The Ganganagar Sugar Mills Ltd. circulated notice
that auction sale of the sugar would take place on Sept. 10, 1979 at 4 p.m in
the Mill, licenced traders dealing in sugar could only take part in it,
immediately after the acceptance of the bids earnest money @ Rs. 30/- per bag
would have to be deposited, and sugar purchased would have to be lifted within
the specified period. This auction notice was circulated to the licenced
traders dealing in sugar and their signatures were taken on its back. The
auction sale took place same day. The defendants took part in it. They gave
bids for the purchase of sugar @ Rs. 281.75 besides payment of Rs. 40.67 as
excise duty, per quintal and deposited required earnest money. The number of
bags purchased by the defendants and the defendants of the remaining appeals
purchased 100 bags each. At the time of the auction sale,' they were told to
lift the sugar' bags purchased by them during the period from' Sept, 16 to 22,
1979. This period was extended by the Collector, Sri Ganganagar till Sept.-29,
1979. Earnest money was duly deposited at the rate of Rs. 30/- per bag. On
Sept. 12, 1979, the Government of lndia in the Ministry of Agriculture and
Irrigation, Department of Food, New Delhi issued Sugar (Price Control), Order,
1979 (hereinafter referred to as Price Control Order) under S. 3, Essential
Commodities Act, 1955, fixing the
wholesale price of sugar @ Rs. 268/- per quintal, including basic excise duty,
additional excise duty in lieu of sale-tax and other charges for Rajasthan with
immediate effect. The defendants insisted upon the plaintiff to deliver the
sugar @ Rs. 268/- per quintal as fixed under the Price Control Order. The
plaintiff repeatedly requested and also served notice upon them for lifting the
sugar after paying the price at the agreed rate of Rs.281.75 + Rs. 40.67 as
excise duty, per quintal and adjusting there from the amount of earnest money.
They did not lift their sugar. The plaintiff filed suits against them for
damages @ Rs. 54.42 (Rs. 281.75 + Rs. 40.67 -- Rs. 268/-) per quintal after
adjusting the amount of earnest money deposited by them. The case of all the
defendants is the terms and conditions of the auction sale were not explained
to them, after the issuance of the Price Control Order the plaintiff was not
entitled to charge price at the rate exceeding Rs.268/- including all charges
per quintal and the contract for the purchase of sugar at the rate of Rs.
322.42 stood frustrated and cancelled, amount was not paid as earnest money but
it was part payment towards the price, the plaintiff had not suffered any loss
and it had sold sugar at the rate of Rs. 292/ -per quintal.
The trial Court dismissed the suits holding that the plaintiff is entitled to recover damages at' the rate of Rs. 13.75 only (281.75 -- 268) per quintal and to deduct it from the amount of earnest money deposited @ Rs. 30/- per quintal; The plaintiff filed appeals and they were dismissed by the learned Additional District Judge. The provisions of Section 20, Sales of 'Goods Act, 1930 were not applicable in these cases as the sugar bags were, not in a deliverable state at the time of auction, sale, the property in goods not pass to the defendants, on the issuance' of Price Control Order, the contracts which took place in between the parties' on Sept. 10 1979 were frustrated, the defendants were not' bound to lift the sugar purchased by them in the said auction sale and the plaintiff has failed to prove that it had suffered loss on account of the non-lifting of the sugar by the defendants. The plaintiff has filed these second appeals challenging the judgments of both the lower Courts.
The Rajasthan high court allowed appeals. The plaintiff will get costs of all three courts and interest on the decretal amount at the rate of 12% per annum from the date of the institution of the suit to the date of payment of deposit. If the defendant-respondents pay to the plaintiff-appellant or deposit in the trial Court the entire decretal amount and costs within three months from the date of the receipt of a notice of demand detailing the various amounts payable as per this judgment along with a photostat copy of the decree of this Court from the plaintiff or from the date of the receipt of a notice from the executing Court, they will get reduction in the rate of interest. The interest will be payable at the rate of 6% per annum instead of 12% per annum.