Mumbai: 4 decades on, cotton body wins legal suit

Hada Textile Industries Limited and Shaktigarh Textile and Industries Limited have to pay ₹16.82 lakh and a 12% interest on ₹10.50 lakh calculated from November 1980 when the suit was filed

A city civil court has settled a 41-year-old legal battle between the Cotton Corporation of India (CCI) and two companies by directing the latter to pay compensation for breach of contract.

CCI had entered into a contract with the two companies for import of cotton. In the contract, CCI acted as canalising agent (who facilitates flow of goods). (PHOTO FOR REPRESENTATION)

Hada Textile Industries Limited and Shaktigarh Textile and Industries Limited have to pay ₹16.82 lakh and a 12% interest on ₹10.50 lakh calculated from November 1980 when the suit was filed.

The contract between CCI, and Hada and Shaktigarh dates back to March 18, 1977. CCI had entered into a contract with the two companies for import of cotton. In the contract, CCI acted as canalising agent (who facilitates flow of goods). All importers have to place orders with the canalising agency for supply of goods.

According to the suit, 890 bales of cotton were to be imported for the two companies.

As many as 822 bales of cotton arrived from various countries at a port in Calcutta. Of them, 467 bales were allotted to Hada and 355 bales to Shaktigarh in September 1977.

However, the two companies refused to accept the delivery. It was alleged the corporation failed to import the consignment on due dates, leading to the two companies to cancel the agreement in July 1977. They claimed that the cotton bales were supposed to arrive between May and July 1977.

After Hada and Shaktigarh’s refusal, CCI said it was forced to sell cotton to other companies at a discounted rate. It said that the total bales were worth ₹16.82 lakh. The corporation claimed that after the resale, it suffered a loss of ₹10.50 lakh owing to a glut in the market. The companies refused to accept CCI’s contention and filed a suit before the Bombay city civil court in November 1980.

In the court, CCI argued that both companies are part of Hada Group of Industries and liable to pay for the loss.

The companies claimed that they were not part of the Hada Group, and the person who signed the contract was not authorised to do so. They also argued that were not liable to pay for CCI’s loss as it resold the goods.

The court debunked the argument by Hada and Shaktigarh, saying they had agreed to import cotton bales through CCI.