Judgment:
Mishra, J.
1. The instant appeal is yet another in the series of cases in this Court, at the instance of the creditors in particular, in which before any adjudication of the money claim in the suit and accordingly, any decree, defendant's properties are sold through the intervention of the court, the sale proceeds are allowed to be appropriated by the plaintiff and as weshall presently see in the instant suit, the third party-purchasers are neither delivered any property, nor are they given the refund of the money so realised from them as the consideration of the auction purchase. The plaintiff/1st respondent has filed the suit, C.S. No. 351 of 1987 for recovery of Rs. 16,82,882.60 from respondents 2 to 4 and in default of payment for sale of B Schedule property in the plaint for realisation of the suit claim. Pending suit, however, the plaintiff/1st respondent filed Application No. 2084 of 1987 for appointment of an Advocate as Commissioner to take inventory of the stocks and other goods in Schedule B property mentioned in the plaint and take possession and another Application No. 2083 of 1987 for interim injunction restraining the defendants from disposing or otherwise alienating the goods available in the premises of the 1st defendant, i.e., to say, the 2nd respondent herein. On 13.7.1989, the court passed an order, directing the plaintiff/1st respondent to nominate one of its officers to take inventory of the stocks in the property described in B Schedule to the plaint and it was understood that the plaintiff and defendants would come out with the offers or purchaser if any so that the said stock might be sold to the highest offerer. On 25.8.1989, the plaintiff brought in 4 sealed covers containing offers for different amounts, which included the offer of the appellant herein, i.e., to say, Great Eastern Engineering Company, Madras. The appellant's offer was the highest; yet, it seems, the court permitted the bid once again and finally, it seems, it was settled in favour of M/s. Raman & Co., The said Raman & Co., however, did not come forward and it seems, backed out. It fell this time upon the appellant to pay Rs. 7,90,000 for B Schedule properties by depositing Rs. 50,000 immediately in court and the balance of Rs. 7,40,000 in instalments on various dates by getting extension of time from court for payment of the amount. After completing, however, of the payment of Rs. 7,90,000 the appellant herein demanded delivery of the goods. On 3.10.1989, one of the Officers of the plaintiff described as plaintiffs officer-in-charge (rehabilitation) issued a letter to the appellant permitting to take delivery of the goods available at No. 71, Perianna Maistry Street, Periamet, Madras-3. The said officer also sent a copy of that letter, it is said, to the 1st defendant/2nd respondent asking him to release stocks detailed in that letter to the appellant or its authorised representative/nominee as the appellant had paid the entire sum of Rs. 7,90,000 as per the order of the court. According to the appellant, however, when it reached the destination as directed by the said Officer of the plaintiff, it was denied any delivery of the goods. It returned, thus, with an application in court alleging that the plaintiff and the defendants had abused the process of law, which amounted to contempt and committed various criminal offences. The appellant issued a lawyer's notice to defendants 1 to 3 (respondents 2 to 4) with a copy to the plaintiff/1st respondent alleging that the goods were not delivered to it as per the letter of the plaintiff, but, that notice was returned unserved, as the premises of the defendants 1 and 2 (respondents 3 and 4) was found locked. The appellant filed in the said suit Application No. 5398 of 1990 seeking a direction to the plaintiff to deliver the auction materials together with Rs. 1 lac as damages or alternatively to refund the sum of Rs. 7,90,000 received from it with interest from 3.10.1989 and Rs. 1 lac as damages. By another Application No. 5399 of 1990, the appellant also sought punishment to respondents 2 to 4 for Contempt of Court in respect of the goods sold, but not delivered to it. The appellant made yet another Application No. 5400 of 1990 seeking a direction for the prosecution of defendants 1 to 3, i.e., to say, respondents 2 to 4 for having committed criminal offence for wrongfully selling away the goods to third parties and converting the proceeds against themselves.
2. The plaintiff as well as defendants opposed the abovesaid applications. The plaintiff/1st respondent, however, came forward with a case in its counter that on 3.10.1989, it addressed a letter to the defendants/respondents asking them to deliver the leather stocks to the appellant as per the order of the court and that it was under the impression that the goods were taken delivery by the appellant accordingly, but that it was only on 18.4.1990, when the plaintiff/1st respondent received a notice from the counsel of the appellant that it came to know that the appellant had not taken delivery of the goods from the defendants. It maintained in its counter that it was not responsible for the non-delivery of the leather stocks by defendants 2 to 4 to the appellant, as it had duly acted as per the direction of the court.
3. The return of the 2nd respondent is, however, curious, for, according to it, the purchase money was arranged by the defendants themselves, that the appellant herein had no means to pay the purchase money and that two suits C.S. No. 757 of 1990 and C.S. No. 769 of 1990 have been instituted accordingly by it impleading the appellant as a party/defendant for realisation of such advances made by it to the appellant. Although it does not appear to say that it delivered the goods as ordered by the court to the appellant, it has said that the appellant has duly acknowledged the delivery of the stocks by the defendants/respondents 2 to 4 by delivery of the original letter dated 3.10.1989 issued by the plaintiff-1st respondent.
4. The trial court has, however, after taking notice of the case of the parties stated as follows:
They must have agreed between themselves that the goods must be somehow purchased and retained by paying the sale price and that the goods, after payment of the sale price to the plaintiff must be shared between them. The second defendant must have had the fear that if the goods were sold and delivered to the applicant and if the applicant would in turn pass on the goods in favour of third parties, there would be loss to the first defendant-company and therefore, the second defendant as director of the first defendant-company must have come forward to arrange for the payment of rupees four lakhs to be paid to the applicant. If only the applicant had not received the sum of rupees four lakhs from the second defendant or the first defendant- company and had not paid the same to the plaintiff, the claim of the applicant herein would be straight forward and he might be deemed to be entitled to his claim at present. But, it is not so, as the applicant has conducted himself otherwise and he has not come with clean hands. If he has received a major part of the sale price from the first defendant or-the second defendant themselves and paid the same to the plaintiff, it is but natural that the defendants had thought of having right in respect of the goods that were sold in favour of the applicant. It is significant to note there that the applicant has not expressly stated in his affidavit that he received rupees four lakhs from the defendants 1 and 2 for payment to the plaintiff and for making up of Rs. 7,90,000. This is an indication that the applicant is a person guilty of suppression of material facts.
The circumstances that a sum of rupees four lakhs was paid by the defendants 1 and 2 while the applicant had paid only Rs. 3,90,000 shows that some dispute must have arisen between the defendants and the applicant over the disposal of the goods from the premises of the first defendant long after 3.10.1989 and that, therefore, the applicant did not come forward with a complaint that the goods were not delivered to him or or immediately after 3.10.1989. The plaintiff has evidently issued and handed over the latter to the applicant on 3.10.1989 itself soon after the realisation of Rs. 7,90,000. If the applicant's claim is straightforward he ought to have gone to the premises of the first defendant on 3.10.1989 itself or the following day and in any event, without delay and taken steps to take delivery of the goods. Here, it appears that nothing as such has been done by the applicant. As against the latter issued by the plaintiff permitting to take delivery of the goods on 3.10.1989, the applicant would come forward with a complaint that the goods were not delivered to him only on 13.4.1990, that is exactly 61/2 months af tier the said letter of the plaintiff. There is absolutely no reason why the applicant has not made any complaint of nondelivery of the goods by the defendants soon after 3.10.1989. The legal notice issued by the applicant's counsel on 18.4.1990 alone contains such an allegation of non-delivery of the goods. He has not made any complaint to the plaintiff, the proper authority to whom the complaint could and should be legitimately made, till 18.4.1990 about the non-delivery of the goods by the defendants.
The allegation of the applicant in his notice dated 18.4.1990 that the applicant made complaints on several occasions to the plaintiff, but that the plaintiff did not take action on the matter, is found to be false. The plaintiffs counsel has duly repudiated this allegation in his letter dated 25.5.1990 by saying that the applicant made no such complaint. It is clear that the allegation that the applicant made complaints to the plaintiff on several occasions, but that the plaintiff took no action on the complaint, has been invented by the applicant as an explanation to cover up the delay of 6 1/2 months in sending the first notice dated 18.4.1990 to the defendants. Even then, the applicant's counsel did not address the notice to the plaintiff also as addressed to defendants. The applicant's counsel has just marked a copy of the notice dated 18.4.1990 to the plaintiff as if it was not important to the plaintiff. Probably, the applicant did not like to invite an immediate and suitable reply from the plaintiff and that, therefore, the notice was not addressed to the plaintiff also. Here, the plaintiff would say that after the passing of the letter dated 3.10.1989, the plaintiff was under the bona fide impression that the applicant had taken delivery of the goods as no complaint of non-delivery of the goods was made by the applicant soon after 3.10.1989 and as the leather goods in question being perishable might not have been kept undelivered to the applicant for so long.
So far as the defendants are concerned, their contention is that the goods were duly delivered to the applicant as soon as he handed over the letter dated 3.10.1989 of the plaintiff. The possession of this letter by the defendants-after handing over of the same the applicant is relied on by the defendants as a document evidencing the delivery of the goods. Their plea is that if the goods were not delivered to the applicant, the letter issued by the plaintiff would not have passed into the hands of the defendants. Of course, there is no letter or voucher evidencing the actual delivery of the goods by the defendants from the premises of the first defendant to the applicant. But still, it is not possible to hold definitely that the goods were not delivered to the applicant. If the goods were not delivered to the applicant, the natural human conduct of a person like the applicant would be to report to the plaintiff or take up the matter to the court soon after 3.10.1989. But, it has not been done so by the applicant. He has kept quiet for about 6 1/2 months after the letter issued by the plaintiff for taking delivery of the goods from the first defendant and he has chosen to complain of the non-delivery of the goods only thereafter. This sort of conduct on the part of the applicant is not consistent with the natural conduct of a person and probability.
So far as the plaintiff is concerned, it is not possible for this Court to direct the repayment of Rs. 7,90,000, leave alone the interest and damages claimed by the applicant, for the reason that the plaintiff has duly acted according to the directions of this Court in its order dated 23.8.1989. The order directs that the plaintiff must issue a letter requesting the defendants to deliver the goods and that on receipt of the letter the defendants should deliver the goods to the purchaser (applicant). Here, the plaintiff has duly complied with this order arid, if the applicant has not taken delivery of the goods as alleged by him, it must be attributed only to his underhand dealings and laches. He should not have received the money from the first defendant or the second-defendant for payment to the plaintiff when it is the goods of these defendants that were sold and this had really complicated the matter and put the applicant in a helpless situation for which he alone is responsible. In the circumstances, we have only to say that the applicant and the defendants should sort out the claims and settle the same and not to look to the plaintiff for redressal. The applicant will not be entitled to seek any relief at the hands of this Court. Consequently, we have to refuse the relief of direction that the plaintiff should deliver the hypothecated materials with Rs. 1,00,000 as damages, or refund the sale price of Rs. 7,90,000 with interest and damages of Rs. 1,00,000. It is not known howtheapplicant will be entitled to claim both interest and damages in this regard. For the reasons stated above, we have to hold that the applicant has not made out a case for punishing the defendants 1 to 3 for contempt of court's order or for directing criminal prosecution against them.
Besides the above, the trial court also has held that the appellant has no locus standi to make the above mentioned applications, as the order for the sale of the property described in Schedule B of the plaint was in favour of Great Eastern Engineering Company and not the appellant individually. It has said.
The said Great Eastern Engineering Company is said to be a partnership concern of which the applicant has described himself as a partner in Application No. 4161 of 1989 and as Managing Partner in Application No. 4662 of 1989. These two applications have been filed by the applicant seeking extension of time for payment of part of the sale price. Now, in the present applications, we see the applicant himself to figure as an individual to make the claim on behalf of Great Eastern Engineering Company. The cause title of the present applications is styled as 'Mohamed Hussain Suleman of Great Eastern Engineering Company.' He has not indicated in these applications that he is a partner or a managing partner of the said firm. Nor, has he mentioned that the said Great Eastern Engineering Company has become a proprietary concern of himself and that, therefore, he has come forward with the present applications. The description of himself as applicant in the applications gives rise to the question whether the applicant is entitled and is competent to file these applications. It has not been shown here that the said Great Eastern Engineering Company is a registered firm. Unless the firm is a registered one, it cannot sue the plaintiff and the defendants in the present applications. In feet, this is the very contention raised on behalf of the defendants. The defendants would plead in this context that the applicant has come forward with the present applications as a pre-exemption on coming to know somehow that the defendants were going to file suits against Great Eastern Engineering Company and the applicant for recovery of Rs. 4,00,000 paid by defendants 1 and 2 to the applicant towards the sale price of the goods. Evidently, one suit, C.S. No. 757 of 1990 has been filed by the first defendant for recovery of Rs. 3,55,520 with interest and costs and the other suit C.S. No. 769 of 1990 has been filed by the second defendant for recovery of Rs. 1,19,250 wi th interest and costs. These suits against the applicant and the firm of Great Eastern Engineering Company are pending. In the circumstances, I have to uphold the technical plea of the defendants that the applications are not maintainable.
5. Before we started delivering the instant judgment, however, learned Counsel for the plaintiff/1st respondent has brought to our notice that the suit has been decreed exparte. The fact, however, remains uncontroverted that when the plaintiff filed the application for sale of Schedule B properties, the defendants were yet to file their written statement. The application, thus, for the sale of Schedule B properties was made at a time when issues were yet to be framed and it was not yet known, whether the defendants would accept the plaintiffs claim or not. The provision in the Code of Civil Procedure for sale byway of interlocutory, orders of any property which is the subject-matter of the suit or attached before judgment, is permissible only when they are subject of speedy and natural decay and otherwise when for any just and sufficient cause, the court finds it desirable to have sold at once. The power given to the court under Order 39, Rule 6 of the Code of Civil Procedure alone is available before adjudication and decree that maybe executed in accordance with the provisions under Order 21 of the Code of Civil Procedure. A Bench of this Court in the case of Ranjaniv. The Indian Bank, O.S.A. No. 64 of 1993, dated 5.8.1993 and another in the case of PL.CT.SP. Subramanian Chettiar v. Meenakshi Achi and seven Ors. (1992) 1 L.W. 423, has clearly spelled out, the only situation in which pending the suit, the court can order interim sale is one as contemplated under Rule 6 of Order 39 of Code of Civil Procedure. The inherent power of the court under Section 151 of the Code is not available at all. The court has stated the reasons for taking the said view and we can hardly find better words to express ourselves than the words in the judgment of this Court in PL.CT.SP. Subramanian Chettiar v. Meenakshi Achi and seven Ors. (1992) 1 L.W. 423:
There are certain specific provisions in the code as respects the sale of movable and immovable properties. Order 39, Rule 6 invests the power to the court to order interim sale of movable property and the said Rule reads as follows:
The court may on the application of any party to a suit order the sale, by any person named in such order and in such manner and on such terms as it thinks fit, of any movable property, being the subject-matter of such suit or attached before judgment in such suit, which is subject t6 speedy and natural decay, or which for any other just and sufficient cause it maybe desirable to have sold at once.
There are also other provisions regarding the sale of movable property found traceable to Order 21, Rules 74 to 81 and the details of those provisions need not at all be required to be elaborated here for the purpose of the instant case. The sale of immovable property, in execution of the decree is legally permissible and to this effect, there is a provision under Order 21, Rule 82 which prescribes:
Sales of immovable property in execution of decrees may be ordered by any court other than a Court of Small Causes.
Order 21, Rules 83 to 96 prescribe the procedure to be followed in such sales. Barring these provisions, there is no other provision, except the provision, as adumbrated in Section 151 of the Code dealing with the inherent powers of the court. Section 151 does not confer a power in the court, but makes a statutory recognition of the inherent power of the court to do certain things ex debito justiciae. Such a power is not to be exercised casually and if at all exercised with circumspection and not to violate any rule of law or equity. There can be no justification in applying the powers of the inherent jurisdiction to introduce a new form of procedure for which no provision is made by law.
For the direction by the court, in the instant case, to the Commissioner to order sale of two items of the suit properties in final decree proceedings, for meeting the pressing demands of the estate in discharging the huge tax arrears, the aforesaid provisions of Order 21, Rule 39 cannot at all be made applicable and further, no other provision is available, except the invoking of the inherent jurisdiction under Section 151 which in our view, is also not applicable, as the inhering of such a power to the court would tantamount to introducing a new form of procedure, for which no provision is made in the Code and if at all, any provision is traceable, for such sale of property in partition action, reference maybe made to Section 2 of the Partition Act (IV of 1893) wherein it is legally permissible to effect such sale, in case a division of the property cannot reasonably or conveniently be made. The case on hand is not one falling within the purview of Section 2 of the Partition Act.
In this context, useful reference may be made to the decision in Muthuswami Gounder v. A.P. Kaithamalai Gounder 1976 T.L.N.J. 191. In that case, the lower court after taking into consideration the Commissioner's report and the objections filed by the respondent, directed the Commissioner to sell the property among the sharers, after giving one month's notice to the counsel of both the parties and the successful bidder, among the sharers, shall be permitted to set off his share to the sale price and deposit the balance. Aggrieved by the said order, the defendant preferred a revision to this Court, which considered the question as to whether the court has inherent jurisdiction, apart from the Partition Act to pass an order as it thinks just and convenient. This Court after placing implicit reliance on the Division Bench decision of this Court in O.S.A. No. 108 of 1966 which was affirmed by the apex of the Judicial Administration of the country in R. Ramamurthi v. Rajeswara Rao : [1973]1SCR904 , said thus:
It is clear from the discussion and the decision rendered in O.S.A. No. 108 of 1966 that this Court will not have inherent powers, apart from the Partition Act, to pass orders in respect of a partition suit. I am in complete agreement with the arguments advanced by the petitioner's counsel to the effect that O.S. A No. 108 of 1966 is the authority for the proposition that the court will not have any inherent powers, apart from the Partition Act in respect of partition suits. It is clear the court below has exercised jurisdiction not vested in it by law. The lower court ought to have decided the case as per the provisions of Section 2 of the Partition Act and should not have ordered auction of the suit property in between the sharers.
Notwithstanding the above, the plaintiff/1st respondent herein filed a petition seeking appointment of a Commissioner for preparing the inventories and got an order that it itself would nominate one of its officers to take an inventory of the stocks in the property described in Schedule B to the plaint and thereafter would obtain offers from willing purchasers and place the offers so received by its Officer before the court and other applications aforementioned. The court, however, accorded its seal to the offers of the intending purchasers by first accepting the highest offer of M/s. Raman and Co., and when it did not come forward to purchase the goods, the next offer of the appellant was accepted and deposits by it came in instalments, the first deposit being Rs. 50,000 and the balance, it is not in dispute, was fully accounted for against which alone, the court ordered for delivery of the goods to it. The interesting part, however, of the case, is in the authority to deliver the goods to the purchaser, viz., the appellant herein. If the defendants were required to deliver the goods, why did the court ask the plaintiff to deliver the goods and how then the plaintiff issued a letter for the delivery of the goods as to the appellant herein.
6. It is not in dispute that the appellant herein has paid the price of the goods and that the said price has been settled by the court, realised through the orders of the court by the plaintiff/respondent and it is the plaintiff who has received the same. The plaintiff/respondent has, as the receipts show, received payments of the purchase money from the appellant herein on behalf of M/s. Great Eastern Engineering Company. It is available in the contents of the various communications that the plaintiff/respondent has arranged for the sale of stocks lying at No. 71, Perianna Maistry Street, Periamet, Madras and when they received the final payment on 3.10.1989, they wrote to the appellant as follows:
C.S. No. 351 of 1987 : M/s. Nihads Leathers (P) Ltd.
With reference to your letters dated 28.9.1989 and 29.9.1989 tendering cheques aggregating Rs. 4,40,000 for credit of M/s. Nihads Leathers (P) Ltd., Account towards sale of stocks, we have to advise that we today realised the cheques. With realisation of these cheques, we have received from you totally Rs. 7,90,000 (Rupees Seven lacs and ninety thousands only) as per court order towards payment of stocks of leather sold to you.
Please take delivery of the following quantity of leather stocks from M/s. Nihads Leathers (P) Ltd., 71, Periyanna Maistry Street, Periamet, Madras-3.
1. Goat Gloving Leather 3295 pieces2. Glze Kid Blac 4238 '3. Goat sued FinishedLeather 7691 '4. Buff Calf Leather 1774 '-------Total 16998 '-------We thank you very much for your sincere cooperation extended to us in this matter.
Yours faithfully,
Officer-in-Charge (Rehabilitation)
and gave along with that a letter of saleof stocks of leather per court order stating as follows:
We have today instructed Shri Mohamed Hussain Sulaiman of Great Eastern Engineering Company to take delivery from you of the stocks of leather pieces sold through court order, as he has paid the entire sum of Rs. 7,90,000 to the credit of your account.
Please extend the necessary co-operation in effecting the delivery to him or his authorised representative/nominee.
Yours faithfully,
Officer-in-Charge (Rehabilitation)
The appellant has maintained that the goods were not delivered to it and the plaintiff/respondent's letter of authority to take delivery of the goods remained a paper deal only, about which they repeatedly informed the plaintiff/respondent as well as the defendants. But we find in a letter issued by the learned Advocate for the plaintiff bank that the plaintiff/respondent received copies of letters issued to Nihads Leathers (P) Ltd., that is to say the 2nd respondent herein (the 1st defendant in the suit) and that from that alone the plaintiff/respondent came to know that the defendants had not delivered the possession of the stocks of goods purchased by the appellant for a sum of Rs. 7,90,000. In this letter, obviously under the instructions of the officers of the plaintiff bank, learned Advocate for the plaintiff bank has stated as follows:
The statement contained in paragraph 3 of your letter that 'my client had also on several occasions complained to State Bank of India, but State Bank of India has not taken any action in the matter' is not true. Your clients did not at any time before, complain to the Bankabout the non-delivery of the stocks. The Bank has until receipt of copy of your letter been under the bona fide belief that your clients have already taken delivery of possession of the stocks from Nihada Leather (P) Ltd.
The allegations made in paragraph 4 of your letter that Mr. Hajee K. Immadduddin and Mrs. Hameeda Banu acted 'in collusion and conspiracy with the Bank Officials' is false and without any substance whatsoever. If Mr. Hajee KLImmadduddin and/or Mr. Hameeda Banu have removed the stocks, it is in contravention of the orders passed by the Honourable High Court and they have to hold themselves responsible to you for the consequences flowing from such unauthorised removal and nondelivery to your clients.
The first twist thus in the whole game of the sale of the stocks of goods at the instance of the plaintiff/respondent came by way of a reply to one of the letters of the appellant by the learned Advocate of the plaintiff/respondent, in which it is said, if the defendants had removed the stocks it was in contravention of the orders passed by the court and they had held themselves responsible to the appellant for the consequences flowing from such unauthorised removal and non-delivery of the goods. The defendants came forward with their story in lawyer's reply to the lawyer's notice on behalf of the appellant on 21.5.1990 in these words:
It is totally false that your client has made a payment of Rs. 7,90,000 to State Bank of India and thereafter the 1st of my client was directed by the bank to release the stocks to your client. After the auction in court your client had made a payment of Rs. 50,000 on 29.8.1989 and inspected and vertified the stocks. He found them to be in order and gave a letter to that effect to my client. Though your client had offered to purchase the stocks for Rs. 7,90,000 he did not have the means to pay the same. The 2nd of my client could understand that he could not make payment of the entire auction money from his own account. Your client requested the 2nd of my client to help him in the payment of the amounts, and represented that after the completion of the transaction he would be able to dispose of the stocks and pay my client the amounts advanced by him. On 12.9.1989 he had received as hand loan a sum of Rs. 1,00,000 from Barkath Leather Exporters, 33, Hunters Road, Madras-7, which is a sole proprietor concern belonging to the 2nd of my client. At that stage he represented to the 2nd of my client that he was expecting funds from M/s. Shaw Wallace and Co. and that he would repay the loan shortly.
In the meantime, he filed an application for grant of further time and the Hon'ble High Court was pleased to extend the time by order dated 12.9.1989 on which date he had executed a letter and received the abovesaid sum of Rs. 1,00,000 as handloan. Before 29.9.1989 the date upto which the court granted time he could not deposit any further amount. He had again approached the 2nd of my client and requested him to help him further. My client having found that the transaction was halfway through and he having already given Rs. 1,00,000 the 1st of my client had given him two cheques in their favour dated 23.9.1989 for Rs. 1,00,000 each. These cheques were deposited to your client towards the auction price of Rs. 7,90,000. The 1st of my client had further passed on a cheque for Rs. 1,00,000 dated 27.9.1989 which was also deposited by your client towards the sale price. On 28.9.1989 your client filed another application stating that the deals he expected have not fructified and wanted further time to organise resources.
After deposit of the entire amount on 3.10.1989 he obtained a letter from State Bank of India wherein the Bank had advised my client to deliver the stocks to your client since the total amount was paid to the Bank. It was assured by your client at that time that he would sell the stocks and repay the 2nd of my client Rs. 4,00,000. Your client had delivered the original letter of State Bank of India and taken delivery of the goods promising to pay the amounts taken from my client immediately after sale of the goods. Since the 2nd of my client did not receive the amount paid to your client he had started insisting on repayment of the same. Your client was evading payment of the amount. Now having come to know clearly that my client is contemplating to take civil and criminal action against yourclient he had issued the belated notice after more than 6 months without any whisper of such non-delivery earlier. The allegations in your notice that he had made complaints to State Bank of India is totally false. If your client should resort to state that such complaints were oral they could all be only imaginary. At any rate neither your client nor the bank had at any time prior to your notice under reply had even whispered of non-delivery. The averment in your notice of alleged contempt by my client is false, mischievous and made to intimidate my clients.
My clients hereby call upon your client to repay the sum of Rs. 4,00,000 within 15 days of receipt hereof failingwhich they will be taking action against your client for recovery of the sum with interest at 21% per annum from the dates of respective payments as also criminal complaint against your client for cheating.
7. We have dilated in some detail to the first respondent of the plaintiff/respondent to the case of the appellant as well as the first response of the defendants to the case of the appellant that as directed by the court it deposited the purchase money in instalments with the plaintiff/respondent. The plaintiff/respondent acknowledged such deposits and accordingly accepted that right of property in the goods stood transferred to the appellant and accordingly the appellant was entitled to take possession of the stocks sold to it. The plaintiff/respondents' response was, well what if you have paid the price, if goods have not been delivered defendants alone are answerable. The defendants, on the other hand, have a strange case of a sort of a contract under which the defendants made available to the appellant money from time to time which money alone the appellant deposited towards the auction price of Rs. 7,90,000 which money amounting to Rs. 4,00,000 the appellant deposited towards the price of the stocks sold under the court's order and added that the appellant had delivered the original letter of the plaintiff/respondent to the defendants and taken delivery of the goods.
8. The learned single Judge has, however, found no details are available as to how the balance of Rs. 3,40,000 was paid by the applicant so as to complete the sale price of Rs. 7,90,000 on 3.10.1989. Here the fact that both the 2nd defendant and the applicant had acted together and made payment of the sale price shows that there was some collusive arrangement between them. They must have agreed between themselves that the goods must be somehow purchased and retained by paying the sale price and that the goods after payment of the sale price to the plaintiff must be shared between them. The 2nd defendant must have had the fear that if the goods were sold and delivered to the application and if the applicant would in turn pass on the goods in favour of third parties, there would be loss to the 1st defendant company and therefore the 2nd defendant as Director of the 1st defendant company must have come forward to arrange for the payment of Rs. 4,00,000 to be paid to the applicant.' We regret that a finding of such a vital consequence has been recorded based solely on conjectures. Could this be a concern of the court how the purchaser arranged for the purchase money and how he dealt with others including the defendants outside of the court when the simple case before it was that on payment of Rs. 7,90,000 the appellant became entitled to the goods? If there was any other claimant or any other claim stood independently and separately for which neither there could be any nor was any issue in the main suit how that could be an issue in the proceeding for the auction sale of the goods. What has always been guarded by the courts is that they must not fall prey to surmises and conjectures. They do draw inferences of facts, but that they do on the basis of the proved facts and of such facts only which are inferable from such proved facts. We have seen through the facts that all cautions which laws create for any sale, effected through courts, were thrown to the winds by the plaintiff/respondent and the defendants and no care whatever was taken at any stage of the proceeding for the sale of the goods to adhers to the provisions under the Sale of Goods Act. If, after receiving the purchaser money, the plaintiff/respondent has said the transfer of the goods to the appellant was to be effected by the defendants since they were the owners of the goods and they were in the custody of the goods, how could it then receive the purchase money and appropriate it when they knew that they could not effect the transfer. It is not possible to acknowledge that the plaintiff/respondent was unaware of the legal position that it is the seller who has to receive the price of the goods and the buyer to take delivery of the goods. Section 31 of the Sale of Goods Act says, it is the duty of the seller to deliver the goods and of the buyer to accept and pay for them in accordance with the terms of the contract of sale. Facts aforementioned leave no manner of doubt that for all purposes throughout the proceeding for the sale of goods, the plaintiff/respondent represented itself as the seller of the goods. It is it who invited tenders. It is it who received payments and it is admitted, it has received in full the sale price of the goods.
9. Learned counsel for the plaintiff/respondent has, however, pointed out that the court's order to sell the goods was passed in presence of the defendants and the arrangement accordingly for inviting tenders and payment of the price of goods was ordered by the court in presence of the defendants. Thus, all acts of the plaintiff/respondent for the sale of the goods were on behalf of the defendants only. They were required to obey the order of the court and accordingly deliver the goods to the appellant. Had this been, however, a case of the sale of the goods ordered by the court and the payment of Rs. 7,90,000 as the price of the goods of the defendants was ordered to be appropriated on account of the defendants and the plaintiff/respondent received such payment under the orders of the court as part satisfaction of their claim and/or subject to final decree perhaps there would have been some cause for the plaintiff/respondent to say that it has played no such role in the sale of the goods which would make it liable for any action by the appellant. The difficulty, however, for the plaintiff/respondent is that it just cannot appropriate the purchase money until it is so ordered by the court as a part of the decree and it is thus to be accepted as money realised from the defendants. There is nothing of this sort on the record. In fact, nothing of this sort could have been done at all.
10. We were, however, anxious in this proceeding to know if there was, as claimed by the defendants/respondents any delivery of stocks to the appellant. The only case of the alleged delivery is the delivery of the letter of the plaintiff/respondent by the appellant to one of the defendants, and their story that they paid to the appellant a sum of about Rs. 4,00,000 for which money they have already filed two suits, viz., C.S. No. 757 of 1990 and C.S. No. 769 of 1990. In spite of our views as aforementioned, we do not propose to straightaway order forward of any damages to the appellant and/or any action upon the plaintiff/respondent and/or defendants for committing either any criminal offences of wrongfully, selling away the goods third parties and appropriating the proceeds to themselves or for contempt, we have reasons in the instant case, however, to hold that a sum of Rs. 7,90,000 belonging to the appellant is in the hands of the plaintiff/respondent and the plaintiff/respondent is liable to refund the same to the appellant herein with reasonable interest thereon forthwith. The other matters, however, have to be attended to in accordance with taw. If we are not making any further orders, we are doing so for the reason that the trial court is yet to apply itself in the light of our observation and in the light of the law of the land. We are satisfied, however, that the impugned judgment dismissing the three applications cannot be sustained and the same is fit to be set aside. The Application No. 5398 of 1990 is allowed in part. The plaintiff/respondent is directed to refund the sum of Rs. 7,90,000 with interest thereon due from 3.10.1989 till date of payment. The reasonable interest, in our opinion, on the facts of the instant case will be the maximum that the plaintiff has been claiming during the said period from its debtors fixed at 18% compoundable with quarterly rests. This, however, shall be subject to the right of the appellant herein to claim damages for any loss or injury in a properly constituted suit. Application Nos. 5399 and 5400 of 1990 are remitted to the trial court for disposal in accordance with law. It is, however, open to the plaintiff/respondent to execute the decree in accordance with law. The appeal is accordingly allowed with costs. Hearing fee Rs. 5,000.