Middleman not made a party; HC overturns Trial Court’s order over ‘washout charges’

S Shyam Prasad | NT

Bengaluru: The High Court has set aside the ruling of a Trial Court which had ordered a coffee supplier in Kodagu to pay ‘washout charges’ to a Bengaluru-based exporter for non-supply of contracted coffee.

The High Court noted that the middleman who was contracted by the exporter is not made a party to the case. ‘Washout charges’ is a term in international coffee for damages.

Louis Dreyfus Trading Ltd had placed an order with Ratnagiri International, the exporter for supply of 38.40 MTs of ‘Robusta India Cherry A Screen 17 UP Coffee,’ 76.8 MTs of ‘Robusta India Cherry AB’ and 115.2 MTs of ‘RC AB Grade Coffee’.

The coffee was required to be supplied by March 2002. Ratnagiri International then hired the services of another company, Tricon Agencies, to procure the coffee.

Tricon in turn placed the orders with Continental Coffee Curing Works owned by Robin Mandappa. Ratnagiri International approached the Trial Court against Mandappa claiming he failed to supply 38.40 MTs of ‘Robusta India Cherry A Screen 17 UP Coffee’.

Louis Dreyfus had imposed washout charges on Ratnagiri and sought to recover the amount of Rs.10,87,511 from Mandappa. The Trial Court ruled in favour of Ratnagiri and decreed the suit directing Mandappa to pay up. Mandappa filed an appeal in the HC in 2012.

The appeal was heard by the division bench of Justice PS Dinesh Kumar and Justice TG Shivashankare Gowda, which gave its judgement recently. The HC in its judgement noted that there was no contract between the two parties.

“The pleadings in the plaint and the relevant portion of the cross-examination noted hereinabove clearly demonstrate that there is no privity of contract between plaintiff and the defendant,” the HC said.

The court said that Ratnagiri’s contract was with Tricon and therefore the latter should have been made a party in the suit.

“As per the plaint averment and admission in the cross-examination of plaintiff ’s contract is with Tricon. Therefore, it is a necessary party. Hence, suit is bad for non-joinder of necessary party,” it said.

Setting aside the order of the XXXI Additional Senior Civil Judge, the HC said, “As noted hereinabove, there is no privity of contract between plaintiff and the defendant. Also, the suit is bad for non-joinder of necessary party. Hence, the judgment and decree requires interference.” (RFA 2092/2012)