STATE Vs. CIRCLE AUDITOR JABALPUR

JUDGEMENT

(1.) THIS appeal is by the State Government against a decree passed by the Additional First Civil Judge, Class I, Jabalpur, in Civil suit No. 22 B of 1950, on 31st December 1951. By that decree the State Government as principal, and the Nagpur District Rural Area Co -operative Association. Ltd. (hereinafter the Nagpur Association), as agent, have been held responsible to pay to the plaintiff a sum of Rs. 5,253 -4 -0 and costs as damages for breach of a contract. Previous to this, an appeal (First Appeal No. 60 of 1952) filed by the Nagpur Association was dismissed on 30th December 1957 for want of persecution. The result of that appeal, however, has no bearing upon the liability of the State Government, and we, therefore, allowed the appeal under judgment to be argued,

(2.) THE facts of the case are as follows: In July 1947 the Central Government in the Food Department initiated a scheme for the allotment of Simla Hill Potatoes of the 1946 crop for seed purposes to the various Provinces, The Joint Secretary to the Government of India in the Food Department addressed a letter, which is Ex 2 D -2, on 9th July 1946 intimating that allocation of Simla Hill Potatoes had been made by the Government, allotting to the Central Provinces and Berar a quantity of 12,000 maunds for seed purposes, It was intimated that all the potato -growers in the Punjab had been organized into three groups and sales of Potatoes in the Punjab would be made ex -depot, beyond which the grower's Association would take no responsibility. The Government of India nominated an association called the Kailash Association as their clearing agency on a commission of 2 per cent for the purpose of supplying Simla Hill Potatoes to the recipient Provinces the Government also intimated that rail transport was also organized to Kalka Broad Guage Station and intimated the freight etc. chargeable on these consignments. Wagon permits, it was said, would be available to the District Magistrate of the State concerned from the Regional Food Commissioner, North -west Region. The letter goes on to say that the Punjab Government was asked to impose a district ban on the movement of Potatoes by rail or road from Simla or Ambala districts without a permit signed by the District Magistrate of the district and the food Department Officer. Similar restrictions were also imposed on the movement of Potatoes from the sc -called native States to British India, The Government of India, therefore, asked the Provincial Government of the Central Provinces and Berar to depute an official representative to deal with the Political Agent, Punjab Hill States, Simla, not later than 1st August, 1946, with authority to complete negotiations for the purchase and dispatch of the allotted potatoes. They warned the State Government that unless (sic) is was done punctually the quota allotted to the Central Provinces and Berar might be re -allotted to some other Province,

(3.) IN pursuance of this communication the Nagpur Association was Chosen as the commission agent for the purchase of Simla Hill potatoes for the Central Provinces and Berar, and the appointment order is Ex. 2 D -1. A security of Rs. 5,000/ - was ordered to be furnished by the Nagpur Association as a guarantee that it would 'import the said quantity of potatoes by the specified dates and distribute them at a price not in excess of four annas per maund over the landed costs'. The Nagpur Association was further warned that it was expected to serve the people with great care and caution and that in case Government found any allegations of malpractices in its dealings the security of Rs. 5000/ - would be liable to forfeiture at the discretion of Government. On 14th September 1946 an agreement was executed by the Provincial Government and the Nagpur Association to implement the appointment of the commission agent Ex. 1 D -4 lays down the conditions under which the commission agent was to work. Paragraph 4 of that agreement provided that the Commissioner would take from every merchant to whom seed potatoes were to be supplied a guarantee through a recognized bank for the payment of bills to the commission agent for the price, including the cost of transport of seed potatoes against railway receipts for the consignments, and that the agent would not be bound to supply the seed potatoes to any merchant who had not given such a guarantee. It was also provided that the commission agent would be responsible for any short delivery of seed potatoes on certification by the station master concerned In so far as the merchants were concerned it was provided that if any merchant to whom the seed potatoes were to be supplied offered to send his representative to help the agent in the purchase, the agent should purchase the seed potatoes for that merchant with the approval of the representative so offered. The agreement also contained a provision with regard to the security deposit by the commission agent and the conditions on which forfeiture was likely to result and further -provided for an arbitration clause if any dispute on this account arose between the Provincial Government and the commission agent. The agreement is Ex. 1 D -4.