Leonard Stone, Kt., C.J.
1. This is an appeal from the judgment of Mr. Justice Kania dated June 20, 1944. The action is by a purchaser of certain goods against the vendors, who are the appellants in this Court, for damages for breach of contract. The breach which is now admitted was the failure of the appellants to deliver thirty-six bales of cloth, the balance of forty-one bales, the subject-matter of the contract, before the expiry of the month of February, 1943.
2. The only question in dispute is the date on which damages are to be assessed which becomes very material by virtue of the somewhat violent fluctuations in the market prices. Four different dates have been suggested, and the difference in the quantum of damages is substantial. The first date is February 28, 1943, resulting in damages of approximately Rs. 7,000; the second date is May 5, 1943, resulting in damages of approximately Rs. 19,000; the third date is June 19, 1943, resulting in damages of approximately Rs. 14,000; and the last date is July 28, 1943, resulting in damages of approximately Rs. 1,400.
3. It is common ground that unless the date of the performance of the contract, was in some way or other extended, the time of the breach must be on February 28, 1943. Mr. Munshi on behalf of the appellants contends that the relevant date is July 28, alternatively that it is March 1. Mr. M.V. Desai for the respondent-purchaser claims that the date is May 5, and the learned Judge in the Court below has decided in favour of June 19, 1943. The answer to this problem is to be found by determining what is the construction to be put upon certain correspondence which passed between the legal advisers of the parties after the purchase and up to July 28 having regard to two sections of the Indian Contract Act, that is to say, Sections 55 and 63. Section 55, so far as material, is as follows:
When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract.
Section 63 is in these terms:
Every promisee may dispense with or remit, wholly, or in part, the performance of the promise made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit.
So that the question is : did the respondent purchaser extend the time for the performance of the contract?
4. We have in this Court been referred to certain authorities which can be conveniently examined before considering what took place in this case. In the order of date the first authority is Mutthaya Maniagaran v. Lekku Reddiar I.L.R (1912) Mad. 412. That was a case of a breach of contract for the delivery of certain goods by a specified date, and at p. 413 Sir Charles White, the Chief Justice, says this:
I am unable to agree with the Subordinate Judge that the plaintiffs are entitled to damages on this footing. The Judge refers to Section 63 of the Contract Act which empowers a promisee to extend the time for the performance of the promise. Of course it would have been open to the parties to extend the time by agreement, but there is no evidence of any consent by the defendant to any extension of the time and this is not a case in which it can be said that silence gives consent. In my opinion, it is clear that Section 63 does not entitle a promisee, for his own purposes and without the consent of the promisor to extend the time for performance which had been agreed to by the parties to the contract. The view of the learned Subordinate Judge was that at the time the suit was instituted the contract of May the 12th was a subsisting contract. In support of this view Mr. Seshagiri Ayyar relied strongly on the terms of Section 55 of the Contract Act. He contended that under that section the contract was voidable at the option of the promisee that is the plaintiffs, and as they had not avoided the contract, they were entitled to treat it as a subsisting contract at the date of the institution of the suit.
Now, in my opinion, Section 55 entitles a party to a contract, where time (as in this case) is of the essence of the contract, to say if he is sued upon the contract : 'Time is of the essence of this contract, you have failed to comply with the stipulation as to time, I repudiate the contract' It does not enable the promisee to say : 'I elect1 to keep alive this broken contract in the hopes that I may hereafter recover heavier damages for the breach of the contract than I should be entitled to recover at the time of the breach of the contract' Mr. Seshagiri Ayyar contended that the only way by which a promisor who had broken his stipulation as to time could protect himself if the promisee did not avoid the contract would be to give notice that the contract was at; an end. It seems altogether unreasonable to place any such obligation on a promisee when ex-concensus the contract has been broken with reference to a matter which goes to the root of the contract.
5. Then comes the case in the Privy Council of Muhammad Habidullah v. Bird & Co. (1921) 24 Bom. L.R. 687. Lord Dunedin delivering the judgment of the Board says this (p. 690):
Now apart from the terms of the Indian Contract Act, the law is as laid down in Tyers v. Rosedale and Ferryhill Iron Co. (1875) L.R. 10 Baron Martin in that case said:
The second question is one of law, and is a most important one-it arises over and over again every day in the ordinary transactions of mankind. It is this : There is a contract for the Sale of goods to be delivered, say, in January or upon a day of January. On the day before the delivery is to take place the vendor meets the vendee and says : 'It is not convenient for me to deliver the goods...upon the day named, and I will be obliged if you will agree that the goods shall be delivered at a later period,' and the vendee assents; or the vendee goes to the vendor, and says : 'It is not convenient for me to receive the goods in January, or upon the day named, and will you agree that the delivery shall be postponed', and the vendor assents; the latter is the present case, and the contention on the part of the defendants is that this puts an end to the contract, and that the defendants are not bound to deliver upon the later day. In my opinion, the contention is not well-founded...It is impossible to distinguish the case of the application...coming from the vendors and one coming from the vendee.
That opinion was affirmed in the Exchequer Chamber. The effect of Section 55 of the Indian Contract Act above quoted is, where the party having the option elects not to avoid, to put agreement after the original date on the same footing as an agreement, as put by Baron, Martin, just before the original date.
Be it observed that what is said is that s, 55 of the Indian Contract Act is to put an agreement after the original date on the same footing as the agreement mentioned in the quotation in Baron Martin's judgment. But it must be an agreement. Mere forbearance from suing or giving a formal notice is not enough.
6. Then comes the case of Ratilal Parikh v. Dalmia Cement & Paper Marketing Co. Ltd (1942) 45 Bom. L.R. 405. The head-note in that case is as follows:
A party to a contract may, at the request of the other party, forbear from insisting upon delivery at the contract time and allow time to be extended without binding himself to do so, or may expressly contract for an extension of time, and claim damages for non-performance at the extended time.
In his judgment at p. 413 Mr. Justice Blackwell says this:
It is well established that a party to a contract may at the request of the other party forbear from insisting upon delivery at the contract time and may allow time to be extended, without binding himself to do so, or may expressly contract for an extension of time, and that he may claim damages for non-performance at the extended time.
7. With great respect to the learned Judge, in my opinion, the first of those propositions, namely, that the other party may forbear from insisting upon delivery at the contract time and may allow time to be extended without binding himself to do so, is not in accordance either with the Privy Council decision or with the decision of the Madras High Court in Mutthaya Maniagaran v. Lekku Reddiar, to which I have already referred, if it means that damages for non-performance are to be claimed as at the extended time. Certain English cases were also referred to. But I would prefer not to rely on any of them, as in England there is no such statutory provision of Sections 55 and 63 of the Indian Contract Act and the position in England is complicated by the introduction of the Statute of Frauds.
8. After February 28, 1943, there appears to have been no communication between the parties until April 3, 1943. On that day the legal adviser of the purchaser wrote a letter to the vendors of which the material passage is as follows:
As you cannot expect my clients to wait indefinitely like this I am instructed to call upon you to arrange to deliver the same and in that respect to forward your invoice when my clients will pay the requisite amount in cash against delivery or in the alternative to let. me know as to the reason of so much undue delay and as to when you expect to deliver the same and what efforts, if any, you have made in that behalf to obtain delivery from your vendors and the reason, if any, they have assigned for such delay. Awaiting your reply by return and thanking you.
Now the vendors did not immediately reply, and on April 10, 1943, the legal adviser of the purchaser again wrote a letter of reminder to the vendors; and on April 17, 1943, comes the reply from the vendors' solicitors in which they state as follows:
Your clients are also well aware of the fact that our clients have not received the goods from Messrs. Vanraj Vallabhdas. No sooner our clients receive the goods from Messrs. Vanraj Vallabhdas our clients will deliver the same to your client. It was because they did not receive the goods from Messrs. Vanraj Vallabhdas that they did not send you a reply to your letter of the 3rd instant. We may assure your clients through you that no sooner our clients receive the goods from Messrs. Vanraj Vallabhdas they will at once deliver the said goods to your client.
Pausing there, it is to be observed that that is not an answer to the demand of the purchaser. They asked, in the first place, for immediate delivery; or, in the alternative,
to let me (that is, the purchasers' legal adviser) know as to the reason for the undue delay and as to when you expect to deliver the goods and as to what efforts, if any, you have made in that behalf to obtain delivery.
Accordingly on April 21, 1943, the purchaser's legal adviser wrote this:
I am instructed to inquire of your clients through you as to the reason for such undue delay for delivery to Messrs. Vanraj Vallabhdas and as to whether your clients had made any inquiries and attempts for obtaining delivery thereof.
The reply of the vendors' solicitors dated April 28, 1943, is as follows:
Our clients have been writing to Messrs. Yanraj Vallabhdas but have not received the goods. No sooner they receive the goods from Messrs. Vanraj Vallabhdas, our clients would deliver the same to your clients.
To this the purchaser's legal adviser replied on May 1, 1943:
I am now instructed to finally call upon your clients to give delivery within two days from the receipt hereof by you or in the alternative to definitely state as to when they expect to deliver the same as my clients are otherwise not willing to wait indefinitely like this for ever. Failing receipt of your reply within two days from receipt hereof by you as stated here above my clients will proceed further with the matter as may be advised for the costs and consequences whereof your clients will have to thank themselves.
Now be it noted the date May 5, as one of the critical dates, is arrived at from the letter which is dated May 1 and which gave two days' time and which in fact took two days to deliver ; thus the date of May 5 is fixed. On May 6, 1943, the vendors' solicitors replied:
We have already written to you and repeat that our clients have to deliver the goods to your clients as and when they receive the same from Messrs. Vanraj Vallabhdas. They have not received the goods. Our clients are carrying on correspondence with them.
On May 10, 1943, the purchaser's legal adviser sent a reply as follows:
It is really surprising that your clients should not reply to the point of the reason of so much delay or what efforts if any they have made so far to obtain delivery from their vendors, Messrs. Vanraj Vallabhdas. In this connection my clients note that your clients are now carrying on correspondence with their vendor. I am instructed to request your clients through you to give me inspection of their contract of purchase from the said Messrs. Vanraj Vallabhdas as also the correspondence exchanged between the parties.
That letter was followed up by another letter from the legal advisers of the purchaser dated May 25, 1943:
We are now instructed to finally call upon your clients, through you, to carry out the requisition contained therein and thereby prove their bona fides within 24 hours from receipt hereof by you failing which our client will be compelled to proceed further with the matter as may be advised holding them liable for all the costs and consequences, which please convey to yours.
The vendors' solicitors replied on May 26, 1943, that there was nothing in that letter to be mentioned to their clients. On May 29, 1943, the legal advisers of the purchaser again wrote:
We shall therefore thank you to kindly do the needful without further loss of time and in that respect we fix Monday the 31st instant at 5 p.m. at your office when you are requested to produce the same for our inspection.
On June 16, 1943, the purchaser's legal advisers again wrote as follows:
We are instructed to finally call upon you to give us inspection within two days from receipt hereof by you, failing which our clients shall consider their position and proceed further in the matter as best advised; holding your clients liable for all the costs and consequences.
Again, it is to be observed that it is this letter which fixes the date June 19, 1943, which the learned Judge in the Court below has, held to be the relevant date. The letter is dated June 16. It gives two days and apparently another one day for its delivery.
9. Then comes the final letter of the purchaser's legal advisers dated July 28, 1943, giving the fourth and final date. In that letter the purchaser's legal advisers wrote:
In view of the attitude adopted by your clients and their having committed breach of the contract, our clients, as already intimated to yours, have fixed their damages on the then prevailing market rate of Rs. 38-6-0 per piece. Your clients are accordingly liable to pay to our clients the sum of Rs. 19,237-8-0, being the damages sustained by our clients, based on the difference between the contract price and the then prevailing market rate, viz. Rs. 38-6-0.
The then prevailing market rate is taken as on May 5, 1943, which apparently was not only the time fixed by the letter of May 1, 1943, but was the time when the market appears to have been at or near its highest.
10. In my judgment, reading the correspondence as a whole, it at no stage passed from the melting pot of negotiations to crystallize as an agreement to extend the time for the performance of the contract. The attitude of the purchaser throughout the correspondence was : 'Satisfy us that you are doing your best to obtain the goods from your suppliers and we will then consider fixing a new date for delivery of the goods to us.' On the other hand the attitude of the vendors throughout the correspondence was to avoid the purchaser's demand and to simply say : 'You know that we cannot effect delivery from our suppliers and until we do so we cannot deliver the goods to you.' There was never in my judgment any consensus ad idem, no agreement, express or implied, to extend the time either to any particular date or to the happening of some future event. Mere forbearance in my opinion to institute proceedings or to give notice of rescision cannot be an extension of the time for the performance of a contract within the meaning of Section 63 of the Contract Act. The learned Judge in the Court below does not appear to have had the advantage of having the matter argued before him in the way it has been argued in this Court. In his judgment the learned Judge says this:
In my opinion, the correspondence only shows that the plaintiffs were willing to consider the situation if in fact the defendants had protested that their vendors had not given delivery of the goods. As no satisfaction on this point was offered no question of the plaintiffs considering the delay in delivery by the defendants remained. The effect of the letter of June 16, 1943, in my opinion, is that the plaintiffs conveyed to the defendants that although, till then, they were willing to consider the position, if correspondence was shown, if no correspondence was shown within two days after the receipt of that letter the plaintiffs would consider that a default had been committed on the part of the defendants. In my opinion, it was not necessary thereafter to give express notice that the defendants had committed a breach. The previous correspondence had already disclosed that the plaintiffs had not accepted the plea that the plaintiffs were bound to wait till delivery was given by the defendants' vendors. They only showed a businesslike desire to consider the situation if the defendants proved their bona fides. When that was not proved, in spite of reasonable opportunities being given, the plaintiffs were entitled to consider the contract as broken by the defendants. In law one-sided demand for disclosure or inspection of documents cannot extend time. The only reason why I think the breach should be considered to have taken place on June 19 is that in the correspondence till June 16 the contract appears to be treated as alive and subsisting. The peremptory tone of the letter of June 16 shows that they were not willing to wait any longer after June 19. Therefore, in my opinion, the contract was kept alive till June 19, and when the defendants' attorneys failed to give inspection of the contract and correspondence as called for by the plaintiffs, the defendants committed a breach of the contract. Damages will be assessed on that basis.
With great respect to the learned Judge, the correspondence, as it seems to me, discloses negotiations and negotiations implemented by threats contained in some of the letters to the effect that if a new date satisfactory to the purchaser was not soon fixed, proceedings would ensue. In my opinion there was never any agreement to extend the time for the performance of the contract and there is no suggestion that in this case any question of estoppel could arise. This results in the correct date for assessment of the damages being February 28, 1943. Mr. Kolah on behalf of the appellants says that as on that date the damages were a sum of Rs. 7,000 and his clients are prepared to submit to a decree for that amount. Mr. Desai's clients want time to consider the matter and accordingly we refer the question as to the amount of damages to the Commissioner with this direction that if the damages are quantified at Rs. 7,000 or less, Mr. Desai's clients will pay the costs of the reference; if more than Rs. 7,000, then the appellants will pay the costs of the reference.
11. As regards costs, as in the Court below the breach of the contract was contested, the costs in the Court below must, in our opinion, be paid by the appellants. As to the costs of this appeal, both parties have partly failed and partly succeeded; and on balance the appellants have succeeded more than they have failed. In our opinion, a fair order as to costs would be that the respondent should pay half the costs of this appeal to the appellants.
12. There will be no order as to costs of the cross-objections.
13. Interest on the sum decreed will run from the date of the suit.
14. I agree.
15. Under the contract between the parties the defendants had to deliver to the plaintiff forty-one bales of Edsu Cloth No. 4488 by the end of February, 1943. The defendants did deliver to the plaintiff five bales of the contract goods on February 27, 1943, but failed to deliver the balance of thirty-six bales and thereby committed a breach of the contract. Now unless the plaintiff can show that something transpired after February 28, 1943, it is clear that the date of breach would be February 28, 1943, and damages must be assessed as of that date.
16. Under Section 55 of the Indian Contract Act, the promisee is given the option to avoid the contract where the promisor fails to perform the contract at the time fixed in the contract. It is open to the promisee not to exercise the option or to exercise the option at any time, but it is clear to my mind that the promisee cannot by the mere fact of not exercising the option change or alter the date of performance fixed under the contract itself. Under Section 63 of the Indian Contract Act, the promisee may make certain concessions to the promisor which are advantageous to the promisor, and one of them is that he may extend the time for such performance. But it is clear again that such an extension of time cannot be a unilateral extension on the part of the promisee. It is only at the request of the promisor that the promisee may agree to extend the time of performance and thereby bring about an agreement for extension of time. Therefore it is only as a result of the operation of Section 63 of the Indian Contract Act that the time for the performance of the contract can be extended and that time can only be extended by an agreement arrived at between the promisor and the promisee.
17. Now I agree with the learned Chief Justice that on a perusal of the correspondence it is perfectly patent that the parties were never ad idem and no agreement was arrived at between them as to the extension of time. As a matter of fact, Mr. M.V. Desai for the respondent concedes that there was no agreement for extension of time; but what he urges is that his client forbore from insisting upon delivery at the contract time at the request of the appellants and the result of that forbearance was that although there was no agreement to extend time, the time was extended so long as that forbearance continued. It is a proposition difficult to accept that under the Indian law and under Section 63 of the Indian Contract Act time for the performance of a contract can be extended otherwise than by an agreement.
18. Mr. M.V. Desai has relied on a decision of Mr. Justice Blackwell in Ratilal Parikh v. Dalmia Cement & Paper Marketing Co., Ltd. (1942) 45 Bom L.R. 405. The learned Judge in that case held that a party to a contract may, at the request of the other party, for bear from insisting upon delivery at the contract time and allow time to be extended without binding himself to do so, or may expressly contract for an extension of time, and claim damages for non-performance at the extended time. I can well understand the decision if it only means that at the request of the promisor the promisee agrees to extend the time. Then it is nothing more than an agreement to extend time. But the learned Judge expresses his opinion that time can be extended even though the promisee may not bind himself to do so. With great respect to the learned Judge, I cannot accept that part of the statement of the law. The learned Judge's judgment is based on English decisions to which he has referred in his judgment. The Privy Council has repeatedly warned Courts in India not to import doctrines of common law when construing the plain sections of the Contract Act and the danger of relying on principles of common law is all the greater in this case when one remembers that Section 63 of the Indian Contract Act constitutes a wide departure from the principles of the English common law. The English cases relied on by Mr. Justice Blackwell are based on the principles of the English common law which principles are further complicated by the fact that in England an oral agreement to extend time is kept out by the Statute of Frauds and therefore, with respect to the learned Judges in England, one often finds that the Judges there have to strain the letter of the law in order to do equity and hold that a particular arrangement arrived at between the parties was not an oral agreement in order that it should not be kept out by reason of the provisions of the Statute of Frauds.
19. In this case, in my opinion, there is not even a basis of facts to support the argument of Mr. Desai, because at no time did the defendants request the plaintiff to forbear from exercising his rights and asking for delivery under the contract; on, the contrary, their whole attitude has been that they were only bound to deliver the goods as and when they received them from their vendors. Therefore really throughout the correspondence they were asserting their right not to be bound to give delivery of the contract goods until they had received them from their vendors. Assuming that there was a request by the defendants to the plaintiff to forbear, I do not find in the correspondence at any stage or at any time any compliance with that request. Assuming this was a request to forbear, what the defendants wanted was a forbearance till they received the goods from their vendors, and the emphatic and categorical answer given by the plaintiff was that he wanted the goods to be delivered within a short time. Therefore it seems to me impossible to hold that having turned down the request of the defendants to forbear, it was open to the plaintiff by his unilateral act to extend time for performance and come to Court and say : I have now repudiated the contract and I shall fix the time according to my choice.
20. Mr. Desai has argued that if there is one thing that the correspondence showed is that both the parties considered the contract alive and subsisting. If by that expression is meant that the plaintiff had not exercised his option under Section 55 of the Indian Contract Act to put an end to the contract Mr. Desai is right; but the mere fact that the contract was not put an end to did not entail the further consequence that the time for the performance of the contract was automatically extended.
21. There were two further cases cited at the bar to which I should like to refer. One is the judgment of Mr. Justice Macleod, which is a very instructive case, Phoenix Mills, Ltd. v. Madhavdas Rupchand (1916) 24 Bom. L.R. 142. In that case the time for performance was October-November 1913. After the time elapsed, nothing further happened; and in July, 1914, the plaintiffs wrote to the defendants to arrange to take immediate delivery of the balance of ninety-two bales and delivery was taken; and Mr. Justice Macleod held that the original contract had come to an end at the end of November, 1913, and these deliveries were referable to separate transactions and not to the original contract.
22. Mr. M.V. Desai has also relied on the judgment of Mr. Justice Marten, as he then was, in Coorla Mills v. Vallabhdas : AIR1925Bom547 . Before the learned Judge the question did arise as to whether the time for the performance of the contract had been extended. Originally it was February 28, 1921, and Mr. Justice Marten held that there was an extension of time. Now if one looks at the judgment of the learned Judge, it is clear that he held as a fact that the representatives of the defendant and of the plaintiffs met several times and that the plaintiffs at the request of the defendant agreed to withhold delivery (see p. 1179). So there was a proposal and a definite acceptance; and on that the learned Judge came to the conclusion that there was an agreement to extend time.
23. Unfortunately in this case the learned Judge below has proceeded in his judgment on the assumption that it was common ground between the parties that there was an agreement to extend time, and the only question that remained for the learned Judge's determination was the date up to which the time for performance of the contract had been extended. Mr. Desai at one stage did strenuously argue that it was not open to Mr. Munshi to contend that there was no agreement to extend time. But a specific issue as to the agreement was raised before the learned Judge which is issue No. 1 : Whether the time for delivery of contract goods was extended; and if so, to what date? Unfortunately the learned Judge has not recorded his finding on that issue. But it is impossible to contend that in the face of this state of the record it is not open to Mr. Munshi before this Court to urge that there was no agreement to extend time.
24. I should like to say a word about the decision relied on by Mr. Kolah in Ratanlal v. Brijmohan : (1931)33BOMLR703 with regard to the giving of interest 'on the damages awarded from the date of the filing of the suit. In that case a bench of our Court consisting of Sir John Beaumont, Chief Justice, and Mr. Justice Mirza took the view that if the claim in the suit was one for damages, the plaintiffs were not entitled to interest before judgment. Mr. Desai has drawn our attention to the judgment of Mr. Justice Marten in Coorla Mills v. Vallabhdas (at p. 1187), where he takes the contrary view and where he relies on an unreported judgment also of the Court of Appeal. I really think that the matter is clear beyond any doubt because under Section 34 of the Civil Procedure Code it is entirely a matter for the Court's discretion whether to award interest from the date of the filing of the suit where the decree is for the payment of money. With great respect, I cannot understand why Sir John Beaumont, the learned Chief Justice, took the view that the Court could not award interest from the date of the filing of the suit. It is all a matter of discretion whether under the circumstances of each particular case interest should be awarded or not.
25. I, therefore, agree with the learned Chief Justice that we must hold in this case that there was no agreement to extend time, that the date of the breach was February 28, 1943, that damages should be assessed as of that date, and that in this particular case the plaintiff is entitled to interest on damages from the date of the filing of the suit.
26. I should like to add that I entirely agree with what has been said by my learned brother with regard to the awarding of interest.