1. These 17 appeals have been filed against the similar judgments of the learned Additional District Judge No. 2, Sri Ganganagardt. Nov. 29,1985 by which he has dismissed the appeals of the plainfiff-appel-lant and confirmed the judgments and decrees of the trial Court (Civil Judge, Sri Ganga-nagar in Appeals Nos. 63/86, 80/86 and 65/86 and Munsif, Sri Ganganagar in remaining appeals) dismissing the suits for damages. The facts of these cases are almost similar and law involved is same. As such these appeals are being disposed of by this common judgment.
2. On Sept. 6, 1979, the Ganganagar Sugar Mills Ltd. (plaintiff-appellant) circulated notice Ex. 1 that auction sale of the sugar would take place on Sept. 10, 1979 at 4 p.m in the Mill, licenced traders dealing in sugar could only take part in it, immediately after the acceptance of the bids earnest money @ Rs. 30/- per bag would have to be deposited, and sugar purchased would have to be lifted within the specified period. This auction notice was circulated to the licenced traders dealing in sugar and their signatures were taken on its back. The auction sale took place oh Sept. 10,1979. The defendants took part in it. They gave bids for the purchase of sugar @ Rs. 281.75 besides payment of Rs. 40.67 as excise duty, per quintal and deposited required earnest money. The number of bags purchased by the defendants in appeals Nos. 63/86, 77/86, 80/86, 81/86 and 65/86 were 400, 200, 250, 200 and 250 respectively and the defendants of the remaining appeals purchased 100 bags each. At the time of the auction sale,' they were told to lift the sugar' bags purchased by them during the period from' Sept, 16 to. 22, 1979. This period was extended by the Collector, Sri Ganganagar till Sept.-29, 1979. Earnest money was duly deposited at the rate of Rs. 30/- per bag. On Sept. 12,1979, the Government of lndia in the Ministry of Agriculture and Irrigation, Department of Food, New Delhi issued Sugar (Price Control), Order, 1979 (hereinafter referred to as Price Control Order) under S. 3, Essential Commodities Act, 1955, fixing the wholesale price of sugar @ Rs. 268/- per quintal, including basic excise duty, additional excise duty in lieu of sale-tax and other charges for Rajasthan with immediate effect. The defendants insisted upon the plaintiff to deliver the sugar @ Rs. 268/- per quintal as fixed under the Price Control Order. The plaintiff repeatedly requested and also served notice Ex. 3 upon them for lifting the sugar after paying the price at the agreed rate of Rs.281.75 + Rs. 40.67 as excise duty, per quintal and adjusting therefrom the amount of earnest money. They did not lift their sugar. The plaintiff filed suits against them for damages @ Rs. 54.42 (Rs. 281.75 + Rs. 40.67 -- Rs. 268/-) per quintal after adjusting the amount of earnest money deposited by them. The case of all the defendants is that the terms and conditions of the auction sale were not explained to them, after the issuance of the Price Control Order the plaintiff was not entitled to charge price at the rate exceeding Rs.268/- including all charges per quintal and the contract for the purchase of sugar at the rate of Rs. 322.42 stood frustrated and cancelled, amount was not paid as earnest money but it was part payment towards the price, the plaintiff had not suffered any loss and it had sold sugar at the rate of Rs. 292/ -per quintal. After framing necessary issues and recording the evidence of the parties, the trial Court dismissed the suits holding that the plaintiff is entitled to recover damages at' the rate of Rs. 13.75 only (281.75 -- 268) per quintal and to deduct it from the amount of earnest money deposited @ Rs. 30/- per quin-tal; The plaintiff filed appeals and they were dismissed by the learned Additional District Judge No. 2, Sri Ganganagar by his similar judgments dt. Nov. 29,1985, holding that the provisions of Section 20, Sales of 'Goods Act, 1930 (hereinafter to be called 'the Act') were not applicable in these cases as the sugar bags were, not in a deliverable state at the time of auction, sale, the property in goods not pass to the defendants, on the issuance' of Price Control Order, the contracts which took place in between the parties' on Sept. 10 1979 were frustrated, the defendants were not' bound to lift the sugar purchased by them in the said auction sale and the plaintiff has failed to prove that it had suffered loss on account of the non-lifting of the sugat by the defendants. The plaintiff-appellant has filed these second appeals challenging the judgments of both the learned lower Courts.
3. On Feb. 2, 1987, Hon'ble Mr. Justice N.C. Sharma framed the following nine substantial questions of law in second appeals Nos. 66/86, 78/86 and 82/86 :--
'(i) Whether the learned appellate judge has committed serious illegality and acted without jurisdiction in applying Section 20 of the Sale of Goods Act and not Section 64 of the Act in the facts of the present case and which provision of law is applicable?
(ii) Whether the property in the goods passes to the buyer-respondent on 10-9-79 when the auction sale was finally announced in his favour or not in view of Section 20 of the Act and whether doctrine of frustration will apply in this case or not?
(iii) Whether the Sugar (Price Control) Order 1979 was applicable to all sales made prior to 12-9-79 if the delivery of the same has not been taken by the buyer i.e. respondent then whether retrospective effect could be given on auction sales already completed on 10-9-79 but the property not delivered before 12-9-79 in view of the Sugar (Price Control) Order, 1979?
(iv) Whether the appellant was bound to supply the sugar bags to the respondents @ Rs. 268/- per bag (quintal) in view of the provisions of Sugar (Price Control) Order, 1979 and the appellant could charge old auction price at which the auction sale was announced on 10-9-79?
(v) Whether there is a contravention of Cl. 3 of the Sugar (Price Control) Order, 1979 if the appellant charges the price at which the auction sale was, completed on 10-9-79, but delivery not made ,at the spot and delivery period was fixed from 16-9-79 to 22-9-79?
(vi) Whether such contravention of Clause 3 of the Order read, with Section 7 of the Essential Commodities Act is punishable and therefore the respondent has not taken the delivery in the agreed period i.e. 16-9-79 to 22-9-79?
(vii) Whether the provisions of Section 56 of the Contract Act are applicable in the present circumstances of the case and therefore on coming into force the Sugar (Price Control) Order, 1979 the respondent was lawfully in not taking the delivery of the old agreed rate Section 56 of the Contract Act says that an agreement to do an act impossible in itself is void?
(viii) Whether the lower Courts were bound to decree the suit in view of the provisions of Sections 55 and 56 of the Indian Contract Act?
(ix) Whether the contract was not frustrated even after coming into force of the Sugar (Price Control) Order, 1979?
4. On Jan. 12, 1987, Hon'ble Mr. Justice G.K. Sharma framed the following three substantial questions of law in remaining appeals:--
'(1) Whether in auction sale under Section 20 of the Sale of Goods Act will apply or Section 64 of the Act will apply?
(2) Whether the auction sale was complete on 10-9-79 or would be complete when the delivery of the goods was made?
(3) Whether provisions of Section 56 of the Contract Act are applicable in the present case?
These three substantial questions of law are covered in the above quoted nine questions framed on Feb. 2,1987. As such the questions framed on Feb. 19, 1987 are answered.
QUESTION NO. I AND FIRST LIMB OF QUESTION NO. II.
5. The learned first appellate Court has held that the provisions of S. 20 of the Act were not applicable as the sugar sold was not in deliverable state at the time of its auction sale. This is factually incorrect. It is clearly stated in para No. 4 of the plaint that in the auction sale the defendant purchased sugar bags of specific lot. The number of sugar bags purchased, the number of the lot of bags and the quality of sugar are duly mentioned in the plaint of each case. These averments have categorically been admitted in para No. 4 of the written statement, in each case. As such it cannot be said that the sugar bags purchased were not in a deliverable state at the time of; auction sale. According to the provisions of; Section 20 of the Act, the property in the godds passed to the defendants immediately after the auction sale.
6. The provisions of the Section 64 of the Actwere not at all considered by both the learnedlower Courts. Its Clauses (1) and (2) run asunder:--
'64. Auction sale :-- In the case of a sale by auction --
(1) where goods are put up for sale in lots, each lot is prima facie deemed to be the subject of a separate contract of sale;
(2) the sale is complete when the auctioneer announces its completion by the fall of hammer or in other customary manner; and, until such announcement is made, any bidder may retract his bid;'
It is clear from the above-quoted provisions that the contract of sale is complete soon after the bid is accepted. In all the cases, there is no dispute about the acceptance of the bids and deposit of earnest money @ Rs. 30/ - per bag. The provisions of Section 64 of the Act were fully applicable. It has been observed in Consolidated Coffee Ltd. v. Coffee Board, Bangalore, AIR 1980 SC 1468 : (1980 Tax LR 1723), at page 1492, para 25, as follows :---
'Section 64(2) of our Sale of Goods Act, being in part materia with S. 58(2) of the English Sale of Goods Act, 1893, will have to be interpreted in the same manner and we are, therefore, of the view that it does not deal with the question of passing of the property at auction sale but merely deals with completion of the contract of sale which takes place at the fall of the hammer or at the announcement of the close of the sale in other customary manner by the auctioneer. It would also be correct to say that if the auction-sale of chattels is unconditional and is in respect of specific ascertained goods and nothing remains to be done to the goods for putting them in a condition ready for delivery, the property in the goods would pass to the purchaser upon the acceptance of the bid but that would not be because of Section 64(2) but because of Section 20 and such would not be the case if the goods sold thereat are non-specific or unascertained goods or the auction-sale is conditional. In this context it will be useful to refer to a decision of this Court in A.V. Thomas & Co. Ltd. v. Deputy Commr. of Agricultural Income-tax, (1963) Supp 2 SCR 608 : AIR 1964 SC 569, where this Court recognised adistinction between auction sales pertaining to specific or identifiable goods and auction-sales in regard to unascertained goods and held that in regard to the former the property in the goods passed when the C9ntract was accepted, at the fall of hammer and not in the latter case.'
7. It was faintly argued by the learned Counsel for the respondents that the amounts of carnets money were not deposited the same day as required under the notice of auction and as such the contracts of sale were not complete before September 12, 1979. This argument is devoid of force. Firstly, no such case has been pleaded in the written statement. On the contrary, it is admitted in para No. 5 of the written statement that the amount was deposited in time as required in the auction notice Ex. I. Secondly, auction notice did not so require. Thirdly, Section 64 of the Act does not say that the auction-sale is complete on the deposit of earnest money. State of Madras v. R. Ranganathan, AIR 1975 Mad 292, relied upon by the learned Counsel for the defendants does not help them. Auction notice issued in this reported case contained many terms and conditions. It was not so simple as the auction notice Ex. I issued in these cases was. The questions are accordingly answered.
Questions Nos. III? IV? V and VI.
8. In all these questions, interpretation of the provisions of the Price Control Order is involved and they are also intermixed. As such they are being disposed of together.
9. On Sept. 12, 1979, the Ministry of Agriculture and Irrigation, Department of Food, Government of India, issued the Price Control Order in exercise of the powers conferred under Section 3 of the Essential Commodities Act, 1955. Clause 1(3) of the Price Control Order provided that Clause 4 relating to the maximum retail price of sugar came into force on Sept. 17, 1979 and remaining clauses came into force at once. Clause 3 dealt with the maximum ex-factory price of sugar. The last Clause 5 contained provisions regarding the powers relating to entry, examination, search and seizure. Clause 3 ran as under:--
'3. Maximum ex-factory price of sugar:--The ex-factory price at which sugar produced in any State or Union territory specified in column (1) of Schedule may be sold or agreed to be sold, shall not exceed the price specified in the corresponding entry in column (2) thereof per quintal.'
According to the Schedule I, maximum ex-factory price for Rajasthan was Rs. 268/- per quintal. According to Note given below the Schedule I, this price included the basic excise duty and additional excise duty in lieu of sales tax and all other charges. As already observed above while answering question No. I and first limb of question No. II, the sale of the sugar bags was complete and property in goods passed to the auction-purchasers (defendants) immediately after the auction-sale i.e. on Sept. 10, 1979. The provisions of Clause 3 simply required that in Rajasthan no dealer could sell sugar at a price exceeding Rs. 268/ -per quintal on or after Sept. 12, 1979. In all these cases, the sale had already taken place prior to the coming into force of the Sugar (Price Control) Order, 1979. There was no provision in it requiring that it would be applicable to the sale of the sugar whose delivery was to be given or price was to be paid or taken on Sept. 12, 1979 or thereafter in respect of the sale which was complete prior to Sept. 12,1979. There is nothing in the Price Control Order to indicate that it had retro-specitve effect. On the contrary, it was specifically mentioned in Clause 1(3) that the provisions of Clause 1 2, 3 and 5 would be applicable with immediate effect i.e. with effect from Sept. 12, 1979 and those of Clause 4 with effect from Sept. 17,1979. The Price Control Order was issued under Section 3(l)(c) of the Essential Commodities Act, 1955. These provisions did not authorise the Central Government to issue such a notification with retrospective effect otherwise the actions lawfully taken earlier had become offences punishable under Section 7 of the Essential Commodities Act, offending Article 20(1) of the Constitution of India. It runs as under :--
'20. Protection in respect of conviction for offences :-- (1) No person shall be convicted of any offence except for violation of the law in force at the time of the commission of the Act charged as an offence, nor be subjected to a penalty greater than that which might have been indicated under the law in force at the time of the commission of the offence.'
There is also nothing on the record of any case to indicate that the said contracts of sale of sugar were subject to the price which might subsequently be fixed by the Government. As such the plaintiff was not bound to deliver sugar bags to the defendants @ Rs. 268/- per quintal. It was entitled to get aforesaid agreed price i.e. Rs. 281.75 + Rs. 40.67 as excise duty, per quintal. There was no contravention of the Sugar (Price Control) Order, 1979 on the part of the plaintiff when it asked the defendants to pay price @ Rs. 332.42 (Rs. 281.75 + Rs. 40.67) and refused to accept the price offered at the rate of Rs. 268/- per quintal. The defendants would not have also contravened any provision of the Sugar (Price Control) Order, 1979 if they would have paid price at the said agreed rate and lifted the sugar as the sale was complete and property in goods had passed to them prior to the issuance of the Sugar (Price Control) Order, 1979.
10. There is yet another aspect of the matter. It is clear from a perusal of the Clause 3 of the Price Control Order that it prohibited a dealer from selling sugar at a rate exceeding Rs. 268/- per quintal but it did not prohibit any person from purchasing it at a rates exceeding Rs. 268/-per quintal. As such there was no justification on the part of the defendants to refuse to take the delivery of the, sugar on the ground that they would be contravening the provisions of the Sugar (Price Control) Order, 1979 by paying the price at the aforesaid agreed rate. The questions are accordingly answered in favour of the plaintiff and against the defendants.
Questions Nos. II (second limb), VII and IX.
11. In all the appeals, the defendants' case is that the contracts which took place on Sept. 10, 1979 in between the parties for the sale and purchase of the sugar @ Rs. 281,75 and Rs. 40.67 as excise duty, per quintal were frustrated and stood cancelled on the issuance of the Sugar (Price Control) Order, 1979. Section 56 of the Contract Act deals with frustration of contracts. Its relevant para runs as under:--
'A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.'
As already observed above, the provisions of Sugar (Price Control) Order, 1979 were not applicable to the said contracts which took place in between the parties on Sept. 10,1979 for the sale and purchase of the sugar. The contracts remained uneffected even after the issuance of this order. In other words, the delivery of the sugar on the part of the plaintiff and payment of price at the agreed rate of Rs. 281.75 and Rs. 40.67 as excise duty per quintal by the defendants in pursuance of the said contracts did not become impossible or unlawful on coming into force of the Sugar (Price Control) Order, 1979. As such the said contracts were not frustrated. They did not stand cancelled. It has been observed in Joharilal v. B. S, Co-operative Bank, AIR 1959 Pat 477, para 13 as under (at page 480) :--
'13. I do not find any substance in these contentions of the learned Counsel for the respondent. No question of frustration of contract can arise in this case because the Government in its letter fixing a different price in Oct., 1950, clearly mentioned that this order would have no retrospective effect. As pointed out by the Court below there was nothing to show that in the terms settled between the parties when the contract between them for supply of salt had been arrived at, there was anything to indicate that the rate was to depend upon the changes made in it from time to time by any Government order. There is also no material pointed out to me from which it can be inferred that the order passed by the Government altering the rate at any subsequent period had automatically the effect of affecting any contract arrived at before that order was promulgated or issued irrespective of the fact whether the Government made that order retrospective or not.'
As such the questions are answered in favour of the plaintiff.
Question No. VIII.
12. It is clear from the aforesaid discussions that the defendants committed the breach of the said contracts and not the plaintiff. Sections 55 and 56 of the Act run as under:--
'55. Suit for price.-- (1) Where under a contract of sale the property in the goods has passed to the buyer and the buyer wrongfully neglects or refuses to pay for the goods according to the terms of the contract, the seller may sue him for the price of the goods.
(2) Where under a contract of sale the price is payable on a certain day irrespective of delivery and the buyer wrongfully neglects or refuses to pay such price, the seller may sue him for the price although the property in the goods has not passed and the goods have not been appropriated to the contract.
56. Damages for non-acceptance.-- Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may sue him for damages for non-acceptance.'
13. In all the cases, it is admitted case of the parties that the defendants agreed to purchase certain number of bags of sugar @ Rs. 281.75 per quintal, they also agreed to pay excise duty @ Rs. 40.67 per quintal, the delivery was to be taken by them on any date in between Sept. 16, 1979 and Sept. 29, 1979 and admittedly it was not taken. After the issuance of the Sugar (Price Control) Order, 1979, the plaintiff could not sell sugar at a price exceeding Rs. 268/- per quintal. As a result thereof, the plaintiff had to suffer loss at the rate of Rs. 52.52(Rs. 281.75 + Rs. 10.67 --Rs.268/-) Per quintal. The plaintiff has rightly claimed damages at this rate. The learned lower Courts should have decreed all suits. The question is accordingly answered in favour of the plaintiff.
14. There is also no force in the last, contention of the learned Counsel for the defendant-respondents that the doctrine of unjust enrichment would be applicable if the suits are decreed. The doctrine that a person who has been unjustly enriched at the expense of another is required to make restitution has found statutory recognition in Sections 65 to 70, Contract Act. It has not been shown as to how the plaintiff is unjustly enriched. On the contrary, it is clear from the aforesaid discussions that the defendants put the plaintiff to loss by committing the breach of the contracts. If they had respected the contracts, the plaintiff would have obtained price at the agreed rate of Rs. 322.42 per quintal. On account of the breach of the contracts on their part, the plaintiff had to sell the sugar at the notified rate of Rs. 268/- per quintal and thereby suffered loss at the rate of Rs. 54.52 per quintal,
15. Consequently, all the seventeen appeals are allowed and the suits are decreed. The plaintiff-appellant will get costs of all three courts and interest on the decretal amount at the rate of 12% per annum from the date of the institution of the suit to the date of payment of deposit. If the defendant-respondents pay to the plaintiff-appellant or deposit in the trial Court the entire decretal amount and costs within three months from the date of the receipt of a notice of demand detailing the various amounts payable as per this judgment along with a photostat copy of the decree of this Court from the plaintiff or from the date of the receipt of a notice from the executing Court, they will get reduction in the rate of interest. In that case, the interest will be payable at the rate of 6% per annum instead of 12% per annum.