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Punjab State Electricity Board, Patiala Vs. Abnash Textile Trading Agencies - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtPunjab and Haryana High Court
Decided On
Case NumberFirst Appeal No. 22 of 1977
Judge
Reported inAIR1986P& H323
ActsElectricity (Supply) Act, 1948 - Sections 12; Partnership Act
AppellantPunjab State Electricity Board, Patiala
RespondentAbnash Textile Trading Agencies
Cases Referred and Shankar Das Rup Lal v. Governor
Excerpt:
.....under article 227 of the constitution. - where there is no available market and there are difficulties in assessing the damages on the ordinary footing, the court must do its best to award such damages as will put the seller in the same position in which he would have been if the contract had been performed......partnership act. the defendant-appellant, punjab state electricity board (hereinafter called the board) issued tender notice in the tribune, chandigarh, dt. july 27, 1973 for the supply of 10,000 metres of khaki woollen cloth 145 cms. x 605 cms. per lineal metre. it, in compliance with the conditions governing the tender for the supply of the cloth, gave its offer in the form of tender vide letter dt. aug. 10, 1973, for three items. the relevant item was: wool khaki serge as per the sample of which the rate quoted was 35.89 per metre. the said tender submitted by it was accepted by the board at the said rate and telegram of acceptance thereto was sent to it asking it to deposit the security amount of rs. 35,000/-. thus, a completed contract came into existence between the parties for.....
Judgment:

1. This is defendant's appeal against whom the suit for the recovery of Rs. 60,000/- by way of damages has been decreed by the trial Court.

2. The plaintiff-respondent M/s. Abnash Textile Trading Agencies, Ambala City, filed the suit for the recovery of Rs. 1,00,000/- on account of the damages for the breach of the contract including the refund of the security amounting to Rs. 36,000/-. According to the plaintiff, it was a partnership firm carrying on the business of retail and wholesale sale of cloth and is duly registered under the Partnership Act. The defendant-appellant, Punjab State Electricity Board (hereinafter called the Board) issued tender notice in The Tribune, Chandigarh, dt. July 27, 1973 for the supply of 10,000 metres of khaki woollen cloth 145 cms. x 605 cms. per lineal metre. It, in compliance with the conditions governing the tender for the supply of the cloth, gave its offer in the form of tender vide letter dt. Aug. 10, 1973, for three items. The relevant item was: wool khaki serge as per the sample of which the rate quoted was 35.89 per metre. The said tender submitted by it was accepted by the Board at the said rate and telegram of acceptance thereto was sent to it asking it to deposit the security amount of Rs. 35,000/-. Thus, a completed contract came into existence between the parties for the supply of wool khaki serge at the rate of Rs. 35.89 per metre. The board also sent the letter of confirmation with endorsement dt. Sept. 13, 1973, which was received by it on Sept. 17, 1973, by ordinary post. Thereafter, it deposited the security amount of Rs. 35,000/-. In pursuance of the completed contract between the parties, the defendant handed over the purchase order dt. Sept. 24, 1973, Ext.P. 9, to its representative for the supply of 12,000 metres of wool khaki serge at the rate of 35.89 per metre. Since, it had agreed to supply the contracted goods within 60 days, it placed order with M/s. Bhag Mal & Sons, Amritsar, for manufacturing 10,000 metres of wool khaki serge and also deposited a large amount of security with the said firm. Before it could start the supply, to its surprise, it received letter dated Oct. 9, 1973, from the Board wherein it was informed that the Board did not propose to enter into any contract with it for the purchase of woollen cloth and, therefore, it was directed to withdraw its security deposit immediately. Since there was completed contract between the parties, none of them was competent to rescind the same. The Board itself committed the breach of the contract. Later on the Board entered into a contract with some firm at Ludhiana and started purchasing from it. Thus, it had suffered as loss of Rs. 60,000/- as damages which it assessed on the basis of the difference of the price which it had to pay to the manufacturer with whom it had entered into the contract, and supply to the Board at the rate agreed with the latter. It was also entitled to the refund of Rs. 35,000/- on account of the security deposited by it. Besides, it also claimed a sum of Rs. 4,000/- on account of the damages which it was likely to pay to the manufacturer with whom it had entered into the agreement to manufacture the goods. The defendant resisted the suit on the allegations that no completed contract had come into existence between the parties. The telegram, if any, was neither a valid acceptance of the offer made by it, nor it amounted to an agreement between the parties. Such an agreement could be valid only if it was duly and properly executed between the parties. The Board was a corporate body and the contract made and entered into on its behalf must be in its name. It was denied that any purchase order was issued or handed over to the plaintiff. According to the Board, as a matter of fact, the plaintiff vide letter dt. Sept. 28,1973, requested it to issue the purchase order. It sent the letter dt. Oct. 7, 1973, to the effect that it did not want to enter into the contract for the purchase of 10,000 metres of cloth. Furthermore, the plaintiff did not deposit the security amount within four days as intimated to it. The defendant was therefore free to enter into any contract with any firm and as such the plaintiff was not entitled to any damages. On the pleadings of the parties, the trial Court framed the following issues:

1. Whether the plaintiff firm is a registered firm under the Partnership Act?

2. Whether there was a completed contract between the parties for the purchase and supply of cloth as alleged?

3. Whether the defendant is guilty of the breach of contract?

4. If issue No. 3 is proved, to what amount of damages the plaintiff is entitled?

5. Whether the suit is not maintainable?

6. Whether the Court has got no jurisdiction to entertain the suit?

7. Whether the defendant is entitled to special costs?

8. Relief.

Under issue No. 1, the trial Court found that the plaintiff was a registered firm under the Partnership Act. Under issue No. 2, it was concluded that the contract between the parties for the supply of 12,000 metres of cloth was complete and, thus, the said issue was decided in its favour. Issue No. 3 was also decided in its favour and against the Board as it was held thereunder that the breach of the contract was committed by the Board. On the most material issue No. 4, it found that the plaintiff suffered a loss of Rs. 5/- per metre which came Rs. 60,000/- on 12,000 metres of cloth. In view of this finding, the plaintiff's suit was decreed for a sum of Rs. 60,000/- because the counsel for the plaintiff had made the statement on Sept. 21,1976, that the Board had refunded the amount of Rs. 35,000/- to it which it had deposited as security with the Board. Dissatisfied with the same, the Board has filed this appeal in this Court.

3. They only contest in this appeal is as to the findings of the trial Court under issues Nos. 2 and 4.

4. The learned counsel for the appellant contended that the Board was a corporate body as provided under S. 12 of the Electricity (Supply) Act, 1948 and, therefore, there could not be a completed contract between the parties unless the same was in writing and duly approved by the Board. It was also contended that no letter of acceptance of the offer was ever despatched to the plaintiff and it had been wrongly pleaded that the letter dt. Sept. 24, 1973, Ext.P. 9, i.e., the order for purchase, was given to the plaintiff, I do not find any merit in these contentions.

5. It is not disputed that the Board is a corporate body as provided under S. 12 of the aforementioned Act, but in the present case, the security was deposited by the plaintiff and accepted by the Board inasmuch as the letter, Ext.P. 9, for the purchase was given to it. A completed contract between the parties had come into existence. Therefore, the said plea was no more available to the Board though there was no regular document evidencing the completion of the contract between the parties. On behalf of the Board, Inder Singh, Deputy Superintendent appeared as D.W. 1 and categorically stated that the Board had asked the plaintiff to deposit the security and the same was deposited by the plaintiff. He also testified that no agreement is executed between the Board and the firm after the acceptance of the tender and only the purchase order is issued. He also stated that the purchase order, Ext.P. 9, was signed by the Under-Secretary on Sept. 22, 1973. That being so, it could not be successfully argued that in the absence of any regular document showing the entering into of the agreement of the parties, there was no completed contract between them. The plea of the defendant that no purchase order was given to the plaintiff was negatived by the trial Court and no meaningful argument could be raised to assail the same in this Court. In these circumstances, the finding of the trial Court under issue No.2 is maintained.

6. On issue No. 4, the learned counsel for the appellant contended that the plaintiff did not lead any evidence to prove as to what was the market price of the goods at the time when the purchase order was withdrawn by the appellant. In the absence of any such evidence it could not be held that the plaintiff suffered damages to the tune of Rs. 60,000/-, as held by the trial Court. In support of the contention, the learned counsel relied upon Firm. H. Sham Sunder & Sons v. Ram Chand Spinning and Weaving Mills, AIR 1957 Punj 90; Muhammad Habidullah v. Bird and Company, AIR 1922 PC 178 and Erroll Mackay v. Kameshwar Singh AIR 1932 PC 196. On the other hand, the learned counsel for the respondent submitted that since the cloth which was to be supplied by it was a non-marketable goods, therefore, the price of goods is the measure of damages. Thus, argued the learned counsel, the trial Court rightly held that the plaintiff and suffered damages at the rate of Rs. 5/- per metre. In support of the contention, the learned counsel relied upon G. D. Gear and Company v. French Cigarettes Company Ltd., Lahore AIR 1931 Lah 724 and Shankar Das Rup Lal v. Governor-General in Council, AIR 1952 Punj 234.

7. After hearing the learned counsel for the parties on this issue, I am of the considered opinion that there is no merit in the contention, raised on behalf of the appellant.

8. The propositions of law, as laid down in the authorities cited by the learned counsel for the appellant are not disputed, but the said rulings have no applicability to the facts and circumstances of the present case. It is proved on the record that the cloth for which the order was placed by the plaintiff with M/s. Bhag Mal & Sons, Amritsar, through its agent, Banwari Lal & Co., was not a marketable cloth. It has been so categorically stated by Barhmanand, partner, Banwari Lal & Co. P.W. 2 and Anil Gupta, P.W. 4. There is no rebuttal to the said evidence, by the Board. Once it is so found that the goods were not marketable, then, the price of the goods was the measure of damages as held in G. D. Gear and Company's case (AIR 1931 Lahore 742) (supra). Therein, while holding so, it was observed that in the case of goods specially made to order a distinction has to be drawn between goods which are marketable and which are not marketable, and in the latter case the price of the goods is the measure of damages. To the same effect is the law laid down in Shankar Das Rup Lal's case (AIR 1952 Punjab 234) (supra). Therein it was held that ordinarily the measure of damages upon a breach of contract for sale of goods is the difference between the contract price and the market price on the date of breach. The defaulting party is bound however to place the other party in the same position in which he would have been if the contract was performed. Where there is no available market and there are difficulties in assessing the damages on the ordinary footing, the Court must do its best to award such damages as will put the seller in the same position in which he would have been if the contract had been performed. Under the circumstances, the finding of the trial Court under issue No. 4 is also to be affirmed.

9. No other point arises, nor has been argued.

10. Consequently, this appeal fails and is dismissed with costs.

11. Appeal dismissed.


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