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S.K.A.R.S.M. Ramanathan Chettiar Vs. National Textile Corporation Ltd., New Delhi and anr. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtKerala High Court
Decided On
Case NumberA.S. No. 133 of 1979
Judge
Reported inAIR1985Ker262
ActsContract Act, 1872 - Sections 5, 6, 10 and 73; Evidence Act, 1872 - Sections 3 and 114; Sale of Goods Act, 1930 - Sections 56
AppellantS.K.A.R.S.M. Ramanathan Chettiar
RespondentNational Textile Corporation Ltd., New Delhi and anr.
Advocates: P. Santhalingam and; Balakrishnan, Advs.
DispositionAppeal dismissed
Cases Referred and Dunkirk Colliery Company v. Lever
Excerpt:
.....5, 6, 10 and 73 of contract act, 1872, sections 3 and 114 of evidence act, 1872 and section 56 of sale of goods act, 1930 - contract for sale - buyer refused to take delivery of goods despite several reminders - act of buyer caused loss to seller - seller entitled to damages on buyer's willful default in taking delivery and payment. - - since the defendant refused to act up to his obligations under the contract, the goods were sold by plaintiff 2 on 27-9-1975 to yarn distributors for the best available price in the market. 50,455/-,which includes the difference between the contract price and the price realised by the sale as well as the lorry charges, commission, demurrage, etc. balakrishnan appearing for the appellant submits that there is no reliable evidence to support the..........those entries fully support the plaint claim in regard to the loss sustained as a result of the sale at calcutta. the entries show that the difference between the contract price and the price at which the goods were ultimately sold was rs. 30,636.80. the balance claim of rs. 19,818.20 represents the demurrage and commissions paid and other expenses incurred.5. the defendant in his written statement questioned the existence of the contract, the genuineness of the sale effected at calcutta and his responsibility for the loss stated to have been incurred by plaintiff 2. d. w. 1 is the defendant. he produced exts. b1 and b2. ext. bl is his letter dated 18-1-1975 stated to have been despatched on the very same day as shown in the certificate of posting, ext. b2. in that letter he has.....
Judgment:

Kochu Thommen, J.

1. The defendant in a suit for recovery of money is the appellant. The first plaintiff is the National Textile Corporation Limited, and the second plaintiff, Vijaya Mohini Mills, is one of the Units of the first plaintiff by virtue of the Sick Textile Undertakings (Nationalisation) Act, 1974).

2. Exhibit A1 dated 17-1-1975 and Ext. A2 dated 6-1-1975 evidence a contract of sale between the second plaintiff and the defendant under which 15 bales of 40's and 25 bales of 60's of cotton yarn had been sold by plaintiff 2 to the defendant. As per the terms of the contract of sale, the goods were despatched by plaintiff 2 to the Calcutta branch of the defendant on 22-1-1975 and the relative documents were forwarded by it to the authorised bank. The defendant did not take delivery of the goods at Calcutta despite various reminders. Ext. A4 dated 25-3-1975 and Ext. A5 dated 17-4-1975 are the two telegrams sent by plaintiff 2 to the defendant urging him to take delivery of the goods lying at Calcutta.

3. Since the defendant did not take delivery of the goods, Ext. A6 notice dated 17-6-1975 was sent by plaintiff 2 to the defendant. In that notice, plaintiff 2 specifically stated that unless the goods were immediately cleared by him, it would take steps for the sale of the goods, and the defendant would be held liable for all consequential loss and damages. In reply to Ext. A6 the defendant sent Ext. All letter dated 8-7-1975, totally denying any liability or responsibility on his part for the goods despatched by plaintiff 2. He even questioned the very existence of the contract. Since the defendant refused to act up to his obligations under the contract, the goods were sold by plaintiff 2 on 27-9-1975 to Yarn Distributors for the best available price in the market. As a result of that sale, plaintiff 2 incurred a loss of Rs. 50,455/-, which includes the difference between the contract price and the price realised by the sale as well as the lorry charges, commission, demurrage, etc. Plaintiff 2 caused a suit notice, Ext. A9 dated 14-10-1975, to be sent to the defendant. Ext. A12 dated November 4, 1975 is the reply notice sent on behalf of the defendant, denying any liability on his part whatever. The suit was accordingly instituted by the plaintiffs for realisation of the aforesaid amount of Rs. 50,455/-.

4. Exhibit A13 which is the book of accounts of plaintiff 2 was proved by P. W. 1 who is its accountant at Trivandrum where the accounts are maintained. At page 100 of Ext. A13 the relevant entries are recorded. Those entries fully support the plaint claim in regard to the loss sustained as a result of the sale at Calcutta. The entries show that the difference between the contract price and the price at which the goods were ultimately sold was Rs. 30,636.80. The balance claim of Rs. 19,818.20 represents the demurrage and commissions paid and other expenses incurred.

5. The defendant in his written statement questioned the existence of the contract, the genuineness of the sale effected at Calcutta and his responsibility for the loss stated to have been incurred by plaintiff 2. D. W. 1 is the defendant. He produced Exts. B1 and B2. Ext. Bl is his letter dated 18-1-1975 stated to have been despatched on the very same day as shown in the certificate of posting, Ext. B2. In that letter he has stated that the order placed by him under Ext. Al dated 17-1-1975 was a misunderstanding and that the goods ordered were not required. He therefore requested plaintiff 2 not to despatch the goods. Ext. B2 is therefore an attempted revocation of the contract which had been already entered into between plaintiff 2 and the defendant. What would have been the effect of such revocation and the consequential damages, if any, to be paid are questions which do not arise in the present case because, as found by the Court below, Ext. Bl did not reach plaintiff 2, Ext. B2 evidences the despatch of Ext. B1, but there is no evidence as to its receipt by plaintiff 2. Plaintiff 2 has denied receipt of that letter. The relevant averment and the deposition of P. W. 1 on the point were accepted by the Court below. We do not see any reason why we should not accept that finding. Plaintiff 2 has categorically stated that Ext. Bl was not received. In the absence of any evidence, such as an acknowledgment receipt, we must, as we do, proceed on the basis that the contract subsisted between the parties at all material times and that the defendant defaulted in the performance of his duties under the contract.

6. Mr. Balakrishnan appearing for the appellant submits that there is no reliable evidence to support the alleged sale at Calcutta. We do not agree. Ext. A13 is the book of accounts regularly maintained in the course of business by plaintiff 2 which is a nationalised company. The relevant entries in the accounts book have been spoken to by P. W. 1 who is the accountant. This is perfectly reliable evidence. We do not see any reason to suspect the genuineness or the correctness of the relevant entries in that book.

7. Section 56, Sale of Goods Act, 1930, says :

'Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may sue him for damages for non-acceptance.'

The measure of damages has to be determined with reference to the rule in Hadley v. Baxendale, (1854) 9 Ex. 341, 354, which is incorporated in Section 73, Contract Act, 1872. This section reads :

'Where a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach.....'

It is not necessary to read the rest of the section, as we are concerned only with the first rule in Hadley v. Baxendale (supra). That rule postulates compensation for any loss or damage which naturally arises in the usual course of things from the breach. The measure of damages for non acceptance is the estimated loss directly and naturally resulting, in the ordinary course of events, from the buyer's breach of contract. The general intention of the law is that, in giving damages for breach of contract, the party complaining should, so far as it can be done by money, be placed in the same position in which he would have been, had the contract been performed. Where there is an available market for the goods in question, the proper measure of damages is prima facie to be ascertained by reference to the difference between the contract price and the market or current price at the time of the breach. If however the market rate on the date of the breach is not available, it is open to the Court to take into account the surrounding circumstances and the evidence regarding rate of the market on the subsequent dates with a view to awarding proper damages in terms of Section 73, Contract Act. This principle is founded upon the general duty of the seller to mitigate his damages by taking all reasonable steps to minimise his loss. The seller must therefore take reasonable steps to sell the goods for the best price that he can obtain. The difference between the price for which he sold the goods and the contract price is the true measure of damages. Where there is no evidence as to the market on the date of the breach, and where there is evidence as to market for the goods in question on any subsequent day, it is the rate prevalent on the subsequent date that would be relevant for the purpose of determining the measure of damages. All that is expected of the seller is to act as reasonable men and take reasonable steps to minimise the loss: Jugmohandas Vurjiwandas v. Nusserwanji Jehangir Khambatta, (1902) ILR 26 Bom 744 and Dunkirk Colliery Company v. Lever, 9 Ch. D 20.

8. In the present case, Exts. Al and A2 leave no doubt that plaintiff 2 and the defendant had entered into a contract of sale whereunder goods were despatched by the second plaintiff to Calcutta. It was the duty of the defendant to honour the contract and promptly take delivery of the goods at Calcutta. He failed to do so. The goods were not immediately sold because plaintiff 2 urged the defendant by means of a letter, telephonic requests and telegrams to take delivery of the goods. Due notice was issued to the defendant on 17-6-1975 informing him that if he did not take delivery of the goods they would be sold at the risk and costs of the defendant. Plaintiff 2, in the circumstances, acted most reasonably and took prompt steps to mitigate the damages. The defendant is liable to compensate plaintiff 2 for the loss suffered by it as a result of the sale. The true measure of the compensation is the difference between the contract price and the price at which the goods were finally sold in Calcutta and the incidental expenses. The Court below accepted the plaint claim. We see no reason to interfere with that finding. The appeal is accordingly dismissed with costs.


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