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Sriram Agarwalla and ors. Vs. Sagarmal Modi - Court Judgment

LegalCrystal Citation
SubjectContract
CourtOrissa High Court
Decided On
Case NumberSecond Appeal No. 173 of 1949
Judge
Reported inAIR1957Ori8
ActsSale of Goods Act, 1930 - Sections 38 and 60; Contract Act, 1872 - Sections 73
AppellantSriram Agarwalla and ors.
RespondentSagarmal Modi
Appellant AdvocateH. Sen, Adv.
Respondent AdvocateL.K. Das Gupta, Adv.
Cases ReferredVolkart Brothers v. Rutnavelu Chetty
Excerpt:
.....the entire price due on the same. b-7 and that, on the other hand, the plaintiff was guilty of a breach of contract in having failed to take delivery of the two thousand and odd maunds of sabai grass tendered by the defendants in january, 1945. the trial court, therefore, negatived the claim of the plaintiff for compensation and held that he was not entitled to recover the earnest-money of rs. 1 the contract clearly stipulates for instalmental deliveries though the performance of the control was to be completed by 30-6-1945. sub-section (2) of section 38 says: the question, therefore, is whether the failure of the plaintiff to take delivery of the two thousand and odd maunds of grass tendered by the defendants can be regarded as a severable breach giving rise only to a claim for..........the contract by their letter ex. b-7 and that, on the other hand, the plaintiff was guilty of a breach of contract in having failed to take delivery of the two thousand and odd maunds of sabai grass tendered by the defendants in january, 1945.the trial court, therefore, negatived the claim of the plaintiff for compensation and held that he was not entitled to recover the earnest-money of rs. 1000/- which had been deposited with the defendants. the plaintiff's suit was accordingly dismissed. on appeal, the learned district judge accepted the findings of fact arrived at by the trial court, but differed from it on the question as to whether ex. b-7 amounted to a complete rescission of the contract by the defendants.the lower appellate court held that it was the defendants who treated the.....
Judgment:

Panigrahi, C.J.

1. This second appeal arises out of a suit for damages for breach of contract. The admitted facts are that the defendants agreed to supply 4,000 maunds of sabai grass F.O.R. Pendra Road at Rs. 2-1-0 per maund, and received Rs. 1000/- as deposit. One of the stipulations, among others, embodied in the contract was that the defendants should go on supplying sabai grass, and receiving the price from time to time, while the plaintiff, in his turn, was to supply wagons according to the defendants' requirements every month.

In the event of the plaintiff's failure to supply the wagons, he was bound to take charge of the goods lying in the godown of the defendants on payment of the entire price due on the same. The contract was agreed to be performed by 30-6-1945.

2. The facts, found by both the Courts below are these. The defendants intimated to the plaintiff, by a letter, Ex. B-1 dated 19-1-45 that ten wagons were required for delivery of the sabai grass that had already been collected by them. The plaintiff however put off the supply of wagons, for taking delivery, till 20-2-1945.

After some correspondence with the plaintiff, the defendants finally sent Ex. B-7 on 20-2-45 intimating to the plaintiff that they were going to sell the goods to other persons and make the plaintiff responsible for the loss incurred in the transaction.

3. The present suit was filed on 12-5-45 alleging breach by the defendants and claiming recovery of damages amounting to Rs. 847-8-0. The plaintiff also claimed recovery of the sum of Rs. 1000/- deposited by him with the defendants.

4. These are concurrent findings of fact but curiously enough the Courts below have come to contrary findings on the question as to who is responsible for the breach. The trial Court held that the defendants did not repudiate the contract by their letter Ex. B-7 and that, on the other hand, the plaintiff was guilty of a breach of contract in having failed to take delivery of the two thousand and odd maunds of sabai grass tendered by the defendants in January, 1945.

The trial Court, therefore, negatived the claim of the plaintiff for compensation and held that he was not entitled to recover the earnest-money of Rs. 1000/- which had been deposited with the defendants. The plaintiff's suit was accordingly dismissed. On appeal, the learned District Judge accepted the findings of fact arrived at by the trial Court, but differed from it on the question as to whether Ex. B-7 amounted to a complete rescission of the contract by the defendants.

The lower appellate Court held that it was the defendants who treated the contract as terminated before the expiration of the period stipulated in the contract (Ex. 1). According to the lower appellate Court the defendants were bound to wait till 30-6-1945 and go on tendering sabai grass to the plaintiff from time to time, till that date, irrespective of whether or not the plaintiff fulfilled his part of the contract. In this view the learned District Judge granted a decree to the plaintiff in terms of the plaint. It is against this judgment that the defendants have come up to this Court in second appeal.

5. Learned counsel for the appellant-defendants has placed reliance on Section 30, Sale of Goods Act which deals with deliveries in instalments. As I have already stated above, Ex. 1 the contract clearly stipulates for instalmental deliveries though the performance of the control was to be completed by 30-6-1945. Sub-section (2) of Section 38 says:

'Where there is a contract for the sale of goods to be delivered by stated instalments which are to be separately paid for, and the buyer neglects orrefuses to take delivery of, or pay for, one or more instalments it is a question in each case, depending on the terms of the contract and the circumstances of the case, whether the breach of contract is a repudation of the whole contract or whether it is a severable breach giving rise to a claim for compensation.'

Both parties concede--and indeed it has been found by both the Courts below--that the contract is one and indivisible though the performance is stipulated to be made in stages. The question, therefore, is whether the failure of the plaintiff to take delivery of the two thousand and odd maunds of grass tendered by the defendants can be regarded as a severable breach giving rise only to a claim for compensation, or whether it amounts to a repudiation of the contract in its entirety.

Our attention was drawn to a decision reported in Khettramohan Dey & Co. v. Benode Behari, 34 Cal WN 33: (AIR 1930 Cal 382) (A) where Rankin C. J. held that, in similar circumstances, failure or breach of part of a contract would amount to a repudiation of the whole contract. In that case the contract was for supply of 300 tons of rape seed cake though the delivery was arranged to be made in separate instalments . Half of the quantity contracted for was tendered and the plaintiff refused to take delivery.

Their Lordships of the Calcutta High Court, following the leading case of Honck v. Muller, (1881) 7 QBD 92 (B) held that the plaintiff having failed as regards no less than half, at the outset of the contract, in effect repudiated the contract, and was guilty of a breach. Another decision to the same effect is that reported in Volkart Brothers v. Rutnavelu Chetty, ILR 18 Mad 63 (C). The question in each of these cases was whether repudiation of a part of the contract would amount to repudiation of the whole contract; and that has to be decided with reference' to the contract as a whole.

In the instant case the plaintiff having failed; to accept delivery of more than half the stipulated quantity of goods was clearly guilty of a breach of the entire contract and the defendants were justified in refusing to abide by the terms of the contract, in such circumstances, the plaintiff is not entitled to any compensation on the ground of breach by the defendants. On this part of the plaintiff's case, therefore, we would hold that the claim for damages for breach of contract should be dismissed with costs, as held by the trial Court. (6) The plaintiff's claim with regard to the refund of Rs. 1000/-, however, stands on a different footing. The language of the contract between the parties is undoubtedly capable of more than one interpretation and learned counsel for the parties have each put his own interpretation upon the contract. One thing, however, is clear and that is that the contract is silent as to what is to happen to this sum of Rs. 1000/- in the event of a breach of contract.

The equitable rule in such cases would be that the earnest-money is forfeited in order to cover possible loss that may be incurred by the party not guilty of breach. In this case, however, the defendants do not allege that they had suffered any loss on account of the plaintiff's failure to perform his part of the contract.

It is, on the other hand pointed out by learned counsel for the respondent that the plaintiff's evidence would go to show that the defendants had in fact, made a profit by selling the goods which the plaintiff failed to take delivery of. We would,therefore, differing from the trial Court on this part of the case, hold that the plaintiff should be held entitled to get a refund of the sum of Clauses 1000/- deposited by him with the defendants.

7. The result will, therefore, be that the plaintiff's suit so far as it relates to the recovery of damages from the defendants for alleged breach of contract will stand dismissed with costs throughout. The appeal will be allowed with costs to this extent. The plaintiff shall, however, be granted a decree for recovery of the sum of Rs. 1000/- deposited by him with the defendants, and each party shall bear his own costs in this Court, in respect of this claim. We would further direct that the plaintiff shall pay the proportionate costs on the sum of Rs. 847/- incurred by the defendants in the Courts below and recover costs on the sum of Rs. 1000/- now allowed.

Mohapatra, J.

8. I agree.


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