THE STEEL AUTHORITY OF INDIA AND ORS.versusNEW MARINE COAL CO. (PVT.) LTD.

A             THE STEEL AUTHORITY OF INDIA AND ORS.
                               v.
                 NEW MARINE COAL CO. (PVT.) LTD.

                               FEBRUARY 14, 1996

B             [K. RAMASWAMY ANDS. SAGHIR AHMAD, JJ.]

          Code of Civil Procedure, 1908

          Suit for recovery-Agreement for supply of Grade-I Coaf-Grade-//
C   Coal supplied but price of Grade-/ Coal collected-Over-payment adjusted in
    subsequent bills-Trial Cowt holding that in the absence of counter-claim
    and co wt fee thereon, adjustment not to be made-Suit decreed-On appeal,
    High Cowt confinning the decree-On appeal held, appellants entitled to
    adjust the over-payments from future supplies by the party on discovery of the
    fraud-Matter remitted to T1ial Cowt-Appellants to be given an opp01tunity
D   to adduce evidence of total supplies made and the price of Grade-I and
    Grade-I/ Coal dwing the relevant pe1iod-Over-payments to be adjusted and
    fresh decree drawn within six months.

          CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3496 of
E 1982.
         From the Judgment and Order dated 20.5.82 of the Patna High Court
    in Appeal from Original Decree No. 30 of 1973.

          Jaideep Gupta and K.J. John for the Appellants.
F         B.B. Singh and Rajiv Singh, for the Respondent.

          The Following Order of the Court was delivered :

        This appeal by special leave arises from the judgment and order
G dated May 20, 1982 in P.A. No. 30 of 1973 of the Division Bench of the
  High Court of Patna dated May 20, 1982. The admitted facts are that M/s.
  Kirkend Coal Company which is now renamed as new Marine Coal Com-
  pany Ltd. (for short, the 'plaintiff) laid a suit to recover a sum of Rs.
  1,13,000 towards the value of the coal supplied to the appellant-defendant.
  The case of the appellants is that the plaintiff was to supply Grade-I coal
H between December 7, 1962 to June 1967. Instead of Grade-I coal, Grade-II
                                       650
     STEEL AUTHORITY OF INDIA v. NEW MARINE COAL CO. PVf. LTD.          651

coal was supplied but price of Grade-I coal was collected. under the           A
agreement Ext. C series, a clause in the contract was :

        "We agree for any adjustment as may be necessary on account of
        quality or quantity of supply to be made from our bills or sub-
        sequent bills."
                                                                               B
Thereunder they are entitled to adjust the over payment made during the
period of December 1962 to June 1967 and accordingly they made adjust-
ment. After framing of issues and adduction of evidence, the trial Court
found that though there was such an agreement for adjustment, unless that
appellants placed either set of or counter claim and pay the court fee, they C
are not entitled to the relief. Consequently, the suit was decreed. On
appeal, the High Court found that in the light of the agreement and
adjustment from future bills the appellants were entitled to adjust the same
from the future supplies since fraud was discovered for the first time under
Ext.Din the year 1969. After it was pointed out by the Audit Department D
that the plaintiff had supplied Grade-II coal but collected the price of
Grade-I coal, the appellants were entitled to adjust the same. But from the
evidence on record about 12,038 tones of coal was supplied but what was
the total quantity of the coal supplied between December 7, 1962 and June
1967 has not been broug~t on record and even the price which prevailed
for Grade-II and Grade-I coal during the relevant period was not E
produced. Consequently, the appellant cannot succeed in avoiding the
decree. Thus, the appeal was dismissed.

       The question, therefore, is : whether the High court was justified in
dismissing the appeal and confirming the decree of the trial Court on the      F
facts of this case? It was found by the High Court, as a fact, and we agree
with the same, that under the agreement between the parties the excess or
over-payment was required to be adjusted in the pending or subsequent
bills and the parties were bound by the same. Consequently, the appellants
are entitled to adjust the over-payments from the future supplies made by
the plaintiff. It is also found that the plaintiff committed fraud demanding   G
and collecting payment of the price of Grade-I coal while in fact Grade-II
coal was supplied to the appellants. After the discovery of the fraud, the
appellants started adjusting the amounts of over payments from the future
bill payable to the plaintiff. Having found this fact, necessarily, the High
Court either would have called for a finding from trial Court, after giving    H
    652                    SUPREME COURT REPORTS                   [1996) 2 S.C.R.

A opportunity to the parties, and adjudged the rights of the parties or would
  have remitted the matter to the trial Court to give an opportunity to the
  appellants to place on record evidence in this behalf. We think that the
  latter course would be more feasible. Accordingly, we set aside that part
  of the judgment of the High Court and the decree of the trial Court and
B remit .the suit to the trial Court. The trial Court is directed to give an
  opportunity to the appellants to adduce evidence of the total supplies made
  during the period from December 7, 1962 to end of December 1967 and
  also the preva.iling price of Grade- I and Grade- II coal. It is seen that if the
  supply is in excess of 12, 038 tones, as found by the High Court, the same
  should· also be taken into account to find out what was the amount actually
C of over-payment received -by the plaintiff, adjust the same towards the
  amount payable to the plaintiff, and then to draw decree accordingly. This
  would be done within a period of six months from the date of the receipt
  of the copy of the order.

           The appeal is accordingly allowed. No costs.
D
    G.N.                                                         Appeal allowed.