N K RAJGARHIA Vs. ORISSA SPINNING MILLS LTD

JUDGEMENT

(1.) BY this order, I shall dispose of the preliminary issue i. e the issue of limitation on which parties have addressed their arguments.

(2.) BRIEF facts relevant for the purpose of deciding this issue are that the defendant was the manufacturer of yarn and the plaintiff is an exporter of yarn. Plaintiff entered into a negotiation with the defendant for supply of yarn. The defendant, as a result of this negotiation, asked the plaintiff to send an advance of Rs. 60 lac so as to organize the production and dispatch of the materials and also wanted plaintiff to give confirmation of the order. When the plaintiff did not send this amount, another reminder was sent to the plaintiff that plaintiff should send an advance of Rs. 60 lac. The defendant also sent a sample of 10 cons for approval of the plaintiff. The plaintiff, vide letter dated 28th March 1995, sent the amount of Rs. 60 lac by way of a demand draft but told the defendant not to start production or purchase any type of raw-materials unless the samples were approved by the plaintiff and re-confirmation of the order was done. The plaintiff asked the defendant to send fresh samples at the earliest. The defendant sent fresh samples for approval to the plaintiff. Plaintiff informed defendant vide letter dated 30th July 1995 that it has sent the samples to the buyer for approval so the defendant should wait for the reply. The samples were rejected by the plaintiff vide letter dated 12th September 1995 since the same were not approved by the buyer on the grounds that the yarn was uneven, CSP was below 1400 and appearance was dull. The defendant sent fresh samples pm 14. 11. 95 and told the plaintiff that the price was moving upward and the defendant shall not be in a position to supply the yarn if the approval of the sample is delayed. Vide letter dated 27th February 1996, plaintiff informed the defendant that those samples were acceptable to the buyer but the price earlier agreed was on higher side so the defendant should reduce the rate at the earliest. It was also informed that Rs. 60 lac was lying with the defendant for quite sometime. The defendant vide letter dated 25th march 1996 informed the plaintiff that there was no scope of reduction of the price and the plaintiff was told that the advance was lying with the defendant and defendant was not increasing the price as goodwill gestures so the programme of dispatch should be sent. No programme of dispatch was sent and the goods were never dispatched. It seems that the price could not be negotiated between the parties and the final contract did not materialize. The amount of Rs. 60 lac kept lying with the defendant. The plaintiff vide notice dated 20th November 2002 demanded back this amount along with interest of 10% per annum amounting to rs. 39. 50 lac.

(3.) THERE is no denial on the part of the defendant about the correspondence between the parties and the last confirmation given by the defendant on 16th April 1996 about the amount of Rs. 60 lac lying deposited with the defendant. The objection of limitation is taken by defendant that since the last confirmation was in April 1996, the suit has been filed in December 2002, the suit was barred by limitation. Counsel for the plaintiff submitted that the case of the plaintiff was covered under Article 22 of Limitation Act. The amount which was lying with the defendant was in the form of a deposit and the limitation shall start from the date of demand.