supply of sub-standard quality of seeds by the defendant to the plaintiff = 1. Whether the plaintiff is entitled to recover the suit amount from the defendant with interest in view of the supply of sub-standard quality of seeds by the defendant to the plaintiff? 2. Whether the defendant is not liable for the suit amount as pleaded in the written statement? 3. Whether the plaintiff is liable to pay the amount covered by counter claim made by defendant? 4. Whether the defendant is entitled for the damages claimed in the written statement? 5. To what relief? = Admittedly, Clause-7 of Ex.A1—agreement stipulates that the defendant being the supplier was solely responsible for the genetic purity, germination and other seed standards. As the samples were drawn within a span of 5 days of the annual stocks, the contention of the defendant that due to heavy rains and storage the germination percentage was low is not tenable. As per the evidence of P.W.1, the seeds were replaced only after consultation and in the presence of defendant’s representative. In Ex.A21, dated 16-09-1998 the defendant agreed for furnishing bank guarantee for the unsold stocks of 440 quintals and also for 140 quintals supplied without indent. As the defendant failed to furnish the bank guarantee, the plaintiff sold the stocks including 140 quintals on non-seed basis in the public auction and appropriated the amount due from the defendant. Actually, the cost of unsold stock was at Rs.8,48,040/-, after deducting the value of the seeds sold in public auction i.e. Rs.4,05,684/-, it comes to Rs.4,42,356/-. After deducting the amount of Rs.1,56,880/- payable to the defendant for 140 quintals, it comes to Rs.2,85,476/-. By adding interest at 12% and rent for godown for keeping the unsold stock at Rs.12,652/- the lower court rightly awarded Rs.3,70,733.95 ps. with future interest. 13. In view of the same, the judgment passed by the court below based on evidence on record needs no interference.


THE HONOURABLE SRI JUSTICE
ASHUTOSH MOHUNTA

C.C.C.A.No.103 of 2008



Date of Judgment:    16--02--2012

Between:

M/s. Krishidhan Seeds Ltd.


                                                                      ..Appellant
and

M/s.A.P.State Co-op. Marketing Federation Ltd.
                                                                                   ..Respondent



The Court made the following Judgment:
























THE HONOURABLE SRI JUSTICE
 ASHUTOSH MOHUNTA

C.C.C.A.No.103 of 2008


Judgment:


1.             This appeal by the defendant is directed against the judgment and decree passed by the X Additional Senior Civil Judge (Fast Track Court), City Civil CourtHyderabad in O.S.No.1235 of 2000, dated 14-10-2004 decreeing the suit of the plaintiff filed for recovery of Rs.4,51,411/- basing on the agreement, dated 18-03-1998 (Ex.A1).
2.             Heard the learned counsel for the appellant and also learned counsel for the respondent.

3.             For the sake of convenience the parties are referred to as arrayed in the court below.
4.             The facts which give rise to filing this appeal may, briefly, be stated as under:

        The appellant/defendant entered into an agreement with the respondent/.plaintiff on 18-03-1998 for supply of soya bean seeds. Pursuant to the said agreement, the defendant supplied the soya bean seeds to the plaintiff. Out of 22 samples supplied by the defendant, 13 samples were found to be sub-standard as per the analyst report. Immediately the plaintiff informed the

same to the defendant through letters dated
10-06-1998, 16-06-1998 and 08-07-1998, as there were complaints from the farmers for poor germination.
        As per the terms and conditions of the agreement, dated 18-03-1998, the defendant was solely responsible for the genetic purity, germination and other seed standards. When the plaintiff brought it to the notice of the defendant with regard to sub-standard of seeds, the defendant agreed for replacement of sub-standard quality seeds through their letters dated
27-08-1998 and 16-09-1998. While the matter stood thus, the plaintiff called upon the defendant to furnish bank guarantee for a sum of Rs.7,07,000/- towards the cost of unsold stock as well as for replacement of stocks, which were found to be sub-standard in quality. While so, the defendant issued a notice dated 05-04-1999 to the plaintiff demanding to pay the balance amount of Rs.2,68,433/-.  The plaintiff sent reply notices dated 03-05-1999 and 03-06-1999 demanding the defendant to comply the contractual obligations under the terms of agreement. The defendant having received the said notices did not comply with the same; instead issued reply on 14-01-2000 claiming the alleged oral settlement which was duly rejected by the plaintiff through its letter dated 05-02-2000. The plaintiff sold the stocks in public auction and adjusted the amount. After giving credit to the amount recovered in public auction, still an amount of Rs.2,85,476/- was due from the defendant. Therefore, the plaintiff issued final notice, dated 10-03-2000 for payment of Rs.2,85,476/- with interest. The defendant having received the said notice on 14-03-2000 failed to pay the said amount. Hence, the suit.

5.             The defendant filed the written statement and made counter claim contending that as per the agreement dated
18-03-1998, it agreed to sell 1200 quintals of soya bean seeds of good quality; accordingly, after satisfaction of good quality only the seeds were despatched to the plaintiff. Out of 22 samples supplied, 13 samples were made sub-standard because of heavy rain fall and in stocking them by the plaintiff.  Therefore, the defendant is not held responsible for the same.
The defendant never agreed to replace the sub-standard seeds but agreed to replace the unsold seeds. Moreover, the defendant never agreed to furnish bank guarantee for a sum of Rs.7,07,000/-, as alleged but ready to give bank guarantee for Rs.4,48,000/- towards unsold stock. The plaintiff had no right to sell the seeds by public auction. In addition to that, the plaintiff sold extra material belonging to the defendant without any authority, for which the plaintiff is liable to pay the amount of sale proceeds of excess stock valued at Rs.2,68,433/- with interest at 24% per annum which comes to Rs.3,83,792/- (counter claim).

6.             A rejoinder has been filed by the plaintiff stating that the defendant was fully responsible for genetic purity, germination and other seed standards as per Clause-7 of terms of agreement, dated 18-03-1998. It is stated that as it is not possible to verify the germination count and other parameters of the seeds at the time of despatch of stocks, the plaintiff had not deputed any officer for verification and the entire responsibility was on the defendant. The samples were sent to the laboratory for germination test. The analyst report dated 16-06-1998 shows that the seeds supplied by the defendant were of sub-standard quality. The plaintiff has got experience in stocking seeds since a long time, so the sub-standard quality was due to lapses on the part of plaintiff in storing is totally incorrect.  The allegation that 13 samples might have failed due to heavy rainfall is also not correct. The defendant failed to furnish bank guarantee for Rs.4,48,000/- towards cost of unsold seeds and Rs.2,59,000/- towards cost of replaced seeds. As the defendant did not comply with the reply notice, dated 03-06-1999, the plaintiff was constrained to sell the seeds in public auction. The counter claim of Rs.2,68,433/- is made only to avoid its liability and the claim is barred by limitation and prayed for decreeing the suit.

7.             Basing on the above pleadings the court below framed the following issues.
1.     Whether the plaintiff is entitled to recover the suit amount from the defendant with interest in view of the supply of sub-standard quality of seeds by the defendant to the plaintiff?
2.     Whether the defendant is not liable for the suit amount as pleaded in the written statement?
3.     Whether the plaintiff is liable to pay the amount covered by counter claim made by defendant?
4.     Whether the defendant is entitled for the damages claimed in the written statement?
5.     To what relief?

8.             During the course of trial the plaintiff examined P.Ws.1 and 2 and got marked Exs.A1 to A33. In spite of granting sufficient time, no evidence was let in on behalf of the defendant.

9.             Basing on the evidence available on record, the trial court decreed the suit of the plaintiff for Rs.3,70,733.95 ps. with future interest at 12% per annum from the date of suit till the date of decree and thereafter at 6% per annum from the date of decree till realisation on Rs.2,85,476/- being the principal amount with proportionate costs of the suit and dismissed the counter claim made by the defendant. Against which the present appeal has been filed by the defendant.

10.            Learned counsel for the appellant/defendant contended that as per the terms of agreement, the unsold seeds, if any, have to be returned to the defendant and the plaintiff was not permitted to sell the same. It is also contended by the learned counsel that the plaintiff has not paid the entire value of the stocks it received from the defendant; therefore, the defendant made counter claim. The plaintiff having not taken any steps to prove deficiency in the quality of seeds, cannot contend that the seeds supplied by the defendant are in sub-standard. The lower court ought to have dismissed the suit by allowing counter claim made by the defendant.

11.            Per contra, learned counsel for the respondent/plaintiff while sustaining the judgment under appeal contends that as per agreement dated 18-03-1998 the defendant was held responsible for the purity, germination and other seed standards and the defendant failed to give bank guarantee for the unsold stocks. Therefore, the lower court rightly decreed the suit of the plaintiff which needs no interference.

12.            Admittedly, Clause-7 of Ex.A1—agreement stipulates that the defendant being the supplier was solely responsible for the genetic purity, germination and other seed standards. 
As the samples were drawn within a span of 5 days of the annual stocks, the contention of the defendant that due to heavy rains and storage the germination percentage was low is not tenable.  
As per the evidence of P.W.1, the seeds were replaced only after consultation and in the presence of defendant’s representative. 
In Ex.A21, dated 16-09-1998 the defendant agreed for furnishing bank guarantee for the unsold stocks of 440 quintals and also for 140 quintals supplied without indent.
As the defendant failed to furnish the bank guarantee, the plaintiff sold the stocks including 140 quintals on non-seed basis in the public auction and appropriated the amount due from the defendant. 
Actually, the cost of unsold stock was at Rs.8,48,040/-, after deducting the value of the seeds sold in public auction i.e. Rs.4,05,684/-, it comes to Rs.4,42,356/-. 
After deducting the amount of Rs.1,56,880/- payable to the defendant for 140 quintals, it comes to Rs.2,85,476/-. 
By adding interest at 12% and rent for godown for keeping the unsold stock at Rs.12,652/- the lower court rightly awarded Rs.3,70,733.95 ps. with future interest.

13.            In view of the same, the judgment passed by the court below based on evidence on record needs no interference.

14.            The appeal fails and it is accordingly dismissed.
In the circumstances, there shall be no order as to costs.


____________________                                                                                                     ASHUTOSH MOHUNTA, J.

16-02-2012
Murthy

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