M/S. BHARAT BARREL & DRUM MFG. CO. v. L. K. BOSE & ORS.
Citation: [1967] 1 S.C.R. 739; 1966 INSC 203
Court: Supreme Court of India
Bench: K.N. WANCHOO , J.M. SHELAT, G.K. MITTER
Judgment date:
Case summary
1966 INSC 203. Supreme Court of India judgment dated 1966-10-05. M/S. BHARAT BARREL & DRUM MFG. CO. v. L. K. BOSE & ORS. Read the judgment and case details...
Judgment text
740 SUPREME COURT REPORTS (1967] l S. C. R. M/s. BHARAT BARREL & DRUM MFG. CO. v. L. K. BOSE & ORS. October 5, 1966 · [K. N. WANCHOO, J. M. SHELAT AND G. K. MITTER, JJ. ] Essential Commodities Act, 1955--Steel Control Order, 1956---Con• troUer cancelling allotment of steel sheets-In subsequent inquiry re/uit-lng to record oral evidence-Natural justice whether vlolated--Error apparent on face of award, what is. The appellant company carried on the business of manufacturin1 barrels and for that purpose required steel sheets. By reason of the Essential Commodities Act, 1955 the Iron & Steel (Control) Order, 1956 and diverse orders passed by the Iron and Steel Controller the appellant company could get supply of steel sheets only by obtaining release orders from the Controller on stockists and importers.
The Controller would direct under such a release order an importer or a stockist to supply steel sheets to the appellant company at rates and on terms and conditions specified by him therein. By three such release orders of October 28 and 29, 1960 the Controller directed the 6th respondent to supply to the appellant a certain quantity of steel sheets at a specified rate. There was dispute between the appellant and the 6th respondent as to the quantity to be supplied and the rate of supply. The appellant claimed that it had already paid an excess sum of Rs. 7 lacs and odrl to the 6th respondent in respect of earlier release orders. On the dispute being referred to the Controller he ordered the 6th respondent to supply steel sheets to the appellant at the specified rate after making allowance for the excess of Rs.
7 lacs and odd already paid, He also ordered that if tbe appellant did not _Pay the price and the transaction was not complet· ed within a certain time owing to the fault of the appellant he would · allot the steel sheets to some other party. Owing to the persistence of differences with the 6th respondent the appellant could not carry out the transaction but instead filed a suit in the High Court. The Controller then cancelled the allotment in favour of the appellant. Against this order of cencellation the appellant filed a writ petition in the High Court. The High Court passed a con. sent order asking the Controller to 'hear' the parties and decide whether the appellant was at fault in not lifting the goods. At the hearing the appellant wanted to examine a witness but the request was refused by the Controller. The Controller decided against the appellant. The appellant filed another writ petition in the High Court.
The writ petition and the subsequent letters patent ai)peal filed by the appellant were both dismissed. The appellants came to this Court and contended : (I) The Controller by refusing to examine the appclla'1t's witn... violated natural 1ustice. (2) On the question of the refund of the excess charges tho Controller's order suffered from an error apparent on the face of the record; and (3) The finding of the Controller that the appellant wanted lo pick and choose the goods was without evidence. HELD : (I) While considering the question of breach of the princl· pies of natural justice the court should not proceed as if there al"e any infiexible rules of natural justice of univer'3al application.
The Court has to consider in each case whether in the light of the facts and circumstances of that case, the nature of the issues -invoJved in the inquiry~ the nature of the order passed and tbe interest affected thereby, a fair and reasonable opportunity of being heard was furnished by the person ai! 'ectcd. A refusal to record oral evidence does not necessarily mean contravention of the rules of natural justice. [746 D; 747 G-H] Local Government Board v. Arlidge, [1915) A. C. 120, New Prakash Transport Co. Ltd. v. New Suwarna Traltsport Co. Ltd. [1957) S. C. R. 98, Western India Match Co. v. Industrial Tribunal, Madras, [1962) 1 L. L. J. 629, De Verteuil v. Knaggs & Anr. [1918) A. C. 557, General Medical Council v. Spackman, [1943] A. C. 627. and Union of India v. T. R. Varma, [1958] S. C. R. 499, referred to. The Controller had beard the case of the parties through their counsel. The witness was a director of the appellant company.
Being present at the bearing, he could have instructed counsel to state all that he wanted to depose. That not having been done the company could have no grievance of not having been heard. The witness produced by the appellant was not of a material character. On the facts of the case the refusal of the Controller to examine the witness in question did not cons-titute a breach of natural justice. [749 C-D; 750 C] (ii) An error of law on the face of an award means that the court must first find whether there is any legal proposition which is the basis of the award. Reading the impugned order 1t was difficult to say what legal proposi1ion it contained in respect of which it could be said that there was an error on the face of the record. 1750 D-EJ . (iii) It could not be said that there was no evidence that the appellant company wanted to pick and choose the goods. (751 G] C! vn. APPELLATE JURISDJCTION ; Civil Appeal No. 928 of 1965.
Appeal by special leave from the judgment and order dated April 24, 1964 of the Calcutta High Court in Appeal from Original Order No. 269 of 1963. Bisha11 Narailf, B. Dutta, S. C. Chagla, Ravi11der Narain, for the appellant. B. Sen and R. H. Dltebar, for respondents Nos. 1-5. A. K. Sen, Rames/nvar Nath, S. N. Andley, P. L. Vohra, Mahi11der Narain, for respondent No. 6. The Judgment of the Court was delivered by Sbelat, J. -This appeal by special leave is directed aganist the judgment and order of the High Court at Calcutta which upheld the judgment and order of the Single Judge of that High Court dismissing the writ pettition filed by the appellant company. The appeC! ant company was at all material times carrying on the business of manufacturing barrels and for that purpose re-qllired steel sheets. By reason of the Essential Commodities Act, BHARAT BARREL CO. V. L. K. BOSE (She/at, J. ) 741 1955, the Iron and Steel (Control) Order, 1956 and .
diverse orders passed by the Iron and Steel Controller the appellant company could get supplies of steel sheets only by obtaining release orders from the Controller on stockists and 'importers. The Controller would direct under such a release order an importer or a stockist to supply steel sheets to the appellant company at rates and on terms and conditions specified by him therein. By three such release orders, of October 28 and 29, 1960 the Controller directed the 6th respondent M/s. Amichand Pyarelal & Co. ,_ to supply to the appellant company 3406. 386 metric tons of steel sheets. Prior to these three orders certain other release orders had been issued on the 6th respondent and the appellant rompany had paid large amounts in respect of steel sheets supplied thereunder on the basis of pro forina invoices issued by the 6th respondent and their sister concerns. An amonnt of Rs.
7 lacs and odd said to be excess payment was claimed by the appellant company from the 6th respondent to recover which theappellant company had filed· suits in Angust 1961 and January 1963 in the High Courts at Bombay and Calcutta. In pursuance of the said three release orders the 6th respondent sent its pro Jonna invoice but only for 2,168 tons and odd stating that it had already delivered between November 1961 and February 1962, 1238 tons and odd in part satisfaction of the said release orders. In these invoices the · 6th respondent claimed Rs. 975. 55 per metric ton which was a higher rate than the one fixed by the Controller. The appellant company thereupon tendered the price at the rate fixed by the Controller also deducting therefrom the said excess of Rs. 7 lacs and odd. The 6th respondent declined to accept the same whereupon the appellant company apprised the Controller about the difference between them.
By his order dated 1/2 May, 1962 the Controller directed that the 6th respondent should charge the appellant company at the rate of Rs. 921 per metric ton and deduct the excess charges paid to it earlier. He also directed the 6th respondent to send to the. appellant company revised proforma invoice within three days. The . order also ~lated that ·the appellant company should make arrangement for payment within three days of the receipt of the revised proforma invoice and that if the transaction was not completed by May 12, 1962 due te any fault on the part of the· appellant company he would consider the disposal of the said sheets in favour of some other party. The Controller sent a copy of, this letter to the appellant company and in the note appended thereto informed the company that it should lift the materials before May 12, 1962.
·The 6th respondent there-after sent its revised invoice at the rate directed by the Controller but without adjusting the said excess and insisting that 1,238 tons and odd were already delivered and that ·only 2, 168 tons remained to be delivered. In the said invoice it also included the price of 1,238 tons at Rs. 921 per metric ton. The appellant company tendered its banker's slip at the rate of Rs. 921 per ton after deducting therefrom 742 SUPJlBMB COUJlT JlBPOJlTS [1967] I S. C. Jl. the said amount of Rs. 7 lacs and odd as excess payable to it by the 6th respondent. The 6th resi;ondent refused to accept the said slip and instead sent on May 7, 1962 another invoice without adjusting the said excess thus, according to the appellant company, making it impossible for it to lift the steel sheets. The appellant company filed another suit in the High Court at Bombay inter alia for mandatory injunction directing the 6th respondent to deliver the entire quantity of 3,406 tons and odd at Rs.
921 after deducting f. rom the price therefor the said excess of Rs. 7 lacs. By his order dated 24/26 May, 1962 addressed to the 6th respondent the Controller allotted 2,168 and odd tons of the said steel sheets in favour of the 7th respondent cancelling the allotment in favour of the appellant company. Appended to the said order was a note of the Controller addressed to the appellant company which ran as follows :- "Due to their non-lifting of Drum sheet 18G for 2168. 25 M{f against. ... (the said three release orders), they are advised to note that the same quantity of allotment against the said R/Os has been treated as cancelled, matter is treated as closed finally. " Against this order of cancellation the appellant company filed writ petition in the High Court at Calcutta. It came up for hearing on September 14, 1962 before Banerjee J. when the parties took a consent order.
The said consent order provided, inter a/ia, that the Controller shall himself "hear" the parties and ascertain for himself which of them was at fault in making the said order of l /2 May, 1962 ineffective. It also provided that if the Controller were to find that the appellant company was not at fault but that the order could not be complied with by it beca11se of any unreasonable stand taken by the 6th respondent he should reconsider his said order of cancellation of allotment. On the other hand if he were to find that the appellant company was at fault he need not change the said cancellation order. In pursuance of the said consent order the Controller fixed December 13, 1962 for hearing the parties and gave permission to them to 8ppear through counsel. On the 13th and the 18th December, I 962 the Con~roller heard the parties who appeared through counsel and took on record correspondence, affidavits and other documents produced by the parties.
The appellant company contended that the 6th respondent failed to implement the said order and thereby made it ineffective. The contention was tha! the 6th respondent was not justified in offering delivery of 2,168 and odd tons only instead of 3,406 and odd tons, that it was not justified in claiming that the delivery of the said 1,238 tons and odd was under the said release orders, that the said 1,238 tons and odd were delivered under and in pursuance of an oral agreement arrived at between BHARAT BARREL CO. V. L. K. BOSB (She/at, /,)' 743- Lalta Prasad Goenka, a director of the appellant company and one Jitpal on behalf of the 6th respondent whereunder the 6th respondent had agreed to deliver 4,500 tons from out of its free sale stock at Rs. 875 per ton, that the said 1,238 tons having been delivered under the said agreement the entire quantity of 3,406 tons and odd remained undelivered and that therefore its offer to deliver only 2,168 and odd tons was not a proper offer.
The appellant company also contended that the 6th respondent failed to deduct the excess amount of Rs. 7 lacs and- odd though directed by the Controller and further that it was not entitled to charge the said 1,238 tons and odd at Rs. 921 per ton as the said quantity as aforesaid was delivered under the said oral agreement and therefore could charge at Rs. 875 per ton. It also contended that in spite of specific directions from the Controller the 6th respondent failed to send its said revised pr wn the following guiding criterion :- "Rules of natural justice vary with the varying consti-tutions of statutory bodies and the rules prescribed by the legislature under which they have to act, and the question whether in a particular case they have been contravened must be judged not by any preconceived notion of what they may be but in the light of the provisions of the relevant Act. " (I) (191'1 A. C. t20. (2) [1957) S. C. R. 98. BHARAT BARREL CO. V. L. K.
BOSE (She/at, /,) 747 In that case r. 73 of the Rules framed under the Motor Vehi-cles Act, IV of 1939 provided that the Chairman of the Provincial Transport Authority on receipt of an appeal shall appoint the time and place for hearing the appeal and shall give a notice of not less than thirty days to the appellant, the origial authority and any other person interested in the appeal and on such appointed or adjourned date the appellate authority "shall hear such persons as may appear and, after such further enquiry, if any, as it may deem necessary, confirm, vary, or set aside the order against which the appeal is preferred. " At page 105 of the report the Court observed that neither the sections nor the rules framed under the Act contemplated anything like recording oral or documentary evidence in the usual way as in courts of law, nor did they contem-plate a regular hearing as in a court of justice.
The Court also observed that the provisions of the Act and the Rules did not provide for any elaborate procedure as to how the parties interested had to be heard in regard to the question as to who should be granted a stage carriage permit. This Court held on a consideration of the provisions of the Act and the Rules that though the appellate authority had to function in a quasi-judicial capacity but not as a court of law, it was not required to record oral or documentary evidence and that the only requirement was that in considering the rival claims for the stage carriage permits the authority had to deal with such clai. Jm in a fair and just manner. Similarly, in Wesrern Indian Match Co. v.
Industrial Tribunal, Madras(') this Court once again stated that the Industrial Tribunal was not bound by the strict rules of procedure of the Evidence Act and that if having regard to the fact that the agreement alleged was denied by the respondents, it came to the conclusion that proof of the agreement would not really matter, that clearly would be a decision within its jurisdiction and it would be unreasonable to invoke the prerogative jurisdiction of the High Court under Art. 226 to overrule or reverse such a conclusion. As in the present case the dispute between the parties there was as to the existence of an agreement said to have been arrived at before the conciliation officer. The Tribunal had held that the agreement reached between the parties had been recorded by the conciliation officer in some of his letters and so it was only a matter of construction of those letters and in that view refused to examine the conciliation officer.
It was in connection with the Tribunal's refusal to examine that officer that this Court made the aforesaid observations. (See also De Verteuil v. Knaggs & Anr. (2)). It is thus clear that a refusal to record oral evidence does not necessarily mean contravention of the rules of natural justice. Mr. Bishan Narain, however, relied upon two decisions in General Medical Council v. Spackman(3) and Union of India v. T. R. Varma (4). In Spackman's case(') a registered medical practi-tioner who was a co-respondent in a divorce suit, was held by the Divorce Court to have committed adultery with Mrs. Pepper, the respondent therein, with whom he had professional relationship and a decree nisi was pronounced which was subsequently made absolute. The General Medical Council appointed under the Medical Act, 1958 served upon Spackman a show cause notice why his name should not be erased from the medical register for infamous conduct and professional misconduct.
At the hearing Spackman's attorney applied for permission to lead evidence to challenge the finding of adultery of the Divorce Court which evidence th. ough available was not produced during the hearing of the Divorce Suit. The Council rejected the application on the ground that the practice followed by it did not permit leading of additional evidence and accepted the decree nisi as primafacie proof of adultery and directed that the petitioner's name should be removed from the register. On appeal the House of Lords held that while the Council was entitled to regard the decree in the divorce suit as prima facie evidence of adultery, it was bound to hear any evidence tendered by the practitioner and that having refused to hear such evidence, it had not made "due inquiry" as cnntemplated by s. 29 of the Act. It should be observed that tnis conclusion was based on the provisions of s.
29 which provided for "due inquiry" and (as is clear from page 645 of the Report) on Rule 9 which, inter a/ia, provided that the Council shall call upon the practitioner "to state his ca~e and to produce evidence in support of it. " That Ruic also provided that the practitioner may address the Council either before or at the conclusion of the evidence but only once. It is thus clear that the Council's order was set aside on the footing that it had failed to hold "due inquiry" within the, meaning of s. 29 and the said Rule, as contrary to the pr n its behalf at that st&ge. No such protest was also placed on record between the 18th and 21st December, 1962 when the Controller declared his order. It was only on the 5th January, 1963 that the attorneys of the appellant company complained for the first time about the Controller's decision rejecting the application to record Lalta Prasad's evidence alleging that the said order . of the Controller was ma/a fide. The appellant company f.
:~d the present writ petition on January 7, 1963. It would appear from these facts that the grievance of Lalta Prasad not being allowed to give evidence was made in the letter of the 5th January, 1963 to bolster up the case in the proposed writ petition that the said order of the Controller was perverse and ma/a fide. It is true that the Controller rejected the appellant company's case about the said oral agreement on the ground that the correspondence indicated that it had been putting up its case inconsistently. It may perhaps be said that if 759 SUPllBMB COUilT llEPOR. TS (1967] I S. C. R. Latta Prasad had been examined he might have explained the in- nsistency. But as already stated Lalta Prasad had ample opportunity through his counsel to explain the said inconsistency. If that inconsistency had been explained by the company's counsel during the hearing it cannot be doubted that the Controller would have considered such explanation tendered by counsel.
That being so, the refusal of the Controller to record Lalta Prasad's evidence cannot be said to have precluded the company from offering an explanation of the said inconsistency. Nor can it be said that the refusal amounted to any breach of natural justice. Since the procedure for inquiry was left to be devised by the Controller and the procedure followed by him was not in any way in contravention of the said consent order nor contrary to natural justice the contention urged by Mr. Bishan Narain must be rejected. The next contention of Mr. Bishan Narain was that on the question of refund of the excess charges the impugned order suffered from an error of law apparent on the record. The question is what is an error of law apparent on the record. In Champsey Bhara & 1 Co. v. Jira) Pa/le Spinning and Weaving Co. ( ). Lord Dune-din observed that an error on the face of an award means that the court must first find whether there is any legal proposition which is the basi~ of such an award.
He also said that where an award is challenged upon such a ground it is not permissible to read words into it or to draw inferences and the award or the order must be taken as it stands. Tucker J. said the same thing in James Clark (Brush Materials) Ltd v. Carters (Marchants) Ltd. (2) Reading the impugned order it is difficult to say what legal proposition it contains in respect of which it can be said that there is an error of law apparent on the record. The issue before the Controller was whether in refusing to give the refund of the said excess the 6th respondent was guilty of obstructing the implementation of the order elated May 1/2, 1962 or of preventing the appellant company from taking delivery of the said goods. It is true that the Controller had on more then one occasion directed the 6th respondent to deduct the said excess from its pro forma invoice and the 6th respondent had in fact expressed its willingness to duduct it.
The dispute between the the parties was within a circumscribed compass viz. , whether the appellant company should first withdraw the suit. The appellant company would not withdraw the suit and hence the controversy. But then it is not possible to say that there was no difficulty in the way of the 6th respondent in deducting straightaway the said excess from its invoice, for, as already stated, the appellant company, had stated different sums of such excess at different times. The Controller had not fixed the exact amount of the said excess and had not directed as to when and on what condition the appellant company's suit should be withdrawn. If in these circum~tances the Controller finds that the appellant company would not ha"e insisted (I) (19:z:i) A. C. ol&J. (2) (1944! I K. B. S6G BHARAT BARREL CO. V. L. K. BOSE (Shelat, /.
) 751 on the deduction before withdra~ng its suit, even if a court were to come to a different conclusion it certainly is not a case of an error apparent on the face of the record. That takes us to the third and the last contention, viz. , that the impugned order that the appellant company wanted to pick and choose was without evidence. The order was based on the finding that it was for the first time in its letter dated May 8, 1962 that the appellant company claimed that it would only accept goods of standard and merchantable quality. That conclusion, in our view, cannot be said to be without evidence. As explained by the High Court, the appellant company, no doubt, had in its letter of April 23, 1962 claimed survey and inspection but that letter does not show that the. appellant company was not willing to accept the goods in the condition in which they were in the 6th respondent's godown.
The demand for inspection and survey was made wiih a view to claim rebate in the eventofthegoods being found either rusty or in damaged condition. But in the letter of May 8, 1962 it would seem that the appellant company stiffened its attitude and laid down the condition that it would accept such of the goods only as were of standard and merchantable quality. As already stated, Jong before May 8, 1962 the appellant company was well aware that the goods had become rusted as they were lying for a long time in the godown. Even the 6th respondent had complained that the goods were getting rusted. Yet, at no time before May 8, 1962 the appellant company had insisted that it would accept only those goods which were of standard and merchantable quality. It may perhaps be that the Controller could have taken the view that since the appellant company required the goods for manufacturing barrels, it was entitled to have goods of merchantable quality.
At the same time it is also possible to take a different view, viz. , that the appellant company could have abided by the Controller's directions in his order dated 1/2 May 1962 and could have accepted delivery under protest and if necessary claimed damages. But merely because there was the possibility of two views befog taken it would not be possible to say, as was contended in the High Court, that the order was perverse. In any event, since it was for the first time in its letter of May 8, 1962 that the aforesaid demand was made by the appellant company it is impossible to say that this part of the order was without any evidene<! and therefore liable to be quashed. These were the only contentions raised on behalfoftheappcllant company. For the reasons aforesaid it is not possible to uphold any one of them. The result is that the appeal fails and is dismissed. It appears to us, looking at the entire record of the case that the 6th respond~nt also was not altogether free from blame.
In the circumstances, we decline to make any order as to costs. Each party therefow will bear its own costs. G. C. · Appea1 dismissed.
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