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Dinkerrai Lalit Kumar Vs. Sukhdayal Rambilas - Court Judgment

LegalCrystal Citation
SubjectContract
CourtMumbai
Decided On
Case NumberO.C.J. Appeal No. 18 of 1946 and Suit No. 304 of 1943
Judge
Reported inAIR1947Bom293; (1946)48BOMLR821
AppellantDinkerrai Lalit Kumar
RespondentSukhdayal Rambilas
Excerpt:
.....sections 35, 36(2) - application for delivery by buyer-whether necessary in respect of ready goods-time for delivery not fixed by contract - reasonable time implied by law-what is 'reasonable time'-time for performance of such contract whether can be extended by unilateral act of one party-contract reduced to writing-parole evidence to ascertain its terms whether admissible-suit by buyer for non-delivery of goods-application for delivery by buyer whether to be explicitly slated in plaint-practice.;on june 26, 1942, the defendants sold to the plaintiffs at calcutta 33 bales of piecegoods under a contract which ran : 'mill delivery. shipment ready. railway receipt through bank,' and on the same day the plaintiffs applied for delivery of the goods. deliveries were to be made at places..........the meaning of section 36, sub-clause (2)3 the contract becomes a contract to be performed at, a fixed time as much as if the parties themselves have fixed a specific time. in the one case it is the act of parties which determines the time when the contract is to be performed; in the other case it is by implication of law that the time is determined.7. in this case sir jamshedji kanga has relied on the fact that although the contract was arrived at on june 26, 1942, 22 bales were delivered between -july 3, and august 21, 1942. nothing happened in september and, as i have pointed out, there were oral demands in october, 1942; and finally a tender for a sum of rs. 7,300 to cover the delivery of the remaining bales was made on november 12, 1942. sir jamshedji has argued that the contract.....
Judgment:

Chagla, J.

1. This is an appeal from the judgment of Mr. Justice Coyajee. On June 26, 1942, the defendants sold to the plaintiffs 33 bales of piecegoods or 36 bales, three bales more according to the option of the defendants. In all delivery was given of 22 bales between July 3, and August 21, 1942. The defendants, according to the plaintiffs, failed to give delivery of the remaining 11 bales, and the plaintiffs have fled this suit for damages for non-delivery of the 11 bales. Mr. Justice Coyajee who tried the suit held that the defendants had committed a breach of the contract and that they had failed to give delivery of the 11 bales; and he referred the suit to the Commissioner to assess the damages on the basis that the breach had taken place on November 12, 1942, and that damages should be assessed at the difference between the market rate prevailing on that date and the contract rate. The plaintiffs' case was that they had made various demands for delivery. They proved two oral demands in October, 1942, and they also proved that a tender was made for the remaining eleven bales on November 12, 1942, which tender was refused by the defendants. On this evidence the learned Judge came to the conclusion that the contract had been broken on November 12, 1942.

2. In this appeal the first question that arises is whether there was any breach of the contract on the part of the defendants. Under Section 35 of the Indian Sale of Goods Act, 1930, it is obligatory upon the buyer to apply for delivery and the seller is not bound to deliver the goods unless there is an application for delivery on the part of the buyer. Mr. Setalvad has contended that in this case there was no application for delivery by the buyer within reasonable time and, therefore, there was no breach on the part of the seller as the seller was not bound to deliver the remaining 11 bales.

3. The terms of the contract have been reduced to writing; and we may point out, with respect to the learned Judge below, that he has fallen into error in admitting parole evidence with regard to negotiations antecedent to the contract and also with regard to the subsequent conduct of the parties. Once the parties reduce the terms of their contract into writing, the Court can only look at the writing alone in order to construe what the terms of the contract were. It is hardly necessary to say that what the terms of the contract between the parties were cannot be ascertained by allowing parole evidence as to what transpired antecedent to the contract or what the parties did -subsequent to the contract. Now on the construction of the contract two points have been placed before us; and as far as we can see, whatever view we may take as to the construction does not materially affect the question that we have got to decide. The contract sets out various particulars in different columns. It first mentions the number of bales and then the quality of the bales; and then under the heading 'Delivery' it mentions various places, Indore, Ujjaa and Bombay; and then the prices of various bales are mentioned. At the foot of the contract appears:

Mill Delivery, Shipment Ready, Less 3/4% per cent discount and Re. 1 per bale, Railway Receipt through Bank.

Now Mr. Setalvad has contended that on a true construction of, this contract the goods were to be delivered at the various places mentioned in the contract at the mills. Mr. Setalvad argues that the column 'Delivery' makes it clear that the place of delivery was the different places mentioned under that column and delivery is further localised by stating; that not only is it to be at the particular place but at the mill itself. On the other hand, Sir Jamshedji Kanga contends that when you look at all the particulars of the contract carefully, it is clear that the place of delivery of the goods was at Calcutta. Sir Jamshedji particularly emphasizes the expression 'Shipment Ready' in the contract. It is common ground that the goods that were sold were not forward goods but ready goods. But the expression 'Shipment' has to be carefully noticed because, if the buyer had to take delivery at the various places mentioned in the contract, there was no need to state in the contract the expression 'Shipment'. 'Shipment' is not used in its proper etymological sense, but it can only mean in this case 'despatch' or 'rail' and the contract undoubtedly casts an obligation upon the seller to despatch or rail the goods. Further it is to be noted that payment is to be made by the buyer through a bank when he obtains the railway receipt. If the obligation was upon the buyer's take delivery at the various places mentioned in the contract, it is difficult to understand how lie could pay for these goods against railway receipts through a bank in Calcutta. The various places mentioned under the column 'Delivery', coupled with the phrase 'Mill Delivery', seem to indicate that the prices fixed are ex-mill and that the buyer is liable to pay for extra charges incurred for despatching the goods from the various places to Calcutta. 'We do not agree with Mr. Setalvad that the expression R/R through bank merely deals with the mode of payment. This provision has got to be taken into consideration with all the other provisions in the contract in order to arrive at a true conclusion as to whether under the contract goods were to be delivered at Calcutta or at the various places mentioned in the contract. We therefore agree with the learned Judge who took the view that under the contract the delivery of the goods had to be made at Calcutta.

4. Now on the question whether the buyer made an application for delivery not not, there is evidence on the record which has been accepted by the learned Judge. Murlidhar Anantram, the munim of the plaintiff, gave evidence and he stated that the contract was reduced to writing at Calcutta and duly signed and after the contract was signed, he told the representative of the defendants that he had bought ready goods and therefore early delivery should be given of these goods and the representative of the defendants agreed that a quick and early delivery would be given; and further on, in cross-examination., he repeated practically the same evidence by saying that he, demanded that as the contract was for ready goods they should be delivered immediately and the defendants' representative said that they would be so delivered as and when the railway waggons were made available. Mr. Setalvad has made a grievance of the fact that in the plaint the fact that an application for delivery was made on June 26, 1942, has not been clearly set out. It is true that when a buyer sues a seller for damages for non-delivery, application for delivery on his part is a part of the cause of action and must be explicitly stated, but when we turn to paragraph 3 of the plaint, we do find an averment that the defendants had failed to give delivery of the remaining goods in spite of the repeated requests made in that behalf by the plaintiffs, in our opinion this averment, although perhaps not as specific as one might have desired, is sufficiently clear to cover the application for delivery relied upon by the plaintiff's at the trial on the date on which the contract was made, namely June 26, 1942.

5. We might point out that we do not agree with the contention of Sir Jamshedji Kanga that when goods which are to be delivered are ready goods, no application for delivery is necessary on the part of the buyer tinder Section 35 of the Indian Sale of Goods Act. Section 35 makes 110 distinction between the sale of ready goods and of forward goods; and the Privy Council in Sivayya v. Ranganayakulu : (1935)37BOMLR538 has laid down that the buyer can only be relieved from his statutory obligation to apply for delivery by an express stipulation to the contrary.

6. Assuming that there was an application for delivery on the part of the buyer on June 26, 1942, it is not disputed that the defendants failed to make delivery of the eleven bales and thereby committed a breach of the contract. What we have next to consider is: what is the date of the breach of the contract? and what is the due date on which the contract should have been performed Now under this contract, as I have pointed out, no time is fixed for delivery of the goods sold; and under Section 36, Sub-clause (2), of the Indian Sale of Goods Act, where under the contract of sale the seller is bound to send the goods to the buyer, but no time for sending them is fixed, the seller is bound to send them within a reasonable time. Therefore the law implies a reasonable time within which the contract is to be performed when the contract itself is silent as to the time of performance. In our opinion once a reasonable time is implied within the meaning of Section 36, Sub-clause (2)3 the contract becomes a contract to be performed at, a fixed time as much as if the parties themselves have fixed a specific time. In the one case it is the act of parties which determines the time when the contract is to be performed; in the other case it is by implication of law that the time is determined.

7. In this case Sir Jamshedji Kanga has relied on the fact that although the contract was arrived at on June 26, 1942, 22 bales were delivered between -July 3, and August 21, 1942. Nothing happened in September and, as I have pointed out, there were oral demands in October, 1942; and finally a tender for a sum of Rs. 7,300 to cover the delivery of the remaining bales was made on November 12, 1942. Sir Jamshedji has argued that the contract must be deemed to be alive till November 12, 1942, and the breach took place when there was a final refusal to perform the contract on November 12, 1942. Now in Anandrmn Mangturam v. Bholaram Tanwmal : AIR1946Bom1 we very recently held that a party to the contract cannot extend the time for the performance of the contract by a unilateral act and that there must be an agreement to extend the time. Now in this case no agreement to extend the time is either pleaded or attempted to be proved. It is true that in. that particular case the time for delivery was fixed; but I see no reason in principle to distinguish between a contract where the time for delivery is fixed and a contract where the time for delivery is, not fixed. If the time for the performance of a contract or the time for delivery is fixed, it cannot be extended by the unilateral act of a party.

8. Equally so time cannot be extended in the case of a contract where the law implies a reasonable time for the performance of the contract. In the first case, when the fixed time has expired there would be a breach; in the latter case, when the reasonable time implied by the law has expired, equally so there would be a breach unless either in the one or in the other case there is an agreement between the parties to extend the time for the performance of the contract. Sir Jamshedji Kanga has contended that there is a distinction in law between a contract where the time for delivery is fixed and a contract where such a time is not fixed and, according to Sir Jamshedji, the latter contract does not come; to an end by efflux of reasonable time implied by the law, but there must be-a definite refusal on the part of one of the parties to perform the contract. It is only then that there is a breach of the contract. In this case, according to Sir Jamshedji Kanga, both the parties to the contract considered the contract to be alive till November 12, 1942, and it was only on November 12 that the seller definitely refused to perform the contract and therefore, according to-Sir Jamshedji, the breach took place on November 12, 1942. In support of this contention Sir Jamshedji Kanga has relied on two English cases. The first is Melachrino v. Nikcoll and Knight [1920] 1 K. B. 693. This is the judgment of Mr. Justice Bailhache. Now, in the first place, it is to be noted that the observations of Mr. Justice Bailhache, although deserving of the greatest respect, are on the facts of that case purely obiter. Mr. Justice Bailhache was dealing with a ease of a contract where the time for delivery was fixed; but he did observe (p. 696):

If there is no fixed time the measure is the difference between the contract price and the market price at the time of refusal to deliver.

It is also to be noted that these observations of the learned Judge were based on the clear language of Section 51, Sub-clause (3), of the English Sale-of Goods Act, 1898, which provided:

Where there is an available market for the goods in question the measure of damages is prima fade to be ascertained by the difference between the contract price and the market or current price of the goods at the time or times when they ought to have been delivered, or, if no time was fixed, then at the time of the refusal to deliver.

It is to be noted that our Sale of Goods Act has no section which corresponds, to Section 51, Sub-clause (3), of the English Act. Even so, notwithstanding the clear language of Section 51, Sub-clause (3), of the English Sale of Goods Act, 1893, the Court of Appeal in England in Millett v. Van Heek & Co. [1921] 2 K. B. 369 doubted the correctness of the opinion expressed by Mr. Justice Bailhache in Melachrino v. Nickoll and Knight [1920] 1 K. B. 693. Lord Justice Atkin actually went to the length of saying, contrary to the view expressed by Mr. Justice Bailhache, (p. 378) :

It is difficult to see why it should be said that that the contract for delivery at times which can be determined by a jury is not a contract for delivery at fixed times. It seems to me that a meaning could be given to the words, 'if no time was fixed,' by reading them as referring to a contract such as to deliver goods on demand or to deliver goods as required by the purchaser. It might well be argued that that would give a meaning to the words in question.

Therefore the view that Lord Justice Atkin took was that under the English section when a reasonable time is implied by the law, the contract becomes a contract where the time for delivery is fixed. Sir Dinshah Mulla in his wellknown text-book on the Sale of Goods Act has expressed the opinion, after setting out the provisions of Sections 50 and 51 of the English Sale of Goods Act, that Section 73 of the Indian Contract Act and the illustrations thereto, though the language is slightly different, are declaratory of the common law and in substance the same as Sections 50 and 51 of the English Sale of Goods Act. Now with great respect to the learned author, when we turn to Section 73 of the Indian Contract Act, there is nothing in the language of the section corresponding to Section 50 (3) or Section 51(3) of the English Sale of Goods Act, and even the illustrations to that section, which, as is well known, cannot possibly control the language of the section itself but merely afford a guide to the construction, do not in our opinion carry the matter any further. Illustrations (e) and (d) to Section 73 of the Indian Contract Act, which are relied upon, really do not deal with the question of reasonable time at all. Illustration (e) is a case of anticipatory breach and it is not clear from the illustration whether the breach took place within the reasonable time or not. Illustration (d) also does not indicate whether the promise was broken within the reasonable time or not. Even assuming that a refusal on the part of the seller to perform was necessary in a contract like this, which was a contract to be performed within a reasonable time, it is clear on the evidence that after the application for delivery was made on June 26, 1942, admittedly there was a failure to give delivery to the extent of 11 bales and, therefore, there was a failure to perform the contract which must be taken to mean the same thing as refusal to perform the contract. I fail to see why any more explicit refusal is necessary than a refusal to comply with the application for delivery made on the part of the buyer. But in our opinion there is no difference in law between a contract where the time is fixed by the act of the parties and a contract where no time is fixed and by implication of the law the contract is to be performed within a reasonable time. (If that be so, after the plaintiffs had made the application for delivery on June 26, 1942, the breach of the contract took place within a reasonable time of June 26. Now what is a reasonable time is a question of fact and in England it would be determined by the jury. Unfortunately the learned Judge did not apply his mind to this aspect of the case and, therefore, we have received no help or guidance from his judgment on this point. But fortunately there is sufficient evidence on record from which we can come to the conclusion as to what a reasonable time for the performance of this contract should be. 'Reasonable time' must in each case depend upon the particular circumstances, the nature of the commodity, the question of transport, the times during which the contract was entered into and so on. It is in evidence that the first consignment of 2 bales was despatched on July 1, 1942, and reached Calcutta on July 8, 1942, which is within twelve days of the entering into the contract. There is no suggestion that if the seller was so minded, all the bales could not have been despatched at the same. time. The evidence shows that both the parties relied on the fact that the sale was of ready goods and they should be despatched as early as possible. Taking all the evidence into consideration, we are of the opinion that reasonable time in this case would be a fortnight after June 26, 1942.

9. We might point out that in a Bombay case, which was also a case for the sale of piecegoods, Mr. Justice Marten considered one week as a reasonable time for delivery of the goods. That case is Toyo Menka Kaisha, Ltd. v. Chabildas Nathubai (1921) 24 Bom. L.R. 140. The case is also instructive from another point of view. In that ease the contract was for delivery of seventy-five sales for ready and twenty-five bales for September delivery. Forty-eight bales were delivered between September 17, 1920, and October 21, 1920; and although the delivery of these forty-eight bales extended right up to October 21, 1920, still Mr. Justice Marten held that the date of breach was eight days after September 13, 1920, with regard to the contract for the sale of ready goods. The learned Judge said that the forty-eight bales which were delivered must be appropriated to the ready contract; and with regard to the balance, he awarded damages on the basis that the breach had taken place within a week of September 13, 1920. In this case also although the delivery of 22 bales had taken place from July 3, 1942, to August 21, 1942, these deliveries to 'the extent that they are after a fortnight from the date of the contract, namely, June 26, 1942, cannot be referable to this contract. As pointed out by Mr. Justice Macleod in a case reported in the same volume-Phoenix Mills, Ltd. v. Madhavdas Rupchand, -these deliveries are referable to a separate transaction and not to the contract in suit.

10. Therefore we hold that there was a breach on the part of the defendants, that the due date of the performance of the contract was July- 10, 1942 and that the damages must be assessed on the basis of the date of breach being July 10, 1942.

11. We will, therefore, vary the decree of the learned Judge below by substituting the date July 10, 1942, for November 12, 1942, as the date on which the breach took place. The learned Judge's order with regard to the reference to the Commissioner will stand.

12. The learned Judge has awarded to the plaintiffs the costs of the suit, Mr. Setalvad contends that if the date of the breach was July 10, 1942, then no damages would be found in favour of the plaintiffs. If he is right, then inasmuch as no decree would be passed in favour of the plaintiffs, the plaintiffs would not be entitled to the costs of the suit. Therefore, in our opinion, the proper order with regard to the costs of the suit would be that the costs of the suit and further directions should be reserved till the Commissioner has made his report.

13. The appellants came to this Court contending, in the first place, that there was no breach and, secondly, that the learned Judge was wrong in fixing November 12, 1942 as the date of the breach. They have failed on the first and succeeded on the second.

14. Under the circumstances we think the proper order to make with regard to the costs of this appeal is that each party should bear their own costs.


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