Manmohan Das vs Madhunagar Powerloom Weavers Co-operative Society and Others

G.K. Misra, C.J.—Plaintiff''s case may be stated in short. Plaintiff and Defendants entered into an agreement (Ext. A) on 31.3.1965 whereby it was settled that all the products of the Defendants would be'' marketed through the Petitioner on sale agency basis. It was provided therein that the entire output of Defendant No. 1 would be sold to the Petitioner and to no other person. Plaintiff undertook not to enter into any other sale with any other persons. Defendant No. 1 had an option to sell 10 per cent of the products within the State of Orissa at retail price. Defendant No. 1 was to manufacture marketable goods according to the manufacturing programme submitted by the Petitioner and to deliver the same to the Petitioner at price fixed from time to time. The agreement was to remain in force for a period of 3 years and would continue thereafter unless it was terminated by either party by giving one month''s notice in writing to the other. Defendant No. 1 violated the terms of the agreement and did not manufacture goods according to the specification of the Petitioner and sold its products in and outside Orissa surreptitiously charged prices at excessive rates without fixation of price according to the terms of the agreement and refrained from submitting bills from October, 1965 till April, 1966. A sum of Rs. 80,000/- was outstanding against the Defendants after adjustment of the price of the goods supplied. Approximately Rs. 25,000/- was due from the Defendants on account of the less supply of non-standard goods. Goods worth Rs. 1,40,000/- was sent by Defendant No. 1 to Calcutta, but it was disposed of in the open market. Defendant No. 1 has no sufficient assets to meet the claim of the Petitioner on grounds of loss sustained by it.

Plaintiff asked for the following prayers:

(a) For a decree for permanent injunction restraining the Defendants from making any sale to anybody else other than the Petitioner as agreed to between the parties in the agreement.

(b) For issue of mandatory injunction directing the Defendants to sell their output to the Petitioner in terms of the agreement.

(c) For submitting correct and revised bills for the period from October, 1965 to April, 1966 at the lowest rates in which themselves have sold in the market excluding the Petitioner''s commission, calendering and transportation charges which he has paid on behalf of the society.

(d) For submitting correct return of their production every fortnight.

Defendant No. 1 is the Madhunagar. Powerloom Weavers Co-operative Society (hereinafter to be referred to as the Society). The case of Defendant No. 1 is as follows : Under the'' agreement Defendant No. 1 had full liberty to sell 10 per cent of its products to any outsider. Plaintiff is not an agent of Defendant No. 1. He is only a purchaser of goods produced by Defendant No. 1 at a price to be fixed under Clause 9 of the agreement. Defendant No. 1 is not responsible for any loss which the Petitioner may suffer on account of 1 dull market. It is not under an obligation to manufacture goods according to the Petitioner''s specification. Under the terms of the agreement Petitioner was only to make suggestions about the designs and sizes of the products to be manufactured by the Society. Defendant No. 1 communicated to the Petitioner the method of calculation of price and Petitioner agreed to it on 6-4-1965. As per this method 21 paise per metre is to be added to the cost of manufacture while fixing the price per metre. After having agreed to the price Petitioner accepted several consignments till 5-5-1966. The Society never violated the terms of the agreement and did not do anything to put the Petitioner to loss. Plaintiff not having objected to the size and design of the goods supplied to him from time to time and having accepted them cannot now turn down and say that the products are not according to his specification. The Society submitted bills for goods supplied in May to September, 1965 and Petitioner did not object to the specification and price till 7-4-1966. The Society did not make any wholesale sale in or outside Orissa and has not submitted bills charging excessive rates. Plaintiff did not pay any advance and did not furnish cash security or bank guarantee as required under the agreement. The Society is to receive more than Rs. 52,000/- from the Petitioner towards the price of the goods delivered to him. The short delay in the submission of bills for the period from October to December, 1965 is due to the laches of the Petitioner in intentionally delaying confirmation of the price suggested by the Society. Plaintiff never complained about the bills till the filing of the writ application referred to in the plaint. The Society has nothing to do with the prevailing market price of the goods supplied to the Petitioner. Plaintiff is not entitled to receive Rs. 25,000/- on account of the Society supplying non-standing goods. He failed to take delivery of goods fortnightly after April, 1966 and did not take any delivery after 5-5-1966. By his letter dated 27-5-1966 Petitioner expressed his intention not to abide by the terms of the agree men t and suggested new terms. In these circumstances a huge stock of manufactured goods is lying unsold which has resulted in blocking all Society''s capital On account of the aforesaid attitude of the Petitioner the factory of the Society runs the risk of being closed down. The Society was forced to take a decision to sell the accumulated stock. The Society is all along agreeable to sell its goods at an agreed price to the Petitioner on cash payment after clearing up all arrears. Plaintiff himself being guilty of violation of the terms of the agreement is not entitled to the relief claimed in the Petitioner. He is connected with a parallel organisation, that is, Orient Weaving Mills engaged in manufacturing goods similar to those manufactured by the Society and is violating the terms of the agreement The suit has been brought in order to stifle the business of the Society and to remove it from the field of competition.

The learned Subordinate Judge decreed the Petitioner''s suit in toto. Defendants filed First Appeal No. 222 of 1966 against the judgment and decree of the trial Court. In appeal B.K. Ray J. held that the suit contract had been validly determined by notice (Ext. C/20); that the breach can be adequately compensated in money; that the damage sustained by the Petitioner due to the alleged breach of contract can be ascertained; that the contract is of such a nature that the same cannot be specifically enfored; that Defendant No. 1 cannot be forced to perform its part of the contract by orders of injunction, both prohibitory and mandatory, as a relief for specific performance of the contract is not available to the Petitioner under the law; and that the specific performance of the suit contract cannot be granted after the same has been determined by Defendant No. 1. He, however, rejected the stand of the Defendants that the suit was liable to be dismissed on account of non-service of notice u/s 127 of the Orissa Co-operative Societies Act, 1962 (hereinafter to be referred to as the Act). He dismissed the suit with costs throughout.

Against the judgment of the learned Single Judge this A.H.O. was been filed.

During the hearing of the appear Mr. Mohanty for the Petitioner-Appellant did not assail the findings of the learned Single Judge on all points. On the other hand an application for amendment of the Petitioners filed. At the end paragraph 20 of the plaint, paragraph 20(a) which runs thus is prayed to be added:

20(a) That since the Defendant illegally stopped delivery of the goods to the Petitioner from 9-6-1966 and conducted sales in and outside the State Orissa in deliverate violation of the contract, they are liable for payment of damages at the rate of 20% of their total sale value which, in the minimum he would have earned, had the Defendants not committed the breach of contract, with effect from 9-6-1966 till the date hereof and also thereafter till the continuance of the agreement together with interest at the Bank leading rates, from the date of the breach and/or when the sum became payable till realization.

At the end of prayer (f), prayer (g) was to be added:

(g) Let a decree for damages at the rate of 20% on the total sale value of the Defendants be granted from 9-6-1966 till the date hereof and also thereafter till the continuance of the agreement together with interest at the Bank leading rates, from the date of the breach and/or when the sum became payable till realisation and the court-fee will be paid on ascertainment of the actual damage by the Court at the time of execution.

Mr. Murty besides combating the application for amendment on merits contends that the suit is liable to be dismissed for non-compliance with the provisions of Section 127 of the Act, and that the amendment cannot be allowed without a notice under same section.

The following questions therefore arise for consideration in this appeal:

(i) Is the suit liable to be dismissed for non-compliance with Section 127 of the Act?

(ii) Is the application for amendment to be dismissed for non-compliance with Section 127 of the Act and also on merits?

Relevant facts may be stated, It is not mentioned in the plaint that notice was served on the Registrar u/s 127 of the Act. There was no averment in the written statement asserting non-service of notice. The point was not referred to much less discussed, in the trial Court judgment. No ground on this point'' was taken in the first appeal. It appears that during the hearing of the first appeal a petition with affidavit was filed by Defendant No. 1 that no notice had been served. Plaintiff filed counter affidavit without asserting that notice had been served. He merely averred that notice is not mandatory and if so, it had been waived.

On these facts Mr. Murty contends that the suit is to be dismissed. Mr. Mohanty on the other hand contends that there is waiver of service of notice and Defendants would not be permitted to raise this question at this stage.

We now proceed to examine the law on the point. Section 127 of the Act runs thus:

Notice necessary in suits. - No suit shall be instituted/against a society or any of its officers in respect of any act touching the constitutions, management or the business of the society until the expiration of two months after notice in writing has been delivered to the Registrar or left at his office, stating the cause of action, the name, description and place of residence of the Petitioner and the relief which he claims, and the plaint shall contain a statement that such notice has been so delivered or left.

''Registrar'' as defined in Section 2(i) of the Act means a person appointed to perform the functions of the Registrar of Cooperative Societies under the Act, and includes any person appointed to assist the Registrar when exercising all or any of the powers of the Registrar.

Section 127 of the Act is in parimateria with Section 80, Code of Civil Procedure. Section 80, Code of Civil Procedure, so far as relevant, may be extracted:

No suit shall be instituted against the Government including of the State of Jammu and Kashmir or againsts a public officer in respect of any act purporting to be done by such public officer in his official capacity until the expiration of two months next after notice in writing has been delivered to, or left at the office of:

xx xx xx

and, in the case of a public officer, delivered to him or left at his office, stating the cause of action, the name, description and place of residence of the Petitioner and the relief which he claims; and the plaint shall contain a statement that such notice has been so delivered left.

Section 80 CPC has recieved judicial notice by the Privy council and the Supreme Court in several cases. The principles laid down in cases u/s 80, CPC will have full application to Section 127 of the Act.

We would now proceed to analyze the cases u/s 80, Code of Civil Procedure. In AIR 1927 176 (Privy Council) , their Lordships observed thus at page 184:

The Act, albeit a Procedure Code, must be read in accordance with the natural meaning of its words. Section 80 is express, explicit and mandatory, and it admits of no implications or exceptions. A suit in which inter alia an injunction is prayed is still ''a suit'' within the words of the section and to read any qualification into it is an encroachment on the function of legislation.

In Sawai Singhai v. Union of India AIR 1966 S.C. 1968, a Constitution Bench, besides approving this dictum, said:

But we do not see how the purpose or the reason for requiring the notice can alter the effect of the plain words used in Section 80.

It is thus clear that the section is mandatory and a suit without issue of such notice is liable to be dismissed in limine.

It is, however, contended by Mr. Mohanty that the notice u/s 80, CPC can be waived.

That there can be waiver of notice under the section is no longer res integra, but waiver is a mixed question of law and fact. Section 80, CPC enjoins that the plaint itself would mention that notice u/s 80 has been served. If this fact is not mentioned waiver must be impleaded in the plaint itself.

Reliance is placed on Order 6, Rule 6, CPC which enactes thus:

Any condition precedent the performance or occurrence of which is intended to be contested, shall be distinctly specified in his pleading by the Petitioner or Defendant, as the case may be; and, subject thereto, an averment of the performance or occurrence of all conditions precedent necessary for the case of the Petitioner or Defendant shall be implied in his pleading.

It is contended that service of notice u/s 80 is a condition precedent to the institution of the suit. As no objection has been taken by the Defendants in the written statement about non-service of notice, an averment that such a notice had been served shall be implied from the plaint itself. This argument is fallacious. Section 80 itself clearly prescribes that the factum of service of notice must be specifically mentioned in the plaint. When there is a positive legal prescription, there can be no implied inference of the service of notice from the fact of absence of pleading in the written statement.

On the contrary, Order 7, Rule 11(d), CPC enjoins that the plaint -shall be rejected where the suit appears from the statement in the plaint to be barred by any law. Section 80 prescribes that the plaint itself would mention that the notice was served. Service of such notice is mandatory in law and the suit is to fall if no notice has been served. When from the perusal of the plaint it appeared that there was contravention of Section 80, by non-mention in the plaint that a notice had been served the plaint should have been rejected in limine without summons being issued to the Defendants to appear.

The obligation has been cast on the Petitioner to serve the notice u/s 80 and mention that fact in the plaint. Defendants are under no duty to the Petitioner to point out his error in the plaint. A Defendant may be negligent in his own interest in not raising the objection at an earlier state but negligence would not amount to waiver or estoppel unless there is a duty of care. On the aforesaid analysis even if a Defendant did not raise the objection in the written statement or in the first appellate Court, he can raise the objection at a later stage. Absence of notice touches the root of the matter and affects the jurisdiction of the Court unless there is waiver.

There may be a case of waiver where notice u/s 80 was in fact not served on the Defendant, but it was mentioned in the plaint that such a notice had been served and the Defendant did not deny the averment of the service of notice in the written statement.

A plea of waiver is a mixed a question of law and fact and such a plea is to be taken in the plaint itself.

In Sawakat Ali v. Superintendent of Police, Sibsagar AIR 1972 Gau. 29, a Division Bench held that plea of waiver must be pleaded in the plaint. It is only when waiver is pleaded that the plaint cannot be rejected under Order 7, Rule 11(d), Code of Civil Procedure. We accept this decision as laying down the correct law.

We would now proceed to examine Vellavan v. Madras Province AIR 1947 P.C. 197 and Dhian Singh Sobha Singh and Another Vs. The Union of India (UOI), , relied upon by Mr. Mohanty who also cited several decisions of different High Courts which we do not consider profitable to notice individually in view of the principles we have already laid down.

Facts in Vellavan v. Madras Province may be noticed. One of the two Petitioners issued a notice u/s 80, Code of Civil Procedure. The suit was, however, instituted by both. Their Lordships held that the other person cannot sue as a Petitioner as notice had not been taken in his name.

The notice being defective Petitioners urged that Defendants had waived their right. A case of waiver was made out as narrated hereunder.

Both the Petitioners had filed an earlier suit in the Court of a Munsif. Defendants took the objection in the written statement that the Munsif''s Court had no pecuniary jurisdiction to entertain the suit. They, however, took no plea of absence of notice u/s 80, Code of Civil Procedure. The Munsif held that he had no pecuniary jurisdiction. The plaint was taken return of and filed before a Subordinate Judge having jurisdiction. In the written statement before the Subordinate Judge Defendants specifically took the plea of want of notice u/s 80, Civil Procedure. Code. Plaintiffs urged that there was waiver of notice and estoppel as the plea of absence of notice had not been taken on the earlier occasion before the Munsif. Their Lordships negatived this contention by the following observation:

The Petitioners were in error throughout in instituting a suit which Section 80 prohibited. The Respondents were under no duty to them to point out their error. They might have been negligent in their own interest in not raising the plea at an earlier stage. But negligence cannot give rise to an estoppel unless there is duty of care.

Their Lordships are therefore of opinion that the Appellants have not established any facts upon which the Respondents must be deemed to have waived proper notice or are estopped from asserting want of proper notice. If in the result the Appellants find themselves precluded by the Limitation Act from prosecuting any action which might otherwise have been open to them, that is a fortuitous result for which the Respondents cannot be held responsible.

This case establishes two essential principles. They are that where the obligation is on the Petitioner, there is no waiver or estoppel against the Defendants from the mere fact of their negligence in not raising the plea at an earlier stage unless there is a duty of care on them and secondly if on account of Petitioner''s fault he does not get a further time to give notice u/s 80, CPC because the suit would be barred by limitation, Petitioner IS to thank himself.

Facts in Dhian Singh Sobha Singh and Another Vs. The Union of India (UOI), , which are material to the point in issue, may only be noticed. The Appellants gave a notice u/s 80 and claimed therein return of two trucks in good running order with spare wheels, accessories and tools and in good condition or in the alternative Rs. 3,500/- being the price of the said two trucks. The High Court dismissed the higher claim of the Appellants merely on the ground that the Appellants had only claimed Rs. 3500/- in the notice and that they were therefore not entitled to recover anything more than the sum of Rs. 3500/-. Their Lordships of the Supreme Court disagreed with the view of the High Court with the following observations:

If the terms of the notice in question be scrutinised in this manner it is abundantly clear that the relief claimed by the Appellant was the redelivery of the said two trucks or in the alternative payment of Rs. 3500/- being the value thereof. The value which was placed by the Appellants on the trucks was the then value according to them - a value as on August 1, 1942 the date on which the delivery of the trucks ought to have been given by the Respondent to the Appellants. The Appellants could only have demanded that sum as on the date of that notice. They could not sensibly enough have demanded any other sum. If the Respondent had complied with the terms of that notice then add there and redelivered the trucks to the Appellants, nothing further needed to be done. If on the other hand instead of redelivering the trucks it paid to the Appellants the value thereof then also it need not have paid anything more than Rs. 3500/- to the Appellants on that alternative. If, however, the Respondent failed and neglected to comply with the requisitions contained In that notice the Appellants would certainly be entitled to recover from the Respondent the value of the said trucks in the alternative on the failure of the Respondent to redeliver the same to the Appellants in accordance with the terms of the decree ultimately passed by the Court in their favour. That ,date could certainly not be foreseen by the Appellants and it is contrary to all reason and common sense to expect the Appellants to have made a claim for the alternative value of the said two trucks as of that date. The Respondent was and ought to have been well aware of the situation as it would develop as a result of its non-compliance with the terms of that notice and if on January 8, 1943 the Appellants in the suit which they filed for wrongful detention of the said trucks claimed redelivery of the said trucks or in the alternative Rs. 3500/- as their value and reserved their right to claim the further appreciation in the value of the trucks by reason of the rise in price thereof upto the date of the decree by paying additional Court-fee in that behalf, it could not be laid at their door that they had not made the specific demand in their notice to the Respondent u/s 80 of the CPC and that therefore their claim to recover anything beyond Rs. 3500/- was barred under that section.

It is in this connection their Lordships observed,

It is relevant to note that neither was this point taken by the Respondent in the written statement which it filed in answer to the Appellants claim nor was any issue framed in that behalf by the trial Court and this may justify the inference that the objection u/s 80 had been waived. The point appears to have been taken for the first time before the High Court which negatived the claim of the Appellants for the appreciated value of the said trucks.

This decision is not an authority for the proposition that if the plea of want of notice is not taken in the written statement or at the first appellate stage, then there would be waiver of that plea. In this case notice was served. Certain claims were made. The question was whether the Petitioner was entitled to a claim higher than Rs. 3500/-. After construing the notice their Lordships held that the higher claim was implicit in the terms of the notice. The pain t related to the question of fact and as the same was not traversed in the written statement nor at the appellate stage, their Lordships came to the conclusion that waiver may be inferred.

The case is an authority for the limited question as to how a notice u/s 80, CPC is to be construed. In clearest terms their Lordships observed that though the terms of Section 80 are to be strictly complied with, it does not mean that the terms of the notice would be scrutinised in a pedantic manner or in a manner completely diverse from common sense.

In Basudeb v. Padmanave ILR 1959 Cutt. 258, G.C. Das, J. in A.C. Parida and Ors. v. Banamali Muduli 4 O.J.D. 13. Barman J. and in State v. Bamadeb AIR 1971 Ori 227, R.N. Misra, J. took the view that in the absence of averment in the written statement that there was non-service of notice, the doctrine of waiver would apply. With great respect to their Lordships we are unable to subscribe to their view. Those decisions'' were wrongly decided and are hereby overruled.

The identical principles apply to a notice u/s 127 of the Act. On the self-same reasoning we hold that the suit would be dismissed for non-service of notice u/s 127 of the Act in addition to the grounds given by our learned brother B.K. Ray, J. which were not assailed before us. The learned single Judge was in error in holding that there was waiver of notice u/s 127 of the Act.

In this view of the matter the application for amendment is to be rejected.

Even assuming that there was waiver of notice u/s 127 of the Act, so far as the suit is concerned, the question is whether notice is essential for acceptance of the amendment.

The answer would depend upon the nature of the amendment. If the relief sought by way of amendment could be granted on the averments already made in the plaint, separate notice u/s 127 of the Act is not necessary on the principle that even without amendment the relief could be granted. Granting of such a relief lies within the general powers of the Court provided the same flows out of the facts already pleaded in the plaint.

Where, however, the amendment introduces a new cause of action and asks for relief which could not have been granted in the original plaint, separate notice for the amendment is necessary.

In the plaint in this case relief sought was for specific performance and injunction. By the amendment damages are claimed on account of breach of contract. It may be that a large part of the facts referred to in the plaint are retained, but the cause of action fat a suit for damages is distinct and different from a cause of action for specific performance and injunction. The Registrar is to have notice of the claim for damages and the notice is mandatory. We accept with respect the principles laid down in Province of Madras v. R.B. Poddar Firm AIR 1949 Mad. 214, and New Churulia Coal Co. Ltd. Vs. Union of India (UOI), .

Reliance is placed by Lady Dinbai Dinshaw Petit and Others Vs. The Dominion of India and Another, and Toran Singh v. State of M.B. AIR 1956 M.B. 98. In the Bombay case the plaint and the amendment were examined side by side. Their Lordships were of opinion that the amendment did not introduce a new cause of action. They said thus:

The cause of action on which the Petitioners rely in their plaint in order to get the relief which they require is the invalidity of the order and that invalidity according to the plaintlffs is due to the fact that the order was made for a colateral purpose and was also made mala fide. In the notice it is explicitly stated as one reason why according to the Petitioners the order was not made for the purposes for which the order stated it was made. But the notice goes on to state generally that the order was not made for the purposes for which it was purported to have been made and it also generally challenges the order on the ground of want of bona fides. The amendment gives another ground in support of the contention of the Petitioners as to why the order was not made for the purposes for which it was purported to have been made and it also furnishes another ground why the order was not made bona fide. In my opinion, the amendment does not introduce into the plaint a new or fresh cause of action. The cause of action is the same as alleged in the notice. All that the amendment does it that it gives further grounds in support of the contentions and allegations which go to constitute the Petitioners'' cause of action.

On the facts of this case it was correctly decided that there was no change in the cause of action, but a new ground was given in support of the cause of action referred to in the plaint. No notice was rightly held to be necessary to accept the application for amendment.

In Torn Singh v. State of M.B. AIR 1956 M.B. 98, facts were as follows : The original suit was for a declaration that an order made by the Government removing the Petitioner from service was illegal, void and inoperative and that he still continued in service. Notice u/s 80, CPC had been served. Plaintiff made an application for amendment of the plaint seeking the relief of payment to him on account of arrears of salary and damages for mental worry. The amendment was sought to be made after notice of. the additional claim had been given to the government u/s 80, Code of Civil Procedure. Their Lordships held that a new cause of action was not introduced by the amendment. With respect we are unable to agree with this reasoning. The amendment clearly introduced a new cause of action by asking for arrears of pay and damages. The case however, was correctly decided inasmuch as even for the amended claim a notice u/s (sic), CPC had been served.

We would sum up our conclusions thus:

(1) The conclusion of the learned Single Judge that the suit for specific performance and injunction is not maintainable is not assailed before us.

(2) The suit is to be dismissed for want of notice u/s 127 of the Act and the view of the learned single Judge that there was waiver of notice is erroneous.

(3) The amendment is rejected both on merits and also due to want of notice u/s 127 of toe Act.

In the result the appeal is dismissed with costs.

N.K. Das, J.

I agree.