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Firm Ramdhan Kedarmal and ors. Vs. Firm Tolla Trading Co. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtRajasthan High Court
Decided On
Case NumberFirst Appeal No. 34 of 1952
Judge
Reported inAIR1959Raj264
ActsContract Act, 1872 - Sections 73
AppellantFirm Ramdhan Kedarmal and ors.
RespondentFirm Tolla Trading Co.
Appellant Advocate A.D. Bareth, Adv.
Respondent Advocate G.N. Sharma, Adv.
DispositionAppeal dismissed
Cases ReferredRam Laxman v. State of Rajasthan
Excerpt:
.....plaintiff had failed to prove that the defendant had entered into a contract for the sale of 50 bars of silver as alleged by him. in our opinion the evidence of girraj is very reliable because he is an independent witness. taking this evidence to be reliable, we accept the evidence of the plaintiff that the space was left blank for the reason that trie brokers would inform him of the defendant's intention to give a pucca name on the next day and when that name was given on the next day. ordinarily this view of law may be correct, but where the contracts of sale and purchase are done on an exchange from day to day with respect to commodities like bullion, the market value of such contract on the date of repudiation is the best basis of damages rather than the actual value ofperformance..........was signed by him and was handed over to the chamber and even at that time the transaction of 50 bars entered in the list had been scored out. on that day only 12 bars were bold and 5 bars were purchased from the plaintiff. it may be mentioned that these two transactions are not disputed and have been adjusted between the parties. he admitted that the grand total had been corrected from 104 to 54 in list ex. p-1 on that day.hari prasad defendant denied the transaction with the brokers radha kishen and ratanlal and denied having made a deposit at the rate of rs. 100/- for 50 bars in dispute. both these defendants denied all the proceedings which took place before the arbitration committee of the chamber. bhanwarlal d.w. 3 was the scribe of list ex. p-1. he said that the scoring had been.....
Judgment:

K.L. Bapna, J.

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

2. The case of the respondent according to the plaint filed before the trial Court on 14-5-1949 in me court of the District Judge, Kishengarh was, that the parties were members of the Chamber of Commerce, Ltd., Madanganj and dealt in gold and silver bullion according to the rules of the Chamber. It was alleged that the plaintiff agreed to purchase 50 bars of silver at Rs. 168/- per bar (100 tolas) deliverable on Asad Budi 1 Smt. 2005, the transaction itself having been done on Jeth Budi Amavas (7th June 1948) of the same year through the registered brokers of the Chamber.

It was alleged that the defendant while entering into an agreement of sale of the aforesaid bars,said that this transaction was to be entered in the name of a merchant whose name would be disclosed later on, but if this was not disclosed, the transaction would be as if entered by the defendant. On the next day the defendant gave out that his own name as seller be entered. It was alleged that according to the rules of the Chamber every member dealing in gold and silver bullion had to send a list of his transactions with other members.

The list of the plaintiff contained an entry of purchase of 50 bars and the list of the defendant also contained an entry of sale of 50 bars. The name of merchant with whom the transaction took place, was not entered in the list filed by the plaintiff. So far as the list of the defendant was concerned, he made an entry that he had sold the aforesaid 50 bars to the plaintiff. It was further alleged that on information being received from the broker that the defendant had agreed being named himself as the seller, the plaintiff went to the office of the Chamber and entered the name of the defendant at the blank space left for the purpose.

It was then urged that the office of the Chamber later sent for the plaintiff to inform that the defendant had cut out the entry of sale of 50 bars to the plaintiff from the list of 7-6-1948 and because the defendant wanted to repudiate that contract, he advised the plaintiff to make an applicattion to the Chamber according to the rules for the Settlement of the dispute. The allegation further is that the plaintiff made an application to the Chamber on 9-6-1948 for allowing damages for the refusal by the defendant to perform his contract on the due date.

The office of the Chamber declared that the market rate on 9-6-1948 at 4.30 P.M. was Rs 173/12/- per hundred tolas at which rate the damages were to be calculated if the Arbitration Committee decided in favour of the plaintiff that a breach of contract had taken place. The Arbitration Committee went into the matter and held that the defendant had committed breach of contract and damages should be allowed on the difference between the rate at which the bars were purchased and the rate of Rs. 173-12-0 declared by the office as aforesaid. The amount of damages came to Rs. 8,050/-. This award was made on 19-6-1948. The plaintiff further alleged that after the award, he received Rs. 1,278/- through the Chamber from the defendant, and made a claim for the balance of Rs. 6,772/- principal and certain interest at 6 per cent P. A. making a total of Rs. 7,140/-.

3. The defendant denied having entered into the contract for the sale of 50 bars of silver on 7-6-1948. It was alleged that only ten bars of silver were sold and that the transaction was completed according to the rules of the Chamber. Certain other points were also raised. The Court framed as many as six issues and as a result of the trial found in favour of the plaintiff and passed a decree for Rs. 6,772/- having disallowed the claim of interest. The learned Senior Civil Judge, Kishengarh in whose Court the appeal was preferred by the defendant, dismissed the same. The defendant has come in appeal to this Court.

4. Several points were raised in the grounds of appeal, but only the following two points were argued :

1. That the plaintiff had failed to prove that the defendant had entered into a contract for the sale of 50 bars of silver as alleged by him.

2. That the rate of bullion forming the basis for calculation of damages would be that prevailing on the date of delivery rather than on the date of the breach of the contract.

5. As to the first contention the lists of the transactions of 7-6-1948 filed by the plaintiff as also the defendant with the Chamber are Exs. P-2 and P-1 respectively. Besides other transactions, the list of the defendant shows that the entries with respect to the transaction with the plaintiff are mutilated and a bare perusal by a naked eye shows that three transactions were entered into with the plaintiff. The sale was of two bars at Rs. 70-8-Of (Rs. 170-8-0), 50 bars at Rs. 68/- (Rs. 168/-) and 10 bars at 72-2-0 (Rs. 172-2-0). The total noted was also at first 62 bars. The transaction of 50 bars appears to have been cut out later and the total was also corrected from 62 to 12, As to when thid was done will be discussed shortly.

6. The list Ex. P-2 shows besides the 12 other bars of silver having been purchased from the defendant, at Rs. 68/- a further entry of 50 bars (Rs. 168/-). This entry is also scored out, but there is a note of the Chamber official that this scoring was made after the declaration of the fixing of the rate. Girraj (P.W. 1) later examined as (P.W. 2) Manager of the Chamber of Commerce Ltd., Madanganj said that according to the practice every merchant of bullion who was a member of the Chamber had to send his list of transactions in Chamber and Ex. P-1 was the list given by the defendant while Ex. P-2 was the list given by the plaintiff.

He said that according to rule, every merchant had to make a certain deposit of money for transaction in excess of 25 bars and the defendant on that date made a deposit of the amount so as to include the transaction of 50 bars of silver in dispute. He said that the entry relating to the transaction of 50 bars with the plaintiff was not scored out when the list was handed over at first to the Chamber. He also said that the list Ex. P-2 was handed over by the plaintiff mentioning the transaction of purchase of 50 bars, but the name of the merchant from whom these 50 bars were purchased was not entered in the list when it was handed over on 7-6-1948.

But on the next day, the plaintiff came and said that the brokers had given the name of the defendant as seller and the Fame was then entered in that list. In respect of this transaction the witness added that he got that transaction scored out from the list Ex, P-2 when the dispute between the parties arose on 9-6-1948. The witness added that a sum of Rs. 5,000/- deposited in respect of 50 bars was subsequently given back to the defendant because he had repudiated that contract,

7. Radba Kishen Broker P.W. 3 and Ratanlal Broker P.W. 4 said that this transaction of 50 bars was entered into by the defendant as alleged by the plaintiff and according to the arrangement between the brokers themselves Radha Kishen showed the transaction of 40 bars and Ratanlal showeod the transaction of 10 bars in their papers. Mohan-lal Manager of the plaintiff firm P.W. 8 supported the plaintiff's case as stated in the plaint and added that on 9-6-1948, the Manager of the Chamber of Commerce Ltd., Madanganj sent for him to say that the defendant had denied the transaction of 50 bars and he should take steps for recovering the damages according to rules.

Kishen Gopal P.W. 6 said that this transaction between the defendant and the brokers on behalf of the plaintiff had taken place at his shop. Daulal D.W. 1 one of the partners of the firm saidthat the list Ex. P-1 was signed by him and was handed over to the Chamber and even at that time the transaction of 50 bars entered in the list had been scored out. On that day only 12 bars were Bold and 5 bars were purchased from the plaintiff. It may be mentioned that these two transactions are not disputed and have been adjusted between the parties. He admitted that the grand total had been corrected from 104 to 54 in list Ex. P-1 on that day.

Hari Prasad defendant denied the transaction with the brokers Radha Kishen and Ratanlal and denied having made a deposit at the rate of Rs. 100/- for 50 bars in dispute. Both these defendants denied all the proceedings which took place before the Arbitration Committee of the Chamber. Bhanwarlal D.W. 3 was the scribe of list Ex. P-1. He said that the scoring had been made before the list was handed over at the Chamber. This witness explained that the entry of the transaction of 50 bars of silver came to be entered in list Ex. P-1, at the behest of the Munim of the plaintiff firm, but when Daulal and Har Prasad came, they denied the contract to have taken place and the witness thereupon, scored out that entry.

In our opinion the evidence of Girraj is very reliable because he is an independent witness. On that evidence it must be held proved that when the list of transaction Ex. P-l was handed over by the defendant in the Chamber it contained the entry of the transaction of 50 bars of silver as having been agreed to be sold to the plaintiff at the rate of Rs. 168/- per 100 tolas. His evidence also proves that there was an entry in the plaintiff's list also about the purchase of 50 bars without the name of the merchant from whom they were purchased when the list was handed over and the correction was made by an entry of the defendant's name on the next day.

Taking this evidence to be reliable, we accept the evidence of the plaintiff that the space was left blank for the reason that trie brokers would inform him of the defendant's intention to give a pucca name on the next day and when that name was given on the next day. the plaintiff made an entry in the list that it was the defendant who had agreed to sell the said bars of silver. It is also proved that the defendant repudiated the contract on 9-6-1948 (The lower Court is, therefore, right in its finding that the defendant had entered into a transaction of sale of 50 bars of silver as alleged in the plaint to the plaintiff and later repudiated the same on 9-6-1948).

8. The next point for consideration is that in a case of breach of contract of this nature what would be the measure of damages. The facts as stated above were that the defendant agreed on 7-6-1948 to deliver 50 bars of silver on 22-6-1948 against the price at the rate of Rs. 168/- for 100 tolas of silver. He repudiated this agreement on 9-6-1948. The case is one of anticipatory breach of contract. Learned counsel for the appellant relied on the cases of Manindra Chandra Nandi v. Aswini Kumar Acharjya, AIR 1921 Cal 185 and Maung Po Kyaw v. Saw Tago, AIR 1933 Rang 25, for the contention that in case of such breach the damages are to be calculated according to the difference between the price at which the goods were agreed to be sold and the price prevailing on the date when the delivery was to be given.

Ordinarily this view of law may be correct, but where the contracts of sale and purchase are done on an exchange from day to day with respect to commodities like bullion, the market value of such contract on the date of repudiation is the best basis of damages rather than the actual value ofperformance as proved by the event. What is broken is not a contract but an agreement to fulfil a particular contract, and since the identical contract for the same date of delivery could be made on the date of repudiation the rate at which such contract for the same date of delivery could be obtained, can furnish a better basis for calculation of damages. A similar view has been taken by this Court in the case of Ram Laxman v. State of Rajasthan, 1955 Raj LW 302, where the only difference in the case was that there was no particular quantity of articles deliverable and no fixed date on which they were to be delivered.

It was a case of contract by an individual to supply a particular kind of goods at a fixed rate as and when they would be required. It was held that the true measure of damages should be calculated on the basis of terms on which an identical contract can be obtained by the promisee from the third party. This view finds support in paragraph 1397 of Wil-liston on Contracts, (Volume V page 3899). After observing that anticipatory breach does not change the nature of the contract, and the normal rule of damages is. therefore, the same as if the breach had not taken place until the time fixed in the contract for performance the learned author proceeds to say that

'In a narrow class of cases, following the analogy of the law governing breach at the time of performance, the market value of a contract such as that which the defendant has repudiated should be taken as the basis of damages, rather than the actual value of performance as proved by the event, but it is only a limited class of contracts for future performance--such as contracts to sell wheat or cotton in the future, or to insure--which can be said to have a market value.'

9. It was finally contended that the rate has been calculated as at 4-30 P.M. while the rate at the opening of the market in the morning was only Rs. 172-6-0. The rules of the Chamber on the basis whereof the parties had been entering into contracts provided for the fixation of rate by the Manager of the Chamber and Rules Nos. 3 and 4 show that the rate to be fixed is to be of the hour soon after the report of the breach of contract. There is no evidence in this case that the rate fixed was not in accordance with the rules. There is no force in any of the contentions.

10. The appeal is accordingly dismissed withcosts.


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