1. This is a defendants' appeal arising out of a suit for recovery of damages for breach of a contract. On 6th February 1933, the defendants entered into a contract with the plaintiff firm, who are carrying on the business of commission agents, to purchase five bars of silver from the plaintiff to be delivered at Calcutta on 31st March 1930 at the rate of Rs. 47-5.0 per bar. In the written contract there was no mention of any liability to pay customs duty. Between the date of the contract and the date of delivery the customs duty on imported silver was raised by Government by the amount of Rs. 9-6-0 per 100 tolas. When the due date was arriving, the plaintiff demanded from the defendants the payment of the price but the defendants paid no heed to it. As the amount was not paid, the plaintiff firm instructed their agents in Calcutta to resell the goods which were sold at Rs. 45 plus Rs. 9-6-0, that is, at Rs. 54-6. The plaintiff demanded from the defendants the difference between this amount and the total of Rs. 47-5-0 and Rs. 9-6-0, that is to say, 2.5-0 per 100 tolas. The defendants decline to pay this amount with the result that the plaintiff brought the present suit for recovery of an amount due on a previous transaction with which we are not now concerned and also for the recovery of Rs. 346-14-0 as the amount of loss suffered by the plaintiff in respect of five bars of silver on account of the breach of contract of the defendants with Rs. 5-4-0 for telegram expenses and interest amounting to Rs. 16.14.6, in all Rs. 369.0-6. Both the Courts below have decreed the claim holding that the burden of the increase of the customs duty should fall on the defendant-purchasers under Section 10, Tariff Act. The only question before us is whether the defendants are liable to pay the amount equivalent to the enhanced duty on imported silver.
2. In the Preamble to the Indian Tariff Act (Act 8 of 1894) it is made clear that it was intended to amend the law relating to the duties of customs on goods imported and exported by sea, and to provide for the levy of duties on goods imported into or exported from British India by land. It is not intended to affect goods which are already in existence in India, except so far as the provisions relating to the imposition of excise duty can be applicable to the goods produced in India. Section 10 lays down that
in the event of any duty of customs...on any article being increased...after the making of any contract for the sale of such article...duty paid, where duty was chargeable at that, (a) if such...increase so takes effect that the...increased duty...is paid, the seller may add so much to the contract price as will be equivalent to the amount paid in respect of such...increase of duty....
3. In the first place it is to be noticed that the increase of duty referred to in the section is on any article and not necessarily on any class of article. The amount which the seller is entitled to recover in addition to the contract price is the amount of duty paid by him, which must obviously mean actually paid to Government when the goods are imported. The section cannot be applicable to cases where goods were already in existence in India prior to the increase of duty and on which no enhanced duty whatsoever had been paid to Government.
4. The question whether the plaintiff is entitled to claim from the defendants the enhanced duty on silver is in the first instance one of interpretation of the written contract. If the contract were clear and had made the defendants liable to pay in addition to the contractual price the enhanced duty as well, there would be no question as to their liability. But where the contract is silent and merely contains a promise on the part of the plaintiff to sell silver to the defendants at the rate of Rs. 47.5-0 per 100 tolas, its obvious meaning is that the plaintiff is to supply silver at that rate irrespective of any duty hat might have been paid upon it, or that may have to be paid on other silver that may be imported in future.
5. If the circumstances of the transaction show that the intention of the parties was that the goods contracted to be sold were to be imported from abroad, then it would be a necessary inference that the parties intended that the enhanced duty that might come in afterwards would be payable by the purchasers. But, in the absence of any such indication it cannot be held that every contract of sale in India has to be varied in accordance with enhanced duty when such duty is imposed afresh or is increased on articles of that class.
6. In the present case there is absolutely no proof that any enhanced duty had been paid to Government on account of these five bars of silver. The amount contracted to be purchased was small in quantity and could be in the Indian market itself. Plenty of silver bars must have been in India before the enhanced duty came into effect. There is nothing in the contract to indicate that the defendants contemplated that the plaintiff would import these silver bars from outside in order to deliver them to the defendants. Indeed, the interval of time between the date of the contract and the date of delivery was so short that a fresh order for importing goods could not have been contemplated. The position, in our opinion, is the same as if one would have entered into a contract for the sale of rice or wheat in India, without implying that the same should necessarily be imported from outside. There would be no liability on the part of the purchaser to pay enhanced duty if the Government were to impose such duty on the import of rice or wheat. The transaction between the parties was in the nature of principal to principal. The name of the person from whom the plaintiff purchased the bars of silver was never disclosed to the defendants, and there was no indication that the plaintiff would not himself be liable to make good the loss to the defendants. The parties therefore dealt with each other as principal to principal. The plaintiff can only recover the difference between the actual contract price and the sale price and not necessarily any loss which he may have suffered on account of his own private transaction with a third party in Calcutta. As pointed out above, the contractual rate was only Rs. 47-5-0 and not Rs. 63-11-0. The plaintiff has by realising Rs. 54-6-0 per 100 tolas made a profit and not suffered any loss. The plaintiff's claim in respect of this transaction is therefore not maintainable and should be dismissed.
7. The defendants appealed from the decree challenging the decree as regards the second transaction, but valued it at Rs. 346 only instead of Rs. 369-0.6, but the grounds of appeal are directed against the whole amount. If the plaintiff is not entitled to the principal amount, he is cartainly not entitled to the interest on that amount. We accordingly allow this appeal and modifying the decrees of the Courts below uphold the decree for rupees 847-1-6 in respect of the first transaction, but dismiss the claim for Rs. 369-0-6 in respect of the second transaction on condition of the defendants making good the deficiency to the extent of Rs. 22-2-6, The amount must be made good within one month from this date, and the decree shall not be prepared until the amount is made good. The par. ties will receive and pay costs in proportion to their success and failure in all Courts.