Oversears Scrap Trading Corporation vs Sen Raleigh Limited

B.C. Ray, J.—This is an appeal at the instance of the Plaintiff against the judgment and order No. 16 dated July 3, 1978 in Title Suit No. 821 of 1978 dismissing the application for temporary injunction filed in the said suit.

The Plaintiff, M/s. Overseas Scrap Trading Corporal ion, a registered partnership firm, has brought an action being Title Suit No. 821 of 1978 in the Fourth Bench of the City Civil Court, Calcutta for a declaration that the Plaintiff is the owner of M.S. Scrap, Turning, Boring and Non-ferrous and other rejected materials being item Nos. A to Q for the period from February 1, 1973 to January 31, 1979 lying in Konyapur factory of the Defendant and the Defendant has no right to resell and deliver the same to any other person and for a decree for permanent injunction restraining the Defendants from selling or delivering M.S. Scrap, Turning and Boring, Non-ferrous and other rejected materials being item Nos. A to Q to any person whatsoever excepting the Plaintiff. There is also a prayer for a decree for mandatory injunction directing the Defendants to issue sale order so as to enable the Plaintiff to lift the goods in terms of the tender of the Defendants and for other reliefs. It has been stated that the Defendant No. 1, M/s. Sen Raliegh Ltd. which is a public limited company invited tenders for sale of M.S. Scrap, Turning and Boring etc. for a period from February 1, 1978 to January 31, 1979. There were certain terms and conditions subject to which the tenders were invited.

The Plaintiff submitted a tender on February 7, 1978 in the office of the Defendant No. 1 accepting all the terms and conditions of the tender and deposited a sum of Rs. 20,000 by bank draft bearing No. P.I.B. 475060 under the Punjab National Bank Limited. Several other companies such as Bhagwati Steel, Hind Overseas. Bachanlal Mohan and Company S.R. Gupta and R.A. Gupta and Company, etc also submitted tenders. On January 11, 1978, the tenders were opened and it was found that the offer given by the Plaintiff was the highest. The Plaintiff submitted the income tax clearance certificate and sales tax clearance certificate in the office of the Defendant No. 1 on January 31, 1978. There was some exchange of letters between the Plaintiff and the Defendant No. 1 over the prices offered by the Plaintiff in its tender for sale of scrap iron. On May 1, 1978, the Plaintiff was intimated by a letter dated April 27. 1978 by the Defendant No. 2, officer of the Defendant No. 1, that its offer was not accepted and the bank draft was returned along with the same. It has been pleaded that the Plaintiff being the highest tenderer and by subsequent agreement it having purchased the item Nos. A to Q of the tender for the period from February 1, 1978 to January 31, 1979 the Defendants have no right to resell or give delivery of the said goods to any person whatsoever except the Plaintiff. The Respondent has come to know that the Defendant No. 1 has arbitrarily and mala fide sold and delivered the goods to M/s. Bachanlal Mohan and Company, Respondent opposite party No. 4, a favourite party of the Defendant No. 1 at a low price. It is on these allegations the above suit was filed.

An application under Order 39, Rules 1 and 2 read with Section 151 of the CPC has been filed by the Plaintiff praying for an order of temporary injunction restraining the Defendants from selling and/or delivering M.S. Scrap, Turning and Boring, Non-ferrous and other rejected materials being item Nos. A to Q mentioned in annex. A to the petition to any person whatsoever excepting the Plaintiff till the disposal of the petition.

On May 3, 1978, an order of ad interim injunction was passed ex parte as prayed for by the Plaintiff. A petition of objection was filed on behalf of the Defendants 1 to 3 stating inter alia that the tender of the Plaintiff was rejected after consideration by the tender committee and as such Plaintiff has not acquired any right to the goods which were the subject-matter of the tender. Under the terms of the tender the highest offer of a tenderer may not be accepted by the management. There was no contract at all with the Plaintiff by the Defendant No. 1 and the Plaintiff cannot acquire any right, title or interest or claim in the goods. The Plaintiff is not, therefore, entitled to get any order of injunction and the ex parte order of ad interim injunction should be vacated. It has also been stated that if the scraps are not removed from the factory there will be huge accumulation which will create blockage of the space of the machine floor of the factory of the Defendant No. 1 and it; will be very difficult for its workmen to work there. The Plaintiff can be adequately compensated by awarding damages if the Plaintiff succeeds in the suit.

Another objection has been filed on behalf of the added Defendant No. 4, Bachanlal Mohan and Company stating that the tender submitted by the Plaintiff was not accepted and as such the Plaintiff had no right or claim to get the scraps sold to it by the company during the contract period and the application for temporary injunction should be dismissed. It was further stated that the offer of the Defendant No. 4 had been accepted by the Defendant No. 1 and a contract has been made by the management of the Defendant No. 1''s company with the Defendant No. 4. On the basis of the said contract the Defendant No. 4 has been lifting scraps from the factory of the Defendant No. 1. In the circumstances no interim order should be made.

Two affidavits-in-reply have been submitted by the Plaintiff stating inter alia that the Plaintiff being the highest tenderer became entitled to the goods and subsequently there was meeting between the Plaintiff''s partner and the Defendant No. 2 who accepted the offer of the Plaintiff. The Plaintiff is, therefore, entitled to purchase the goods from the factory of the Defendant No. 1 All other statements and contentions made in the said affidavits by the Defendants have been denied.

On July 3, 1978 the learned Judge, Fourth Bench, City Civil Court, Calcutta by order No. 16 dismissed the application for temporary injunction holding that the Plaintiff failed to make out a prima facie case inasmuch as there was no contract between the Plaintiff and the Defendant No. 1 in respect of the goods of the Defendant No. 1 for which the Plaintiff prayed for an order of temporary injunction. It has been further held that the loss sustained by the Plaintiff by the refusal of the prayer for temporary injunction can be adequately compensated by money and as such the Plaintiff is not entitled to get any order of temporary injunction. The application for temporary injunction was dismissed and the ad interim order of injunction passed on May 3, 1978 was also vacated.

Against the said judgment and order this appeal has been preferred by the Plaintiff.

It has been urged by Mr. Sankardas Banerjee, Learned Counsel for the Appellant that the Plaintiff''s offer being the highest should have been accepted by the Defendant No. 1 and the Plaintiff is entitled to purchase the M.S. Scrap Turning and Boring, Non-ferrous and other rejected materials from the Defendant No. 1. It has been further submitted that the Defendant Respondent No. 1 cannot illegally prevent the Plaintiff from having its highest offer been considered and accepted without assigning any reason whatsoever and it cannot accept the offer of the Defendant Respondent No. 4. There has been a discrimination by the Defendant No. 1, the management of which has been taken over by the Government as sick industry.

Mr. Sengupta, learned Advocate appearing on behalf of the Defendants 1 to 3 has, on the other hand, submitted that the Plaintiff company''s offer was not accepted as it failed to comply with the terms of the tender, that is, it failed to submit the income tax and sales tax clearance certificate at the time of submitting the tender. It has been further submitted that the management has the absolute right in accordance with the terms of the tender to accept or reject the highest offer made by the tender. The offer made by the Plaintiff was not accepted and as such the Plaintiff did not acquire any right to have the scrap sold to the Plaintiff during the said period. The application for temporary injunction is, therefore, liable to be rejected.

After having heard the respective contentions put forth by the learned Advocates of the parties and after having considered the facts and circumstances of the case we do not find any infirmity in the order of the Court below in rejecting the application for temporary injunction. It is now well-settled that in order to get an order of temporary injunction the Plaintiff is to make out a prima facie case. In the instant case the Plaintiff submitted the tenders to the Defendant No. 1 for purchase of certain quantity of scrap irons, turnings and borings etc. from the factory of the Defendant No. 1 during the period from February 1, 1978 to January 31, 1978. Several other companies including the Defendant Respondent No. 4 also submitted tenders. It appears that there is a specific term in the tender that the management has got the absolute right to accept or reject the highest offer of any tenderer. It also appears that in the tender form there is a term that if the tender is accepted a specific contract is to be made between the Plaintiff and the company offering the tender and after that the contract will then start to operate. The Plaintiff submitted the tender form agreeing to the said term. Admittedly the tenders were opened on January 14, 1973 in the presence of the Plaintiff''s partner as well as in the presence of the representatives of the other companies who submitted, tenders. As it appeared to the tender committee that the offers were not satisfactory so according to the usual practice the tender committee selected three tenderers including the Plaintiff for the purpose of negotiations for the best available tenders. After the negotiation the rate offered by M/s. Bachanlal Mohan and Company, the Defendant No. 4, was highest and the same was accepted. The Plaintiff was intimated by letter dated April 27, 1978 that its offer was not accepted and the bank draft submitted by him along with the tender was returned. Whether the Plaintiff has acquired right to the purchase of all the scrap irons to be sold by the Defendant No. 1 company during the aforesaid contract period arc matters to be decided at the final hearing of the suit. From the facts as they stand there is admittedly no contract entered into by the Defendant No. 1 with the Plaintiff for the sale of scrap iron from its factory at Konyapur during the period from February 1, 1978 to January 51, 1979. As such, in our considered opinion, the Plaintiff has not been able to make out a prima facie case. In the instant case the Defendant No. 1 is a company incorporated under the Indian Companies Act and the management of this company has been taken over by the Government of India u/s 18AA of the Industries (Development and Regulation) Act, 1951 in September, 1975. But this does not in any way make it a Government company or a Government undertaking and it is therefore, not a State under Article 12 of the Constitution of India. Article 14 does not apply in this case. The decisions in Erusian Equipment and Chemicals Ltd. Vs. State of West Bengal and Another, and Radhakrishna Agarwal and Others Vs. State of Bihar and Others, where it has been observed that in the matter of public contract Article 14 imposes an obligation upon the State''s executive power to treat all persons equally and no one can be prevented at the thresh hold or at the time of entering into the field of consideration of persons with whom the Government could contract do not apply to this case.

The next question that poses itself for consideration is balance of convenience and inconvenience. It appears that the offer of the Defendant No. 4 was accepted by the Defendant No. 1 and a contract was made by the Defendant No. 1 with the Defendant No. 4 for sale of the said scrap iron. It also appears that if the goods are not sold and delivered there will be huge accumulation of scraps in the factory of the Defendant No. 1 which will create enormous difficulty to the Defendant No. 1 to run its factory as machine space will be blocked. This will seriously affect the business of the Defendant No. 1 as well as of the Defendant No. 4 and as the scraps are highly inflamable there is possibility of the township being gutted with fire. If the Plaintiff is not granted injunction the loss sustained by the Plaintiff can be adequately compensated in money if it succeeds. Therefore considering the balance of convenience and in convenience it is just and proper that no temporary injunction as prayed for in the said application should be granted. In order to safeguard the interests of the Plaintiff it will suffice, in our considered opinion, to direct the Defendant No. 1 to prepare and submit a statement of scrap iron and other materials mentioned in items A to Q of annex. A to the petition for temporary injunction sold and delivered to the Respondent No. 4, M/s. Bachanlal Mohan and Company at the end of each quarter in the Court below on giving a copy of the same to the Plaintiff. The first of such statement for the quarter from August to October 31, 1978 is to be submitted within the fortnight of November, 1978 and the Defendant No. 1 will go on submitting statements of subsequent quarters with copies to the Plaintiff within the fortnight of each month succeeding the end of each quarter. We make it clear that we have not made any finding on the merits of the contentions of the parties and the observations made by us are all tentative observations made only for the decision of this appeal. We therefore maintain the order of the trial Court and dismiss the appeal.

There will, however, be no order as to costs.

Chittatosh Mookerjee, J.

I agree.