THE HON’BLE SRI JUSTICE T. SUNIL CHOWDARY
SECOND APPEAL No.417 OF 2005
April 17, 2014 Between:
The General Manager, MAHYCO Seeds Co. Ltd., Regd. Office No.19, Rajamahal, 84, Near Nariman Road, Bombay And others … Appellants/ AND Balagani Bala Veeraiah, S/o.Veeraiah Appellants/Defendants … Respondent/ Respondent/Plaintiff THE HON’BLE SRI JUSTICE T. SUNIL CHOWDARY
SECOND APPEAL No.417 OF 2005
JUDGMENT:
The unsuccessful defendants preferred this second appeal challenging the decree and judgment dated 06.01.2005 passed in A.S.No.4 of 2002 on the file of the Additional Senior Civil Judge, Nandyal confirming the decree and judgment dated 24.01.2002 passed in O.S.No.323 of 1999 on the file of the Principal Junior Civil Judge, Nandyal decreeing the suit for recovery of money. For the sake of convenience, the parties will hereinafter be referred to as they are arrayed before the trial Court.
2. The case of the plaintiff is that first defendant is a company registered under the name and style of “MAHYCO Seeds Co. Ltd.,” under the Companies Act, 1956, having its registered office at “19, Rajamahal, 84, Veer Nariman Road, Bombay” and head office at “Industrial Area, Jalna, Maharashtra State”. The plaintiff and first defendant company have entered into an agreement on 10.12.1992; according to which, the plaintiff shall organise the seeds production for the defendant company and for such production the plaintiff shall pay to the company a sum of Rs.400/- towards cost of foundation seed. In addition to that, the plaintiff shall pay a sum of Rs.400/- to the defendants towards registration charges of the agreement to be paid to the State Seed Certification Agency (SSCA). As per the terms of the agreement, the defendant company shall procure processed, cleaned and dry seed at the rate of Rs.1,500/- per quintal subject to the satisfaction of the company or SSCA. The first defendant company shall make the final payment to the plaintiff within 120 days from the date of receipt of the seed at the processing plant after receipt of satisfactory report. As per the terms of the agreement, the plaintiff raised crop in an extent of Acs.2.00 in Rythunagar Village, by spending an amount of Rs.12,000/- for preparation, irrigation, sowing, inter-culture, fertilizer, manures, plant production measures, rouging, harvesting, emasculation, pollination, picking and all other farm operations connected with raising the seed crop.
3. The first defendant company agreed to purchase the produce of the seeds from the plaintiff at the rate of Rs.1,500/- per quintal. The plaintiff supplied 20 quintals 64 Kgs of seed to the first defendant company, who in turn acknowledged the same by issuing unprocessed seed receipt bearing No.27859, dated 17.02.1993. As per the terms of the agreement, the defendant company has to test genetic purity within the stipulated period and they bound to make the payment to the plaintiff within 120 days from the date of receipt of seed i.e., 17.5.1993. The defendants addressed a letter dated 15.10.1993 to the plaintiff stating that jowar 1005, Lot No.50068 has failed in their field test; hence requested the plaintiff to take back the seeds. The defendants have sent an amount of Rs.4,128/- for 2064 Kgs of seed at the rate of Rs.2/- per Kg., which is illegal, arbitrary and capricious. The plaintiff filed CDC No.519/93 on the file of District Consumer Forum, Kurnool and the same was allowed. The defendants preferred FA No.417/96 before the A.P. State Consumer Dispute Redressal Commission, Hyderabad challenging the orders passed by the District Consumer Forum and the same was allowed with an observation that the case of the plaintiff does not come under the purview of Consumer Forum, and directed the plaintiff to institute a suit before the civil court and the plaintiff can avail the benefit under Section 14 of the Limitation Act seeking exclusion of the time spent in prosecuting the proceedings under the Consumers Protection Act. The defendants 2 and 3 are employees of the first defendant company. The cause of action for the suit arose at Nandyal on 10.12.1992 when the plaintiff and first defendant company have entered into agreement and therefore, the trial court has jurisdiction to entertain the suit.
4. The third defendant filed written statement inter alia contending that plaintiff entered into the agreement with the defendant company agreeing to the jurisdiction of Jalna court in Maharashtra State if any disputes arise between them. The registered office of the defendant company is at “19, Rajamahal, 84 , Veer Nariman Road, Bombay”. The present suit is filed challenging the genetic purity and germination test conducted at Jalna; therefore, the cause of action for the suit arose at Jalna. It is further contended that as per condition No.5 of the agreement, the first defendant company shall procure/purchase cleaned and dry seed at the level of 08% moisture at the rate of Rs.1,500/- per quintal subject to satisfactory genetic purity and germination test results conducted by the Quality Control Department of the defendant company and SSCA. The plaintiff delivered jowar hybrid seed bearing lot No.R9-260-11-AP4-500068 A. The defendant company conducted field test and the same failed in the test. The defendants sent a copy of the field test result, dated 28.06.1993 to the plaintiff, which showed genetic purity of 93.85% whereas as per the agreement minimum genetic purity should be 98%. Therefore, the plaintiff is not entitled for any amount. As per the terms and conditions of the agreement, no time fixed for conducting genetic purity test and it was agreed that payment shall be paid on receipt of satisfactory report for the genetic purity and germination test from the Quality Control Department of the first defendant company. The suit claim is barred by limitation. Hence the suit is liable to be dismissed.
5. The defendants 1 and 2 filed memo before the trial court adopting the written statement filed by the third defendant.
6. Basing on the rival contentions, the trial court framed the following issues:
(1) Whether the plaintiff is entitled to recovery of the suit amount?
(2) To what relief?
Additional Issues:
(1) Whether this court is barred to entertain the suit?
(2) Whether the suit claim is barred by law of limitation?
7. In the trial court, on behalf of plaintiff, P.Ws.1 and 2 were examined and Exs.A.1 to A.5 were marked. On behalf of the defendants, no oral or documentary evidence was adduced.
8. After analysing the oral, documentary evidence and other material available on record, the trial Court decreed the suit. Feeling aggrieved by the decree and judgment of the trial court, the defendants have filed A.S.No.4 of 2002 and the same was allowed in part. Aggrieved by the decree and judgment of the first appellate court, the defendants preferred this second appeal.
9. The substantial questions of law raised in this appeal are as follows.
1. Whether the courts below have ignored Section 7 of the Seeds Act, 1966?
2. Whether the suit is hit by Section 23 of the Indian Contract Act?
3. Whether the civil court at Nandyal had territorial jurisdiction to entertain the suit?
4. Whether the suit is maintainable in view of arbitration clause in the agreement?
5. Whether findings of the courts below are perverse?
10. Heard Sri Manu, learned counsel for the appellants/ defendants and Sri T.Rajendra Prasad, learned counsel for the respondent/plaintiff.
11. To substantiate his case, the plaintiff examined himself as P.W.1 and got marked Exs.A.1 to A.5. P.W.2 was examined in support of the case of the plaintiff. On behalf of the defendants, no oral or documentary evidence was adduced.
Question Nos.1 and 2:
12. The predominant contention of the learned counsel for the appellants/defendants is that the present suit is not maintainable in view of Section 7 of the Seeds Act. In order to appreciate the contention of the learned counsel for the defendants, it is not out of place to extract hereunder Sections 6 and 7 of the Seeds Act, which read as follows.
6. Power to specify minimum limits of germination and purity, etc.
The Central Government may, after consultation with the Committee and by notification in the Official Gazette, specify-
a. the minimum limits of germination and purity with respect to any seed of any notified kind or variety;
b. the mark or label to indicate that such seed conforms to the minimum limits of germination and purity specified under clause (a) and the particulars which such mark or label may contain.
7. Regulation of sale of seeds of notified kinds or varieties No person shall, himself or by any other person on his behalf, carry on the business of selling, keeping for sale, offering to sell, bartering or otherwise supplying any seed of any notified kind or variety, unless-
a. such seed is identifiable as to its kind or variety;
b. such seed conforms to the minimum limits of germination and purity specified under clause (a) of section 6;
c. the container of such seed bears in the prescribed manner, the mark or label containing the correct particulars thereof, specified under clause (b) of section 6; and
d. he complies with such other requirements as may be prescribed.
13. A combined reading of Sections 6 and 7 of the Seeds Act clearly manifest that sale of notified varieties of seed shall be subject to the minimum limits of germination and purity test. On the other hand, if such variety of seed is having standard limits of germination and genetic purity, there cannot be any objection for sale of such variety of seed.
14. As per the terms of the agreement, the plaintiff has to grow and supply hybrid seeds to the defendant company. The only contention of the defendants is that the jowar seed supplied by the plaintiff has not withstood specific standards as contemplated under Section 6 of the Act. It is not the case of the defendants that the plaintiff is not entitled to grow variety of the seeds in dispute in view of Section 7 of the Act. The defendants did not file Gazette Notification issued by the Central Government, as provided under Section 6 of the Seeds Act, prescribing the limits of genetic purity and germination of the seed in question before the trial court. Without filing such Gazette Notification and without taking such a plea in the written statement supported by corresponding evidence, the defendants are not legally entitled to take this type of stand, for the first time, at the stage of second appeal. Viewed from factual or legal aspects, I am unable to accede to the contention of the learned counsel for the appellants that the courts below have ignored Section 7 of the Seeds Act and thereby the suit is not maintainable.
15. Section 23 of the Contract Act enumerates what objects and consideration are unlawful. If the object or consideration of an agreement is illegal or opposed to public policy, the same is not enforceable in a court of law. In order to establish that the terms of the agreement are against the provisions of any law or opposed to any public policy, the defendants ought to have produced the same before the court. For the reasons best known, the defendants did not choose to produce the agreement. In the absence of the agreement, it is not possible for this court to arrive at a conclusion that any one of the terms or conditions specified in it is unlawful or opposed to public policy; thereby to declare that the plaintiff is not entitled to institute the suit against the defendants. Having regard to the facts and circumstances of the case, I am of the considered view that Section 23 of the Contract Act is not applicable to the facts of the case on hand.
Question Nos.3 and 4:
16. As per the pleadings in the plaint and written statement, the plaintiff and defendants have entered into the agreement on 10.12.1992. The defendants have taken a specific plea in the written statement that civil court at Nandyal has no jurisdiction to entertain the suit, in view of one of the conditions of the agreement. It is not in dispute that the plaintiff did not file the agreement or a copy thereof before the court. When the defendants allege that the suit is not maintainable in view of one of the conditions of the agreement, the duty is cast upon them to establish the same by filing the agreement. For one reason or the other, the defendants did not file the agreement or come into witness box to explain the reasons for non-filing of the agreement. In such circumstances, it is not fair on the part of the court to express any opinion, basing on the agreement, touching upon the aspect of jurisdiction. The material placed before the court clinchingly established that the plaintiff has grown seeds at Nandyal and supplied the same to the defendants at Rythunagar, which is within the territorial jurisdiction of civil courts at Nandyal. Admittedly, the defendants are having their branch office at “C-36, Balaji Complex, Nandyal” and they are purchasing the seeds from ryots in and around Nandyal. The plaintiff can file the suit where the cause of action arose or where the defendants are carrying on their business. Viewed from factual or legal aspects, I have no hesitation to hold that the civil court at Nandyal had territorial jurisdiction to entertain the suit. I am fully agreeing with the findings recorded by the courts below on this aspect.
17. There is no pleading in the written statement that in view of arbitration clause in the agreement, the present suit is not maintainable. As observed earlier, the defendants have not produced the agreement before the court. In the absence of so- called agreement, it is not possible for this court to give any finding on arbitration clause in the agreement excluding the jurisdiction of civil courts at Nandyal.
Question No.5:
18. The oral testimony of P.Ws.1 and 2 coupled with Exs.A.1 to A.3 reveals that the plaintiff supplied the jowar hybrid seeds to the defendant company. A perusal of Ex.A.1 reveals that the defendants have acknowledged the receipt of the seeds. As per the recitals of Ex.A.2, the seed supplied by the plaintiff has not satisfied the genetic purity and germination test. The lis involved in this suit is whether the seed supplied by the plaintiff withstood the field test or not. The burden of proof lies on the defendants to establish that the seed supplied by the plaintiff did not satisfy the genetic purity and germination test. It is not mentioned in Ex.A.2 in which lab the seed was tested and in which aspect there is deficiency of standard in the seed supplied by the plaintiff. It is not the case of the defendants that after conducting the test by the Quality Control Department of the defendant company, they sent the seed to SSCA for retesting. For one reason or the other, the defendants did not choose to come into witness box. I n Indian [1] Bank, Chittoor v V.R. Venkataraman it was held that “when a party to the proceedings does not enter into witness box to prove the case set up by him or her, a presumption has to be drawn that the version raised in pleading is not true”. Basing on the material available on record, the irresistible conclusion that can be drawn is that the defendants have wilfully refrained from entering into witness box and intentionally not produced the genetic purity and germination test report before the court. Even at the appellate stage also, the defendants have not taken any steps to file the report as an additional evidence to substantiate their case. This aspect also casts a cloud on the stand taken by the defendants. Viewed from any angle, it is a fit case to draw adverse inference against the defendants. I am fully agreeing with the findings recorded by the courts below on this aspect.
19. So far as limitation aspect is concerned, a perusal of Exs.A.4 and A.5 clearly reveals that under a bonafide impression the plaintiff has approached the District Consumer Forum for redressal. The time spent by the plaintiff in prosecuting the consumer case before the District Consumer Forum and appeal before the State Commission with due diligence shall be excluded under Section 14 of the Limitation Act. The courts below rightly considered the scope of Section 14 of the Limitation Act and arrived at a conclusion that the suit is not barred by limitation. I am fully agreeing with the findings recorded by the courts below on this aspect also. The courts below have considered the oral and documentary evidence in right perspective and arrived at a conclusion that the plaintiff is entitled for recovery of the suit amount. There is legal obligation on the part of the defendants to calculate the rate of jowar hybrid seeds supplied by the plaintiff to the defendants at the rate of Rs.1,500/- per quintal. For the reasons best known, the defendants have not paid the money to the plaintiff. Therefore, the plaintiff is entitled to recover the suit amount from the defendants.
20. In the light of the foregoing discussion, I have no hesitation to hold that the trial court has appreciated the oral and documentary evidence in right perspective and decreed the suit. The first appellate court has only rectified the mistake committed by the trial court in calculating the amount of the seeds and modified the decree passed by the trial court. The courts below assigned cogent and valid reasons to its findings. Viewed from any angle, I am unable to accede to the contention of the learned counsel for the appellants that the findings recorded by the courts below are perverse. There is no question of law much less substantial question of law in this appeal.
21. In the result, this second appeal fails and is accordingly dismissed confirming the decree and judgment dated 06.01.2005 passed in A.S.No.4 of 2002 on the file of the Additional Senior Civil Judge, Nandyal. No order as to costs.
22. As a sequel, miscellaneous applications, if any pending, shall stand closed.
T. SUNIL CHOWDARY, J.
Date: 17.04.2014. YS
[1] 2004 (3) ALT 665 (DB)