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Sheo NaraIn Gopi Ram Vs. New Sevan Sugar and Gur Refining Co. Ltd. Through Andrew Yule and Co. Ltd. and anr. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAllahabad
Decided On
Reported inAIR1938All272
AppellantSheo NaraIn Gopi Ram
RespondentNew Sevan Sugar and Gur Refining Co. Ltd. Through Andrew Yule and Co. Ltd. and anr.
Excerpt:
- - 6. this letter makes it perfectly clear that the defendants were not willing to commit, themselves by making any definite statement......learned counsel appearing for the defendant-appellants relied, upon the provisions of section 60, sale of goods act. this section was enacted for the purpose of dealing with the cases of 'anticipatory breach'. but in our opinion, this does not help the case of the plaintiffs. section 60 enacts as follows:where either party to a contract of sale repudiates the contract before the date of delivery, the other may either treat the contract as subsisting and wait till the date of delivery, or he may treat the contract as rescinded and sue for damages for the breach.4. in the case before us, the defendants had agreed to take the first delivery in the month of july. it appears to us that the legal position of the parties is quite clear. under the terms of the contract, it was the duty of the.....
Judgment:

Rachhpal Singh, J.

1. This is a defendants' second appeal arising out of a suit to recover damages for breach of contract. Plaintiff 1, the New Sevan Sugar and Gur Refining Company Ltd., through their Agents, Messrs. Bird & Company, and the defendants firm styled 'Sheo Narain Gopi Ram' entered into a contract on 22nd June 1933. Under this contract, the defendants purchased 900 bags of sugar. Under the terms of the contract, the defendants agreed to take delivery of the goods purchased by them in three instalments in the months of July, August and September 1933. There was a breach and therefore the plaintiffs instituted a suit to recover damages. The defendants firm took various pleas in defence. It was denied by them that they committed a breach of the contract. The amount of damages claimed was also not admitted. There were several other pleas taken in the case; but for the purposes of this appeal, it is not necessary to enumerate them.

2. The learned Judge of the trial Court came to the conclusion that the defendants had committed a breach of the contract and that they were liable to pay damages to the plaintiffs. He however was of opinion that the plaintiffs did not exercise their right of re-sale within a reasonable time. In his opinion, the prices were going down and the plaintiffs should have sold the goods much more quickly than they did. For this reason he came to the conclusion that they were not entitled to the full amount of damages claimed by them. There was a deposit with the plaintiffs firm of a sum of Rs. 1400 by the defendants and in the opinion of the trial Court, that amount was more than sufficient to cover the damages to which the plaintiffs, in his opinion, were entitled. The result was that the suit was dismissed.

3. There was an appeal by the plaintiffs to the Court of the District Judge of Cawnpore. The learned Judge agreed with the view taken by the trial Court that a breach had been committed by the defendants. He was further of opinion that the plaintiffs were entitled to a decree for the full amount of damages claimed by them. He therefore decreed the suit of the plaintiffs in full. It is against that Order that the present appeal has been preferred. The finding of the learned District Judge that it was the defendant who committed a breach of contract, is a pure question of fact which cannot be disturbed in second appeal. A perusal of the evidence produced in the case goes to show that it were the defendants who were responsible for the breach. The defendants committed a breach when they did not instruct the plaintiffs to send them three hundred bags on 31st July. They were again in breach when they took no steps to give instructions in respect of the second instalment in the month of August. When the defendants committed a breach of the contract, the plaintiffs got a right of exercising their option to cancel the sale and to re-sell the goods and recover damages. In our Opinion the view taken by the learned Judge of the lower Appellate Court on this point is correct. Learned Counsel appearing for the defendant-appellants relied, upon the provisions of Section 60, Sale of Goods Act. This section was enacted for the purpose of dealing with the cases of 'anticipatory breach'. But in our opinion, this does not help the case of the plaintiffs. Section 60 enacts as follows:

Where either party to a contract of sale repudiates the contract before the date of delivery, the other may either treat the contract as subsisting and wait till the date of delivery, or he may treat the contract as rescinded and sue for damages for the breach.

4. In the case before us, the defendants had agreed to take the first delivery in the month of July. It appears to us that the legal position of the parties is quite clear. Under the terms of the contract, it was the duty of the defendants to give despatching instructions about the three hundred bags of sugar in the month of July. As soon as there was a breach, the plaintiffs were bound to treat the contract as cancelled and were further bound to exercise their right of re-sale within a reasonable time after the date of the breach so as to mitigate their loss. The same was the position as regards the second instalment. As regards the third instalment, the case was one of anticipatory breach. Having regard to the provisions of Section 60, it is clear that in respect of the third instalment, the plaintiffs could either put an end to the contract immediately when they were informed by the defendants that they would not be able to take the delivery or they could keep the contract alive till the date on which the plaintiffs were to receive instructions from the defendants. It is, therefore, abundantly clear that the breach had taken place in the months of July, August and September and ordinarily, it was the duty of the plaintiffs to sell the goods relating to each instalment within a reasonable time after the date on which the defendants were to give instructions to the plaintiffs for their despatch had passed. But the circumstances of the case before us are however different.

5. It appears to us from the correspondence which passed between the parties that what the defendants were anxious about was to play a trick upon the plaintiffs and they were hoping that the prices may rise in which case they might not suffer any loss. The defendants were very careful to see that they did not commit themselves to any definite statement. On 1st September 1933, the plaintiffs wrote to the defendants intimating to them that they had not sent despatching instructions in connexion with the three hundred bags against July instalment and further informed the defendants that if within one week these instructions were not received, the plaintiffs would have the option to re-sell the undelivered portion at the risk and responsibility of the defendants. The defendants in their reply, dated 9th September 1933, stated that they regretted that it was not possible for them to send despatching instructions as there was absolutely no demand on this side for this class of sugar. They however made further suggestions in this letter of theirs:

With a view however to relieve the situation we-have to request you to kindly replace the above 900 bags with New Sevan Mills Crystal No. 1 or if that quality be out of stock, with New Sevan. Mills Crystal No. 2. If you are pleased to' effect, substitution with Crystal No. 1 we are of course prepared to pay you the difference in price. If the substitution is however effected with Crystal No. 2, the price of the contract will be considered to be the ruling price for Crystal No. 2. Please let us know forthwith if you are so pleased to effect the desired substitution so that we may at once send you despatching instructions.

6. This letter makes it perfectly clear that the defendants were not willing to commit, themselves by making any definite statement. In the first portion of this letter all that they say is that there is no demand for a particular class of sugar this side of the country. They however do not say that they will not be able to take delivery, nor do they make any proposals about the adjustment of loss. On the other hand, they make a fresh proposal and say that if these proposals are accepted, then they will issue despatching instructions. Then further correspondence followed. On 20th September 1933, the defendants sent instructions to the plaintiffs asking them to despatch fifty bags of sugar of a particular description. This was merely a trick to gain time as the Courts below have found that the goods could not be sent to the place mentioned by the defendants. On 31st October 1933, the defendants wrote a letter to the plaintiffs in which they stated:

We are surprised to find that you would have still kept the above contract open in spite of our notifying you by our letter of 9th September last that the contract was impossible of performance.

7. In the letter of 9th September 1933, the defendants nowhere definitely state that the contract should be closed and accounts settled. On the other hand, with a view to gain time, they made a fresh proposal} which, if it had been accepted by the plaintiffs, would have dispensed with the necessity of selling against the defendants by the plaintiffs. In our opinion, the delay on the part of the plaintiffs to exercise their option of selling the goods against the defendants was mainly due to the unreasonable and unfair attitude adopted by the defendants and in these circumstances, the plaintiffs could not be said to have acted with undue delay in not exercising their right of re-selling immediately. The defendants are themselves to blame if there was any delay. It has been further found by the Court below that in the months of October, November and December, there were no sales and therefore the plaintiffs could not have sold the goods in these months. The evidence produced on this point on behalf of the plaintiffs has been believed by the lower Appellate Court and in our opinion, that finding cannot be disturbed. We therefore hold that the delay on the part of the plaintiffs in not exercising their right to re-sell was entirely due to the action of the defendants and therefore the plaintiffs are entitled to claim damages with reference to the rates at which the goods were sold by them.

8. Another point raised by learned Counsel for the appellants was that in this case the contract related to unascertained goods and so long as the goods were not appropriated, there could be no right of re-sale, the right to recover insuring and warehousing charges, etc.... Learned Counsel relied on a ruling reported in Roper v. Johnson (1873) L.R.C.P. 167. This argument would have been certainly right if there had been no special agreement between the parties to, the contrary. But in the present case, the above mentioned ruling can have no application. We find that there is a contract to the contrary between the parties. This contract is mentioned on the reverse of contract No. 20 and runs as follows:

General. - (a) If buyers do not convey despatching instructions to sellers within the period stated in the delivery clause supra, the sellers are to have the option of canceling the sale wholly or in part and to sell or resell the goods wholly or in part in such manner and at such times with or without appropriation or ascertainment as the sellers may deem desirable and the buyers are to be held liable and accountable for all cost, expenses and damages.

(b) If buyers do not take delivery of goods on their arrival at destination, the sellers are after due notice in writing deemed to have the option of canceling the sale wholly or in part and to sell or re-sell the goods wholly or in part in such manner and at such times with or without appropriation or ascertainment as the sellers may deem desirable and the buyers are to be held liable and accountable for all costs, expenses and damages.

(c) After the date on which the goods are due for delivery, the goods shall be and remain at the risk of the buyers and the buyers shall pay the sellers godown rent at the rate of six pies per bag per calendar month or part of a calendar month and insurance at the rate of three pies per bag per calendar month or part of a calendar month and interest on the sale price of the goods at the rate of six per cent, per annum. The buyers shall in addition boar all losses arising from difference in weight, depreciation, condition or quality of the goods.

(d) This agreement is to be deemed a separate contract in respect of each consignment of the goods placed F.O.R. Factory Station and the rights and liabilities of the sellers and buyer shall be the same as though a separate contract has been made out and signed in respect of each consignment. The sellers are to have the option and right to appropriate from any money payable, by sellers the amount of any outstanding bill which the sellers may have against buyers.

(e) This agreement has no validity or legal force unless it is signed on behalf of the sellers by a duly constituted attorney of the firm of Messrs. Bird & Company.

(f) Nothing written in vernacular, besides the signature of the buyers, shall be deemed to form part of this agreement, the contents of which have been explained to the buyers.

9. Section 62, Sale of Goods Act, enacts that:

Where any right, duty or liability would arise under a contract of sale by implication of law, it may be negatived or varied by express agreement or by the course of dealing between the parties, or by usage, if the usage is such is to bind both parties to the contract.

10. According to law, where unascertained goods are sold, the property in them would not pass to the buyer unless they were unconditionally appropriated to the contract either by the seller with the assent of the buyer or by the buyer with the assent of the seller. See Section 23, Sale of Goods Act on this point. It may be pointed out that sale being a consensual contract and a creature of the agreement between the parties, there may be express agreement to alter the obligations implied by law. The Act, does not prevent the parties from making any bargain they please. Now it is always open to the parties to agree to terms under which the question of appropriation or the passing of the property to the buyer, would not arise. Thus there is nothing to prevent the parties from agreeing between themselves that in spite of the fact that the property in goods has not passed as there has been no appropriation by either of them of the goods towards the contract, the seller will have the right to re-sell against the defendant in breach and also to recover godown rent and cost of insurance, etc. Section 62 expressly recognizes that right. In our opinion therefore the plaintiffs were entitled to godown charges, etc., according to the expressed provisions of the contract before us. For the reasons given above, we are of opinion that the judgment of the lower Appellate Court is correct and cannot be disturbed. The result is that the appeal stands dismissed with costs.


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