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Laxmi Ginning and Oil Mills Vs. Amrit Banaspati Co. Ltd. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtPunjab and Haryana High Court
Decided On
Case NumberFirst Appeal No. 78 of 1954
Judge
Reported inAIR1962P& H56
ActsIndian Contract Act - Sections 7
AppellantLaxmi Ginning and Oil Mills
RespondentAmrit Banaspati Co. Ltd.
Cases ReferredIn Foley v. Classique Coaches Limited
Excerpt:
- sections 100-a [as inserted by act 22 of 2002], 110 & 104 & letters patent, 1865, clause 10: [dr. b.s. chauhan, cj, l. mohapatra & a.s. naidu, jj] letters patent appeal order of single judge of high court passed while deciding matters filed under order 43, rule1 of c.p.c., - held, after introduction of section 110a in the c.p.c., by 2002 amendment act, no letters patent appeal is maintainable against judgment/order/decree passed by a single judge of a high court. a right of appeal, even though a vested one, can be taken away by law. it is pertinent to note that section 100-a introduced by 2002 amendment of the code starts with a non obstante clause. the purpose of such clause is to give the enacting part of an overriding effect in the case of a conflict with laws mentioned with the.....orderfacts the plaintiff-from carried on business as manufacturers of groundnut oil at khanna district ludhiana. messrs. chunilal-har narain chopra of delhi acted as brokers on behalf of the plaintiffs. on 4-2-1952, the plaintiffs sent a telegram to their brokers to sell a tank van of groundnut oil at the rate of rs. 57.8.0 per maund. the brokers contacted the defendant who agreed to purchase the oil at that rate. a telegram was sent by the brokers to the plaintiffs on 5-2-1952 intimating sale. on 6-2-1952, the plaintiffs wrote to the defendants to say that the sale was confirmed of one tank weighing approximately 500 maunds of groundnut oil f. o. r., khanna, ready delivery, (indent for the supply to tank wagon to be placed immediately for ghaziabad (where the defendants carried on.....
Judgment:
ORDER

FACTS

The plaintiff-from carried on business as manufacturers of groundnut oil at Khanna District Ludhiana. Messrs. Chunilal-Har Narain Chopra of Delhi acted as brokers on behalf of the plaintiffs. On 4-2-1952, the plaintiffs sent a telegram to their brokers to sell a tank van of groundnut oil at the rate of Rs. 57.8.0 per maund. The brokers contacted the defendant who agreed to purchase the oil at that rate. A telegram was sent by the brokers to the plaintiffs on 5-2-1952 intimating sale. On 6-2-1952, the plaintiffs wrote to the defendants to say that the sale was confirmed of one tank weighing approximately 500 maunds of groundnut oil f. o. r., Khanna, ready delivery, (indent for the supply to tank wagon to be placed immediately for Ghaziabad (where the defendants carried on business) with the Railway) at the rate of Rs. 57-8-0 per maund, Dami Rs.-8/- per cent and Vidya fund Rs.-/1/- per cent. The R/R was to be forwarded through the Central Bank along with bill for collection, the collection charges to be recovered from the defendants. On the same day, the plaintiffs informed their brokers of the transaction and also said that the indent regarding the tank has also been given on that very day.

On 8-2-52 the defendant company wrote to the plaintiffs confirming the bargain but adding conditions that they would not pay anything extra excepting Bank Commission of-/2/- per cent, and Dami-/8/- per cent, and declined to pay Dharmada (Vidya fund). They (the defendants stated that the documents were to be presented through the Punjab National Bank or the Imperial Bank. In the correspondence which followed, the plaintiffs dropped their claim to Vidya fund (Dharmada) and also fell in line with the defendants' choice of the Bank through which the R/R was to be sent. On 27-2-52 the plaintiffs wrote to the defendants that the tank wagon was expected to arrive shortly and requested the defendants to send a representative to supervise the loading. On 29-2-52 the defendants sent a telegram to the plaintiffs stating 'against one tank bargain (5-2-52) goods acceptable if despatched by 29th otherwise not'. On the side of the defendants there was no further reference either to Dharmada or to the choice of the bank. By 29-2-52 the price of groundnut oil had fallen substantially.

On 1-3-52 the tank wagon was supplied and was despatched on 3-3-52. But the defendants declined to take delivery, stating that they had sent the telegram repudiating the contract. A telegram was sent by the defendants stating that the contract had already been cancelled and the loading would be at the plaintiffs' risk. In the letter which followed the defendants said that in fact there was no acceptance of their terms by the plaintiffs and the bargain, if any, stood cancelled as the goods had not been supplied upto 29-2-52. The plaintiffs sent bill dated 3-3-52 for Rs. 28648-8-6, comprising of 3 items, viz., Rs. 28502.0.6 on account of the price of the oil, Dami Rs. 142-8-0 and Rs. 4/- as the price of two locks. No charge was made on account of Vidya fund, which, if charged, would have amounted to Rs. 17/- only. A hundi was sent along with the bill through the Punjab National Bank which was dishonored. There were further negotiations between the parties which according to the case of the parties led to an agreement on 11-3-52, but there was a dispute as to its terms. Finally, the plaintiffs resole the oil to Rishi Trading Co. at Rs. 43/- per maund incurring a loss of Rs. 9,169-11-3. On 19-7-52 the plaintiffs sued the defendants in the court of the Sub-Judge at Ludhiana for recovery of that amount on account of damages. The suit was dismissed by the trial court. The plaintiffs appealed to the High Court.)

Tek Chand, J.

(After stating in paras 1-19 the circumstances including the correspondence exchanged between the parties, which, it was alleged, had led to the formation of the contract in dispute between the parties, the issues which arose on the pleading between the parties and the findings of the trial court on those issues, His Lordship proceeded:)

(20) The contention of the learned counsel for the plaintiff-appellants is three-fold. Firstly, he maintains that the contract between the parties was completed between 4th February, 1952, and 6th February, 1952. The insistence on Vidya fund (Dharmada) amounting to Rs. 17/- only and the Bank through which the Hundi was to be drawn were matters of ancillary or collateral character in no way touching the real transaction, namely, ready delivery of groundnut oil weighing approximately 500 maunds at the rate of Rs. 57-8-0 per maund. The second argument which has been advanced in the alternatives is that if the acceptance be treated as conditional and, therefore, resulting in the cancellation of the offer and the making of a counter-offer by the defendants, the same had been accepted by the plaintiff. The third contention is that after the arrival of the tank wagon at Ghaziabad a new and binding contract had been arrived at between the parties breach of which has been committed by the defendants.

(21) On the other hand, on behalf of the defendants it has been maintained that the original offer had not been accepted in terms of Section 7 of the Indian Contract Act. The so-called acceptance by the defendants was conditional and the law requires that it should be absolute and unqualified. It is also maintained that there has been no acceptance by the plaintiffs of the counter-offer. Lastly, the defendants maintained that though oral agreement had been arrived at between the parties on 11th March, 1952. its terms were not as contended by the plaintiffs but as stated by the defendants and, therefore, no breach of the new agreement had been committed by the defendants.

(22) Before considering the respective contentions of the parties, a brief resume of the oral evidence material to the case may be given. (After discussing the oral evidence of witnesses produced on each side (Paras 23, 24) the Judgment proceeded:)

(25) In a case like the present, the admitted circumstances and the correspondence exchanged throws greater light on the facts than the partisan version of the interested witnesses produced on each side.

(26) In this case, the argument as to the completion of a valid contract and as to the terms thereafter involves examination of question of fact as well as of law. The main principles may be examined in the light of facts proved. The first move towards effecting the sale of oil was made by the plaintiffs on 4th February, 1952, when a telegram (Exhibit PW 9/1) was sent to Chopra Brothers, Delhi, stating 'offer one tank groundnut oil ready 57/8/- '. The offer made to Chopra Brothers, Delhi, was not conditional and beyond indicating the rate and the quantity of the groundnut oil offered, nothing more was indicated. The firm of the brokers then proceeded to sell the goods and P.W. 9 Chuni Lal, proprietor of the brokers firm, stated that on receipt of this telegram he contacted the defendants on telephone on 5th February, 1952. He sent a telegram to the plaintiffs (Exhibit P. 54) stating 'received sole one tank 57/8/-.'

This telegram is silent as to the transaction being subject to any conditions to which objection was made later. On the same day, the brokers sent a letter of the plaintiffs (Exhibit P. 25) reproducing the contents of the two telegrams and intimated that the groundnut oil had been soil in pursuance of the plaintiffs' telegram to the defendant-company. The plaintiffs were asked to confirm this transaction to the defendant-company. From the perusal of the two telegrams and the letter of the brokers, it will appear that the acceptance was in terms of the offer without any conditions. In his statement Chuni Lal stated during the course of his cross-examination that he had been working as defendants' broker also and that there was no specific talk about Dharamada of the collecting Banks at the time of the original bargain and that these matters had been raised by the defendants there or four days later after the bargain had been settled.

If the matters were to be left here, there is no difficulty in construing the terms of the contract and in holding that the contract which had been completed was in strict compliance with S. 7 of the Indian Contract Act which provides that in order to convert a proposal into a compromise, the acceptance must be absolute and unqualified.

(27) Before referring to the subsequent correspondence, the position of the broker vis-a-vis the principal who employs him may be considered. The relationship of principal and agent may be constituted either by express appointment by the principal or by implication of law or by subsequent ratification by the principal of the acts done on his behalf. The agent with the ambit of his authorities deputises for his principal. Law does not ordinarily require a contract of agency to be created in writing except where the statute specifically requires that the authority should be conferred not by oral but by writing. The agent carrying out his undertaking within the scope of his authority binds his principal as the agent's acts are deemed to be those of his principal. An agent authorised to effect the sale of goods or property is called a broker.

Brokers are of two kinds: those authorised simply to secure customers for their principals, the resulting contract being made by the principal parties themselves, and those who are authorised to effect contracts. When a broker acts in the former capacity he is merely a negotiator between the parties and by his intervention he brings the two principals together in order to enable them to enter into a contract. So far he acts merely as an intermediary, the principal purpose of his employment being to find a purchaser or a seller. But a broker need not necessarily be a negotiator, as, his principal by the terms of the contract of agency may confer upon him the power to buy or sell on his behalf. In the latter capacity the contract is completed by the broker himself and the contract is binding on the principal if the limits of the authority conferred are not transgressed. In the former capacity of a negotiator or intermediary, the broker acts for both the buyer and the seller of the goods and he is not incompetent to act as the agent of the other party because the is employed by his first principal to find someone with whom he may enter into contract.

Where the broker does not act merely as a middleman to enable the parties to negotiate for themselves a bargain, and undertake to buy or sell goods for his employer, he acts merely as his employer's representative, and he may not, without the permission of his principal, act simultaneously as the agent of both parties.

(28) In this case, Chuni Lal P.W. 9 was acting as the agent of the plaintiffs and he had in that capacity concluded the bargain with the defendants. If the matters were left here, this case would not have presented any difficulty in holding that a binding agreement had been effected. On 5th February, 1952, Chuni Lal addressed a postcard to the defendant-company confirming the sale on the telephone of one tank of groundnut oil at Rs. 57.80 'plus Dami and Dharmada at-/9/- % f.o.r. Khanna.' He also asked the defendants to confirm the bargain to the plaintiffs, (Exhibit P.W. 9/2). On 8th February, 1952, the defendant-company sent their confirmed the bargain. They added certain conditions and the most important was that nothing was payable extra excepting bank commission of-/2/- per cent and Dami at-/8/- per cent.

The defendants said that they would not pay Dharmada, which was at-/1/- per cent at all. They noted that the goods were to be supplied by the plaintiffs. In the meanwhile, the plaintiffs wrote a letter dated 6th February, 1952 (Exhibit P. 45) confirming the sale of one tank of groundnut oil weighing approximately 500 maunds at Rs. 57-8-0 per maund. They also added Dami at-/8/- per cent and Vidya fund which is another name for Dharmada at-/1/- per cent. To this letter of the plaintiffs, the defendants also replied on 8th February, 1952 (Exhibit D. 1) declining to pay Vidya fund. In this letter, they undertook to pay dami at-/8/- per cent and bank commission at-/2/- per cent and they wanted that the documents would be accepted only through the Imperial Bank of India or the Punjab National Bank Limited.

On 14th February, the plaintiffs wrote back to the defendants (Exhibit P. 46) to say that they would be charging Vidya fund and requested the defendants not to insist upon the refusal. The tone of this letter showed that the plaintiffs were asking for Vidya fund not as a right but as a request. In similar strain the brokers also wrote to the defendants on 14th February, 1952 (Exhibit P.W. 9/5). On 16th February, 1952, the defendants wrote to the firm of brokers (Exhibits CD. 2) that payment of-/1/- per cent on Vidya fund was not acceptable to them. They further mentioned that they wanted the R/R through either the Punjab National Bank Limited or the Imperial Bank of India, Ghaziabad. They adopted the same attitude in their letter to the plaintiffs of 16th February, 1952 (Exhibits P. 18). It may be mentioned here that after 13th February, 1952, the marker rate of groundnut oil started falling.

After this date, the plaintiff did not insist on Vidya Fund being paid. It has already been mentioned that this claim came to Rs. 17/- only. On 27th February, 1952, when the marker rate had come down to Rs. 49/- per maund the plaintiffs addressed a latter to the defendant-company (vide Exhibit P. 47) stating that the tank wagon was expected to arrive very shortly and their representative should be sent to supervise the loading. On 28th February, 1952, the defendants replied by a telegram (Exhibit P. 48/P. 1) stating that the bargain of 5th February, 1952, for one tank was acceptable if despatched by 29th February otherwise not. This was a new condition which was imposed and to which there never had been any reference in the previous correspondence and to this the plaintiffs by their letter dated 29th February, 1952 (Exhibit P. 48) naturally protested.

The significance of this telegram, to my mind, is that bargain of 5th February, 1952, was not repudiated on the ground of want of agreement as to Vidya fund. The existence of the bargain was not denied but a new term was superadded as a condition of its acceptability. By this date the marker in groundnut oil had registered a further fall the average rate bring Rs. 47/- per maund (vide Exhibit P.W. 5/1). On 1st March, 1952, the Railways has supplied the tank wagon which was loaded by the plaintiffs on 2nd March and sent to Ghaziabad. The bill sent by the plaintiffs on 3rd March, 1952, Exhibit P. 38) did not include Vidya fund. Where in the light of the above correspondence the defendants can take up the plea under Section 7 of the Indian Contract Act, namely, the acceptance was conditional, and, therefore, the proposal never matured into a compromise is the main question in this case.

(29) Mr. R. S. Narula, learned counsel for the plaintiffs-appellants, has cited before us a decision of the Federal Court in Jainarain v. Surajmull, AIR 1949 FC 211. The relevant portion from the judgment which summarises the facts and the conclusion is at P. 216 and is as follows-

'In the case before us, it must be taken that nothing was proposed or mentioned at the time when the contract was entered into, regarding the payment of stamp duty on the deeds of transfer. It was not an essential part of the bargain nor was it intended to be so. There was agreement between the parties on the terms which are necessary in the law to constitute a contract of sale and there was agreement on other terms as well which they themselves considered material. The question of stamp duty was not one of the terms of the agreement and if Khaitan and Co. mistakenly and quite unnecessarily introduced this matter in the letter referred to above, that cannot affect the completed agreement already arrived at.

If after a contract is concluded and its terms settled, further negotiations are stated with regard to new matters, that would not prevent full effect being given to the contract already existing, unless it is established as a fact that the contract was rescinded or varied with the consent of both the parties or that both parties treated it is incomplete and inconclusive. Once completed, that contract can be got rid of only with the concurrence of both parties.'

(30) The learned counsel for the respondents, Mr. S. K. Kapur, has placed on a decision of the House of Lords in Hussey v. Horne-Payne, (1879) 4 AC 311, which was distinguished by the Federal Court on facts as the oral evidence and correspondence between the parties showed that all the terms of the contract were not contained in the two letters on the basis of which the action was brought and that it was the intention of the parties that the condition as to the installments was an essential part of the bargain and that on this there was no agreement. Mr. Kapur has also cited before us an English decision in Bristol Cardiff and Swansea Aerated Bread Co. v. Maggs, (1890) 44 Ch D 616, where Kay, J. went to the length of saying that if, after a contract is concluded, one of the parties starts fresh negotiations with a view to introduce new terms, then even if the subsequent negotiations fail, it would be inequitable to allow the party who attempted to reopen the contract to enforce it subsequently. The Federal Court thought that this view was manifestly unsound and referred to the subsequent English cases in which it had been expressly dissented from.

(31) A Division Bench of Andhra Pradesh High Court in Dhulipudi Namayya v. Union of India, AIR 1958 Andh Pra 533, expressed the view that if a new and collateral term is annexed to an absolute acceptance that would not basis of the original offer which had been unconditionally accepted. These two decision relied upon by the learned counsel for the plaintiff-appellants are fully applicable to the fact of this case. The original offer conveyed by the plaintiffs through the firm of brokers was for the sale of one tank of groundnut oil ready delivery at the rate of Rs. 57-8-0 and the acceptance of this offer was absolute and unconditional and the sale had been effected in the term of the offer as stated by Chopra in his telegram (Exhibit P-24) dated 5th February, 1952 and in his statement as P.W. 9. The topic of subsequent controversy, namely, liability to pay Vidya fund amounting to Rs. 17/- was no part of the bargain as agreed to initially.

The real basis of the contract was to effect sale of one tank of groundnut oil ready delivery at Rs. 57-8-0 and on this matter there was no counterproposal. The plaintiffs may have taken an erroneous stand is basing their claim as to Vidya fund on mercantile usage or on implicit terms of the bargain, but this claim never figured in the original proposal or in its acceptance, because immediately after the acceptance of the proposal some new suggestions and counter-suggestions were made to some of which the parties later on agreed which cannot alter the situation as to the bargain relating to the groundnut oil. The claim of Rs. 17/- on account of Dharmada was really otiose to the sale of the groundnut oil and in any case it was a matter of least consequence to either party. I am inclined to agree with the view of the trial Court that the parties were treating the matter of Vidya fund as a mere detail and whichever way it might be settled it would not stand in the way of successful materialisation of the bargain.

As pointed out by the trial Court, this was why the plaintiff had placed an indent for the tank wagon on 6th February, 1952, without waiting for the defendant's confirmation and that is why the defendants had entered this contract in their register of contracts on 8th February, 1952. The acceptance of the offer was not qualified or conditional.

(31a) According to the principles of the law of Contracts by Leake, 8th edition, p. 17:

'The acceptance must agree with the terms of the offer; it is proposes a material variation of the terms there is no agreement, or consensus ad idem upon which a contract can be founded.'

(32) Principles of law are not in dispute, but it is in the application of those principles to the facts of a particular case that Courts are sometimes confronted with difficulty. In a later decision of the House of Lords in Hillas and Co. Ltd. v. Arcos Ltd., 1932 All ER 494, Hillas and Co. had agreed to buy from Arcos Limited '22,000 standards of softwood goods of fair specification over the season 1930.' Written agreement contained as option in buy 1,00,000 standards in 1931 but without particulars as to the kind or size of timber or the manner of shipment. The original purchase for 1930 presented no difficulty, but when the buyers sought to exercise the option of 1931 the sellers took the point that the failure to define the various particulars showed that the clause was not intended to bind either party but merely a basis for future agreement. The House of Lords rejected the defendants' contention and pronounced in favour of the binding nature of the agreement, Lord Tomlin said:

'The problem of a Court of construction must always be so to balance matters that, without violation of essential principle, the dealings of men may, as far as possible, be treated as effective, and that the law may not incur the reproach of being the destroyer of bargains.'

(33) If there appears to be agreement on of essential matters, either on the fact of the documents or by praying in aid commercial practice or the previous course of dealings between the parties, the Courts will ignore the subsidiary or meaningless addendum. There is always a tendency on the part of the Courts to support the assumptions of sensible men if this is possible (vide Cheshire and Fifoot on the Law of Contract, 5th Edition, p. 35).

(34) In Nicolene v. Simmonds, (1953) 1 QB 543 (551, 552) the plaintiffs offered to the defendant to buy from him a large quantify of steel bars and the defendant replied that he would be happy to supply them and he added 'I assume that we are in agreement that the usual conditions of acceptance apply.' The plaintiffs acknowledged this letter but made no reference to the 'usual conditions of acceptance'. The defendant failed to deliver the goods and the plaintiffs sued for breach of contract. The argument raised on behalf of the defendant was that as there had been no explicit agreement on the 'conditions of acceptance' there was no concluded contract and that the defendant's own letter was in the nature of a court-offer which had not been accepted.

The Court of Appeal dismissed this argument and gave judgment for the plaintiffs. It appeared that there were no 'usual conditions of acceptance' to which either party could refer. The Court of Appeal laid emphasis on the fact that a clause which was meaningless and which was severable from the rest of the contract and capable of being rejected without impairing the sense or reasonableness of the contract as a whole, should be rejected. The decision was in favour of there being a concluded agreement between the parties. Denning L. J. said:

'I take it to be clear law that, if one of the parties to a contract inserts into it an exempting condition in his own favour which the other side agrees and it afterwards appears that that condition is meaningless or is so ambiguous that no ascertainable meaning can be given to it, that does not render the whole contract a nullity. The only result is that the exempting condition is a nullity and must be rejected. It would be strange, indeed, if a party could escape every one of his obligations by inserting a meaningless exemption from some of them.'

The learned Judge further remarked:

'You would find defaulters all scanning their contracts to find some meaningless clause on which to ride free.'

Hodson, L. J. said:

'I do not accept the proposition that because some meaningless words are used in a letter which contains an unqualified acceptance of an offer, those meaningless words can be relied on by the acceptor as enabling him to obtain a judgment in his favour on the basis that there has been no acceptance at all.'

(35) If a party, after agreeing in substance to the proposals of the other, introduces a phrase or a clause which when examined is found to be without significance, the Courts are reluctant to draw a presumption against the validity of a contract on the ground that with respect to some inconsequential matter there was no assensio mentium--meeting up the minds. The discovery of the party's intention sometimes offer serious difficulty and the Courts., for arriving at their conclusion, legitimately lean on the conduct of the parties.

In Foley v. Classique Coaches Limited, (1934) 2 KB 1, Scrutton, L. J. said that the House of Lords in 1932 All ER 494, had found that the parties believed that they had a contract and in that case before the court of Appeal Scrutton, L. J. was influenced by the fact that the parties had believed that they had a contract and they acted for three years as if they had. This conduct led the Court of Appeal to conclude in favour of the existence of an effective and enforceable contract although no definite price had been agreed with regard to the petrol which, according to the terms of the agreement, the defendants had to purchase from the plaintiff to meet their requirements for running their business.

(36) In the instant case, the matter of Rs. 17/- by way of Vidya fund was of no consequence, and the main contract as to the sale of oil with respect to which there was a complete agreement of the parties up to the end, was m no way affected. Even when the defendant-company wanted to wriggle out of the bargain, the pretext sought was that the tank wagon should be sent so as to reach Ghaziabad on 29th February, 1952. The existence of the bargain as to the sale of the oil was not denied and there was no allusion to the Vidya fund which was not, therefore, the reason given for non-completion of the contract. The offer of the plaintiffs had insisted at one time in demanding the Vidya fund. On the facts of this case, my view is that the offer had been accepted by the defendants without qualification and any further negotiations in which certain other conditions were added could not enable either party to get rid of the contract already made. The minds of the parties met, I think, on the same terms and in the same sense and the meeting of the minds of the parties to a contract can always be shown not only by their words but also by the conduct of either or both. According to the maximum 'Non refert an quis assensum suum praefert verbis, aut rebus ipsis et factis'--it matters not whether a man gives his assent by his words, or by his acts and deeds.

An argument in the alternative which may be considered is that even if the so-called acceptance by the defendants being conditional had not matured into a promise and which was merely a counter-proposal, the bargain should be deemed to have been completed as the counter-proposal had been accepted by the plaintiffs. The defendants had agreed to pay Dami at-/8/- per cent and the plaintiffs had not insisted on the Vidya fund and had sent the R/R through the Bank in accordance with the desire of the defendant-company.

If a person makes an offeror's assent to an acceptance which is not responsive to the proposal a contract is made and the former cannot get out of it and the offeror's assent to new terms imposed by the offeree in his acceptance may be inferred from the fact that the parties thereafter proceeded to conduct business under the conditional acceptance. In this case, the defendant's own register contains an entry of the purchase of groundnut oil from the plaintiffs and the plaintiffs had sent a bill including those items only to which the defendants had no objection. The subject-matters of controversy did not figure at all on either side when the groundnut oil had been loaded and sent to the defendant-company.

(37) On behalf of the defendant-company it is said that the acceptance of the counter-proposal by the plaintiffs cannot be taken into account as that was at a late stage and after the marker price of the commodity had fallen. This argument might have been cogent if the defendants had repudiated the bargain. Though it was no part of the agreement that the groundnut oil should reach the defendants by 29th February, 1952, the position taken up by the defendants nevertheless was that the bargain stood if they could get the oil delivered to them on 29th February, 1952.

(38) The third argument upon which the plaintiffs' case has also been rested is that, according to both parties, a new agreement had been arrived at between the parties in early March 1952, after the tank wagon had been despatched to Ghaziabad and the defendants had committed breach of that agreement. It is true that it is the case of the parties that there was an agreement but there is a dispute as to its terms. The question not to be seen is as to which of the two versions is in accord with truth and is reliable. (After discussing the question, the judgment proceeded :)

In my, view, the plaintiffs had a cause of action also for the reason that there had been breach of the agreement arrived at on 11th March, 1952. In my view, the second issue was wrongly decided by the trial Court and it should have been held that the defendant-company had committed breach of a contract which was valid.

(39) The next question relates to the fifth issue as to the quantum of damages. The contention of the plaintiffs is that they are entitled to damages amounting to Rs. 9,169-11-3 representing the short-fall on account of the difference in the contract rate and the market rate on 18th March, 1952, besides expenses on account of Railway freight and demurrage and other charges including travelling expenses of Bakshi Narinder Singh and Natha Singh. It is to be remembered that the contract was f. o. r. khanna. The plaintiffs had received a telegram from the defendant-company on 28th February, 1952 (Exhibit D-3) that the bargain in question was acceptable if the tank was despatched by 29th February, otherwise, not and this telegram was definitely received by the plaintiffs on 29th February, 1952, as appears from their letter Exhibit P-48 addressed to the defendants.

As the plaintiff obviously could not despatch the tank wagon by 29th February, as it had not been made available by the Railways on that day, they should not have sent the wagon to the defendants which they did on 3rd March, 1952. In the circumstances of the clear repudiation of the defendant-company, the plaintiffs should have mitigated their damages on learning of the breach on the part of the defendants. The groundnut oil should have been disposed of at Khanna at the prevailing market rate which was said to be Rs. 46/- per maund. Plaintiffs are, therefore, entitled to a sum of Rs. 5,750/- as damages. This is also the finding of the trial Court under issue No. 5.

(40) For the reasons stated above, the plaintiffs' appeal is allowed, and the decree of the trial Court dismissing their suit with costs etc., is set aside. A decree for the recovery of Rs. 5,750/- as damages for breach of contract with proportionate costs throughout is passed in plaintiffs' favour.

K.L. Gosain, J.

I agree.

Appeal allowed.


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