M LACHIA SETTY AND SONS LIMITED GIRI COFFEE WORKS Vs. COFFEE BOARD BANGALORE:COFFEE BOARD BANGALORE

JUDGEMENT

(1.) These appeals by certificates granted by the High Court of Judicature at Madras are directed against its common judgment and two decrees dated July 19, 1963 in A. S. No. 260 of 1958 and A. S. No. 165 of 1960 respectively whereby the High Court decreed the respondents suits (O. S. No. 319/1955 and O. S. No. 316/1955) in damages against the two appellants (M. Lachia Setty and Sons Ltd. and Giri Coffee Works) respectively.

(2.) The respondent (the Coffee Board, Bangalore) is a statutory body incorporated under the Coffee Act, 1942 having complete control - almost monopolistic - over the coffee trade, internal and external. Its functions and duties require it to keep a control over coffee prices regard being had to the interest of all concerned, the grower, planter, licensed curer, trader and consumer. Inter alia, it is entrusted with a duty of marketing coffee delivered to it by all owners of coffee estates and for that purpose it is empowered to make allotments of coffee between export and internal trade and in regard to the coffee allotment made to the latter category at the material time it adopted three methods for releasing the coffee to the trade for internal consumption: (1) by sales called "pool auctions" (wholesale) held at Bangalore, Coimbatore and certain other centres in Madras and Mysore States, (2) by retail sales known as "local auctions" and (3) by sales to cooperative societies and at propaganda centres established by it. In these appeals we are concerned with internal sales falling under the first category, namely, sales effected periodically through "pool auctions". Admittedly, at such "pool auctions" only dealers registeted with the respondent Board to whom permits are issued are entitled to participate and such "pool auctions" are inter alia governed by special conditions prescribed by the respondent Board generally for regulating such sales which are termed as 'Conditions of Sale' (copy produced at Ex. A-3). On October 7, 1952 various quantities of coffee (of various grades and quality) comprised in 315 lots were put up for sale by the respondent at its "pool auction" held at Coimbatore, the auction being conducted by the Chief Coffee Marketing Officer himself as the Sale Conducting Officer. In that auction several registered dealers including the two appellants (M. Lachia Setty and Sons Ltd. and M/s. Giri Coffee Works) participated and lodged their bids in the prescribed forms for certain lots in the Bid Boxes maintained for the purpose. The result of the auction was announced some time after 2 P.M. on October 8, 1952 and inter alia, the bids of the two appellants in respect of the quantities of the lots for which they had submitted their bids were accepted by the Chief Marketing Officer, though some of the bids in respect of five lots were not the highest, and they were declared to be the successful bidders. On the appellants' failure to pay for and take delivery of the lots either within the stipulated period of 17 days or the extended period the respondent Board after issuing a notice of resale dated December 18, 1952 to the appellants and others, who had similarly defaulted, held a resale (another pool auction) on December 23, 1952 at which considerably lower price was realised and the respondent Board filed a batch of 15 suits against the defaulting bidders including the two appellants. In Suit No. 319/1955 which was filed against the appellant M. Lachia Setty and Sons Ltd., the loss incurred as a result of the resale was claimed at Rs. 34,570-6-6 as and by way of damages and in Suit No. 316/1955 filed against appellant M/s. Giri Coffee Works a loss of Rs. 5,917/- was claimed.

(3.) By their written statements the appellants, inter alia, raised three principal defences. First, the appellants contended that in their case they had revoked their bids orally as well as by a telegram dated October 7, 1952 before the declaration of the results and hence there were no concluded contracts between them and the Coffee Board and, therefore, they could not be made liable for the loss arising on resale. Secondly, it was contended that at an auction a lower bid always lapses on receipt of a higher bid and as such the lower bid becomes incapable of acceptance and that even under condition No. 6 of the 'Conditions of Sale, the Board or its Chief Coffee Marketing Officer had no power to accept their lower bids (in respect of 5 lots in the case of Giri Coffee Works) those were not the highest bids for the lots concerned. Thirdly, it was contended that the Coffee Board having deliberately depressed or brought down the prices of the coffee had disentitled itself to claim damages inasmuch as the loss arising on such resale was unreal and in any event the resale having been held after an inordinate delay the appellants were not liable for the quantum of loss claimed. It is unnecessary to set out the other defences raised in the suits since in these appeals only the aforesaid three contentions were pressed by counsel for the appellants for our acceptance.