, evident that on the date when the work order was issued to M/s Durga Trading Company, i.e. on 30th August, 2002, the said firm belonged to Shri Kishore Kr. Saboo, proforma respondent No.8, trade name and business of which, however, subsequently transferred to Shri Ashok Kr. Saboo with effect from 1st April, 2004 by virtue of the family arrangement culminated in the written agreement dated 1st April, 2004.By the said agreement, the trade name and business of M/s Rahul Enterprise, of which Shri Kishore Kr. Saboo was originally the proprietor, was transferred to Shri Ashok Kr. Saboo (HUF) with effect from 1st April, 2004.The work order dated 26th August, 2004, pursuant to the NIT dated 23rd June, 2004 was issued in the name of M/s Rahul Enterprises and the agreement was executed between M/s Rahul Enterprises represented by Shri Ashok Kr. Saboo and the respondents Corporation.It is also evident from the facts narrated above that the agreement dated 11th September, 2002 was executed between M/s Durga Trading Company represented by its proprietor Shri Kishore Kr. Saboo and the respondents Corporation for supply of certain quantity of bamboo pursuant to the work order issued on 30th August, 2002, which was issued pursuant to the NIT dated 5th July, 2002.Hence, on the date when the work orders dated 30th August, 2002 and 26th August, 2004 were issued by the respondents Corporation the firms , namely M/s Durga Trading Company and M/s Rahul Enterprises belonged to Shri Kishore Kr. Saboo (HUF) and Shri Ashok Kr. Saboo, respectively.Both the work orders were issued in the name of two firms represented by two proprietors and agreements were also accordingly executed between two different firms represented by two different proprietors and the respondents Corporation.

[17]It appears from the impugned communication dated 21st June, 2005 issued by the respondents corporation to M/s Durga Trading Company that certain amount payable to M/s Rahul Enterprises has been adjusted against the dues of M/s Durga Trading Company.Such dues was in respect of the failure of M/s Durga Trading Company to supply the contracted quantity of bamboos pursuant to the work order date 30th August, 2002 and agreement dated 11th September , 2002.

[18] Article 19(1) (g) of the Constitution of India guarantees the fundamental right of a citizen to carry on any occupation, trade or business.Any action on the part of the State, within the meaning of Article 12 of the Constitution of India, which infringes such fundamental right cannot stand the scrutiny of law.The State though is empowered to put reasonable restriction on the fundamental right guaranteed under the Constitution, its action, however, cannot be arbitrary, unreasonable, unjust and unfair.Though the right arising out of a contract with the State or its instrumality are not fundamental rights guarantees by the Constitution, the action on the part of the State or its instrumality in the contractual matter cannot be unfair, unreasonable, unjustified and arbitrary.The State or its instrumality cannot deprive a citizen to which he is entitled to.The amount payable to a proprietorial firm cannot be adjusted against the dues of another proprietirial firm, in case the firms belong to two different proprietors.If such a course of action is allowed to be taken, it would amount to depriving a proprietorial firm from receiving its dues and such action on the part of the authority by whom such dues are payable would be unjust, unreasonable and arbitrary.

[19]In the instant case, as discussed above, the respondents Corporation has taken a decision for adjustment of the amount payable to M/s Rahul Enterprises against the dues of M/s Durga Trading Company, though at the relevant point time both the firms belonged to two different proprietors.In the suit instituted by the respondents Corporation, i.e. Title Suit No.20/2005, though the claim was made for passing a decree for Rs.1 ,45,84,746/- against M/s Durga Trading Company and its proprietor as damages/compensation for breach of contract and in the said suit the issue relating to the entitlement of the said amount has been framed, the same has been answered against the respondents Corporation by holding that the respondents Corporation are entitled to an amount of Rs.7,09,720/-, only as compensation in that regard from M/s Durga Trading Company and hence, in any case, the respondents cannot recover more than the said amount.If the impugned decision of the respondent authorities is allowed to stand, it would amount to allowing the respondents to recover much more than to which they are entitled to under the decree passed by the Civil Court.The decree in the counter claim has also been passed for an amount of Rs.7,71,784/- against the respondents Corporation.As noticed above, the said decree has not been challenged in the higher forum till date.Hence, the submission of the learned Sr. Counsel for the respondents that without determination by a Civil Court as to whether by virtue of the agreement dated 1st April, 2004, the liability of M/s Durga Trading Company was also taken over by Shri Ashok Kr. Saboo, the relief claimed in this writ petition cannot be granted, does not deserve acceptance.

[20]That being the position, the decision of the respondent Corporation relating to the adjustment of the amount payable to M/s Rahul Enterprises against the dues of M/s Durga Trading Company cannot be held to be legal and valid and hence set aside.

[21]The writ petition is accordingly allowed, as indicated above.No cost.