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Shanti Prasad Vs. Gokulnath - Court Judgment

LegalCrystal Citation
SubjectContract
CourtRajasthan High Court
Decided On
Case NumberFirst Appeal No. 27 of 1951
Judge
Reported inAIR1956Raj137
ActsContract Act, 1872 - Sections 73; Code of Civil Procedure (CPC) , 1908 - Sections 34
AppellantShanti Prasad
RespondentGokulnath
Appellant Advocate S.B.L. Saksena, Adv.
Respondent Advocate Amarchand Inani, Adv.
Cases ReferredRamalinga Mudaliar v. S. R. Muthuswami Ayyar
Excerpt:
.....receive back the amount as on a failure of consideration. the english authorities are clear that money paid on a consideration, which has failed, does not carry interest, except where the contract has been induced by fraud or there is a fiduciary relationship between the parties at common law (benjamin on sale, eighth edition, page 420). in another view, the damages resulted and accumulated, because the plaintiff did not come to court earlier. illustration (r) to section 73 of the contract act no doubt is an illustration where money paid for the conveyance of the plaintiff to a carrier is said to be recoverable with interest on failure of the contract to carry, out that illustration is more for the purpose of showing that the loss resulting to the passenger by non-arrival at at..........the goods after the expiry of one month.in the second place, the plaintiff respondent had already paid money in advance to the defendant, and would have had to find additional money for arranging transport with some other person. the article sought to be transported was obviously such which was sought to be sold in the market, and the damages would be the estimated loss of profit if the contract had been performed, (8) it was next contended by learned counsel for the appellant that the defendant was not liable to pay rs. 350/-, which the plaintiff paid to darshan singh, because of the failure to remove the goods.learned counsel for the respondent stated thathe had to pay rs. 500/- as damages to amarchanddarshan singh as a result or the failure of thedefendant to provide direct.....
Judgment:

Bapna, J.

1. This is an appeal by the defendant in a suit for damages for breach of contract.

2. The respondent had entered into a contract with the defendant for transport of 3000 maunds of coal from Gura to Ajmer on 21-6-1947, the entire operation to be performed within one month. The respondent also advanced Rs. 3250/-to the defendant-appellant in order to carry out that contract.

Previous to this, the plaintiff-respondent had, entered into a contract with Amarchand Darshan Singh of Kotah to purchase 3000 maunds of coal, and the latter had agreed to keep coal ready at his godown at Gura village. This contract was entered into with the sellers on 18-5-1947, and there was a clause in the agreement that the goods were to be removed by the 13th of June.

There was also a clause that if the purchaser, namely, the plaintiff-respondent in the present case failed to purchase the coal, or the seller failed to give delivery to the purchaser, the defaulting party would pay Rs. 500/- to the opposite party. The plaintiff alleged that the defendant failed to perform his contract for the transport of coal. He claimed Rs. 5075/- from the defendant as follows:

Rs. 3250/-Advanced to the defendant,Rs. 425/-Interest from 21st June, 1947, to 14th October, 1949, at 6% p. a.Rs. 650/-Damages which the plaintiff had to pay to Amarchand Darshan Singh.Rs. 750/-Loss of profit which the plaintiff would have earned in case the coal would have been transported to Ajmer.Rs. 5075/-

3. The defendant-appellant admitted the contract to transport 3000 maunds of coal within one month from village Gura to Ajmer, and having received Rs. 3250/- on account of advance, towards performance of the contract. His plea in defence was that on the next day the defendant hired 25 carts and took the same to village Gura for the purpose of transport of coal to Ajmer. He was, however, told by Amarchand Darshan Singh that the price of the coal had not been paid to them, and, therefore, they would not permit the defendant to load the coal in the carts. As the breach of contract took place because of the act of the plaintiff himself, it was pleaded that he was not entitled to any sum claimed by him.

4. After the case had proceeded and the plaintiff's evidence had been recorded, the defendant failed to produce his evidence, and the learned Civil Judge, Bundi, held that the plaintiff had performed his conditions with Amarchand Darshan Singh, and the coal did not come to be transported because of the defendant's default. He gave a decree to the plaintiff for the entire amount claimed. The defendant has come in appeal.

5. It was contended by learned counsel for the defendant-appellant that the lower court had committed an error in not giving an opportunity to the defendant to produce his evidenced. A perusal of the record, however, shows that after the close of the plaintiff's evidence, a date had been fixed for the production of the defendant's witnesses.

On the date of hearing, however, the defendant or his witnesses were not in attendance, and his lawyers made a statement that they had no instructions. In the circumstances the lower court had no other option but to treat the defendant's case as closed.

The court, however, did not pass the judgment on the same day, but fixed another day which again happened to be a holiday, and the case was adjourned for a few days, and thereafter the judgment under appeal came to be passed. If the defendant was keen on producing his evidence, he had an opportunity to make some sort of application to the court for reviewing the order by which the defendants' evidence had been closed. In the circumstances the appellant has no just grievance that he was not given an opportunity to lead his evidence.

6. It was next contended that there was no evidence on record Co show that the plaintiff stood to suffer damages to the extent of RS. 750/-. Learned counsel for the respondent drew our attention to Ex. P. L. showing purchase of coal by Mayo College. Ajmer, from one Govindram Dhannalal on 8th August, 1947, at Rs. 7/- per maund.

This document is proved by the evidence of Gulab Chand, Office Superintendent of the Mayo College, who has testified the purchase of coal from Govindram Dhannaial at Rs. 7/- per maund on that date. If the coal would have been transported to Ajmer according to the contract, it would have reached Ajmer by the end of July. The price of coal early in August stands proved.

The cost of the coal agreed to be paid to Amarchand Darshan Singh was Rs. 3/12/- per maund, and the transportation charges to be paid to the defendant were Rs. 3/- per maund, and the cost at site to the plaintiff would have been Rs. 6/12/-per maund. The plaintiff's claim for damages at -/4/- per maund thus stands amply proved and is not excessive.

7. An argument was made by learned counsel for the appellant that the contract was for transport of the goods, and the damages in the case of such contract would be the excessive amount that the plaintiff may have had to incur in arranging for the transport of the goods on failure of the defendant to do so.

In the first place in view of the agreement between the plaintiff and Amarchand Darshan Singh if, is doubtful whether the plaintiff would have had an opportunity to make any other arrangement.

The contract between the plaintiff and Amarchand Darshan Singh was that the plaintiff would take away the entire goods within a month, and whatever may have been the consequences, if the defendant had started performing his contract, it appears to be clear that in the absence of any transport being started within one month, 16 is doubtful whether the plaintiff could compel Amarchand Darshan Singh to deliver the goods after the expiry of one month.

In the second place, the plaintiff respondent had already paid money in advance to the defendant, and would have had to find additional money for arranging transport with some other person. The article sought to be transported was obviously such which was sought to be sold in the market, and the damages would be the estimated loss of profit if the contract had been performed, (8) It was next contended by learned counsel for the appellant that the defendant was not liable to pay Rs. 350/-, which the plaintiff paid to Darshan Singh, because of the failure to remove the goods.

Learned counsel for the respondent stated thathe had to pay Rs. 500/- as damages to AmarchandDarshan Singh as a result or the failure of thedefendant to provide direct transport, and thatwhile its. 500/- were mentioned in the agreementas damages, he had to pay the extra sum of Rs.150/- on account of expenses which AmarchandDarshan Singh incurred in keeping the coal readyfor transport.

In our opinion, the defendant cannot be saddled with any damages on this score, because theplaintiff was still in a position to carry out his contract for the purchase, and to take the coal at site on payment of the price.

The failure of the plaintiff to make any arrangement for taking delivery of the coal was due to his own act, and, therefore, the defendant cannot be held responsible for any payment that he may have made to Amarchand Dashan Singh on account of the damages for breach of contract existing between the plaintiff and the defendant.

9. It was next contended that the defendant could not be liable for any interest on the amount which remained with the defendant. On behalf of the respondent, it was urged that on the defendant's failure to provide transport, he not only committed breach of the contract and became liable for damages, out he was also bound to return the amount at once, which he had received by way of advances, and he had wrongfully prevented the plaintiff from utilising his money elsewhere and the defendant further enjoyed the benefit of that money, and was, therefore, liable to pay interest.

10. It has been held in B. N. Rly. Co. Ltd. v. Ruttanji Ramji 1938 PC 67 (AIR V 25) (A) that

'Interest for the period prior to the date of the suit may be awarded, if there is an agreement for the payment of interest at a fixed rate, or it is payable by the usage of trade having the force of law, or under the provision of any substantive law entitling the plaintiff to recover interest as for instance the Court may award interest at the rate of 6 per cent, per annum, when no rate of interest is specified in a promissory note or bill of exchange under Section 80, Negotiable Instruments Act.'

In the present case there was no agreement to pay interest, nor has it been urged that it is payable by any usage or under any substantive law. Learned counsel, however, relied on Haji Mohammed Khaja v. Akber Ali, 1955 Hyd 150 ( (S) AIR V 42; (B), where it has been held that interest may be awarded if a state of circumstances was established, which attract equitable jurisdiction. The case related to a refund of price obtained by misrepresentation, and interest was allowed. There is no doubt that a court can and will allow interest where money is obtained or retained by fraud.

Reference may be made to Trojan & Co. v. Nagappa Chettiar, 1953 SC 235 (AIR V 40) (C), But that is not the same thing, where, as in the present case, the money was given for fulfilment of a particular contract, and the estimated profit, which would have resulted on fulfilment of the contract has already been allowed to the plaintiff.

During the period of one month allowed to the defendant to fulfil his contract, the plaintiff was not entitled to recover the money, and obviously not entitled to recover the interest. As the defendant did not carry out the terms of his contract, the plaintiff became entitled to receive back the amount as on a failure of consideration.

The English authorities are clear that money paid on a consideration, which has failed, does not carry interest, except where the contract has been induced by fraud or there is a fiduciary relationship between the parties at Common Law (Benjamin on Sale, Eighth Edition, page 420).

In another view, the damages resulted and accumulated, because the plaintiff did not come to court earlier. He was entitled to come to court as soon as the breach of contract had occurred, and it would have been in the discretion of the court to allow interest from the date of institution of the suit.

We do not think that a plaintiff can be allowed to accumulate damages by his own inaction. A Full Bench of the Madras High court held is Ramalinga Mudaliar v. S. R. Muthuswami Ayyar & Sons, 1927 Mad 99 (AIR V 14) (D) that in a suit to recover money advanced towards a contract for the supply of goods the party making the advance is not entitled to interest from the date of the advance on the ground trial the contract was not performed, when the contract did not provide for it and when no demand was made before suit.

With respect we agree with the majority opinion. Illustration (r) to Section 73 of the Contract Act no doubt is an illustration where money paid for the conveyance of the plaintiff to a carrier is said to be recoverable with interest on failure of the contract to carry, out that illustration is more for the purpose of showing that the loss resulting to the passenger by non-arrival at at destination in time was a remote damage and not liable to be recovered as damages for breach of the contract.

Section 73 relates to compensation for loss or damage caused by breach of contract. The claim for refund of money does not arise out of the breach of contract, out out of the right or the plaintiff to recover money paid to the defendant for consideration which has failed.

The damage by breach of contract to carry was either the difference between the cost of transport agreed to be paid to the defendant and the cost of transport to be paid to a third party in order to fulfil the contract of transport of coal, or, as in the present case, when no alternative means could be employed, by the loss of profit which the plaintiff would have earned in case of fulfillment of the contract.

The illustration so far as it mentions the plaintiff entitled to recover interest on the sum advanced to the carrier is not in accordance with the purpose and import of the section. In our opinion the plaintiff is not entitled to interest on the sum which he advanced to the defendant for fullfilment of the contract.

11. The appeal, is, therefore, allowed, the decree of the lower court is modified, and instead of the decree for Rs. 5,075/- passed by the trial court, the claim shall stand decreed for a sum of Rs. 4,000/- only. The parties will pay and receive costs in this Court and in the lower court according to their success.


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