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The Firm of A.M. Mylappa Chettiar by Partners of the Firm of That Name Vs. Aga Mirza Mohamed Shirazee, Managing Proprietor of the Firm - Court Judgment

LegalCrystal Citation
Decided On
Reported in(1919)37MLJ712
AppellantThe Firm of A.M. Mylappa Chettiar by Partners of the Firm of That Name
RespondentAga Mirza Mohamed Shirazee, Managing Proprietor of the Firm
Cases ReferredCrozier Stephens & Co. v. Anerbach
- - the first negotiation began with a letter from the agent of the bank of madras in negapatam to the plaintiff in which the agent says that the defendant has asked him the names of reliable firms in negapatam with whom timber dealings can be carried on. justice madden puts the matter very clearly. the difference is well illustrated by the case of harvey v. before expressing our final view upon that question we may as well deal with a decision quoted by mr......against the consignor residing in mandalay. the plaint in paragraph 9 says:-'as the price of goods contracted for were rising and ruled very high at the end of 1913 and also during 1914 defendant had wantonly withheld supplying the balance.' the cause of action is said to have arisen on the date of the breach of contract, on the 1st of january 1914. it might therefore be taken that the suit in terms is one for non-delivery of goods agreed to be supplied. the contract was a c.i.f. contract. the first negotiation began with a letter from the agent of the bank of madras in negapatam to the plaintiff in which the agent says that the defendant has asked him the names of reliable firms in negapatam with whom timber dealings can be carried on. this is exhibit n dated the 28th of august.....

1. The questions argued before us have practically no Indian authority behind them. Even the English authorities are not quite consistent with each other as we shall presently show. Before dealing with the points of law the facts should be briefly stated. The suit was by the consignee of timber in Negapatam against the consignor residing in Mandalay. The plaint in paragraph 9 says:-'As the price of goods contracted for were rising and ruled very high at the end of 1913 and also during 1914 defendant had wantonly withheld supplying the balance.' The cause of action is said to have arisen on the date of the breach of contract, on the 1st of January 1914. It might therefore be taken that the suit in terms is one for non-delivery of goods agreed to be supplied. The contract was a c.i.f. contract. The first negotiation began with a letter from the Agent of the Bank of Madras in Negapatam to the plaintiff in which the Agent says that the defendant has asked him the names of reliable firms in Negapatam with whom timber dealings can be carried on. This is Exhibit N dated the 28th of August 1912. Thereupon the the plaintiff put himself is direct communication with the defendant. He wrote Ex. 1 on the 29th of August 1912 in which he made certain enquiries. He asked for samples and promised 'if your quality be suitable for us, we shall order a large quantity.'' As regards finance, this is the note in the letter: 'Please take Bank draft to Madras Bank on seven days sight,'' to which the defendant replied by Ex. XXXII dated the 15th of September 1912. He gives the quotation per ton and slates 'Payment to be arranged in Mandalay, that is, on production of bills of lading and bill the amount to be paid to me here without deduction and this can be arranged through the Bank of Madras.' This letter makes it clear that the defendant demurred to the presentation of the bill in Madras and to receiving payment here. The plaintiff answered that letter on the 23rd of September 1912 by Exhibit II. He says that he accepts the quotation and adds: 'wire us as soon as your shipment be ready and we shall arrange for Mandalay National Bank for money through Madras Bank.' By this letter the plaintiff accepted the condition of the defendant that the money should be paid in Mandalay and agreed to constitute the National Bank to be the agent of the Madras Bank for payment of that money. On the 7th October 1912 defendant wrote to plaintiff that it is unnecessary to send any sample and concluded in these words: ' I shall therefore be obliged if you will kindly send me an order for say one hundred tons which I shall be very pleased to execute promptly.' This letter shows that after quotations and after preliminary discussion it was agreed that the order should conic from the plaintiff. Thereupon plaintiff wrote Exhibit III on the 16th October 1912 in which he asked for further information. Ex, IV is a telegram making further enquiries in which reference is made to Ex. III. Ex. V is a telegram from the defendant in which the information sought for in Ex. IV is given. Then comes Ex. XXV dated 28th October 1912 in which defendant wires to plaintiff: 'Yours 25th. I quote Rs. 63 per ton subject immediately reply letter follows.' To this plaintiff replied on the same day by wire : ' Accepted your 28th telegram.' The contention of Mr. Venkatarama Sasiriar for the plaintiff is that Ex. A concluded the contract and was an acceptance by the plaintiff of an offer made by the lefendant from Mandalay. We might at once say that having regard to the apparent educational qualifications of the draftsman of the letters and of the telegram between the parties and to the imperfect knowledge which these men possessed of the value of technical and legal language, no importance should be attached to the words 'offer' and 'acceptance' which are to be found in the various letters and telegrams which passed between the parties. Both the learned vakils at one time or other laid stress on these words. We are clear that what we have to see is not the use of these words but who in substance made the offer and who accepted the offer. So far in our opinion Ex. XXXV from the defendant must simply be regarded as a quotation and that the offer was what was contained in Ex. A. The correspondence that followed these two telegrams makes that position fairly clear. By Ex. VI dated the 29th October 1912, the plaintiff wrote to the defendant:--We are in receipt of your telegram of the 28th instant, our telegram of yesterday might have reached you. * * * We request you to send us acceptance form for 600 tons Mandalay scantlings.' This was after Exhibit A. Then there was Ex. G from the defendant to the plaintiff in which reference is made to the various correspondence that passed and it says: ' I shall be obliged if you will kindly arrange with your Bankers to open a credit with the National Bank of India, Limited, in my favour so that I may draw on you demand drafts with shipping documents attached and receive payment without any deduction on presentation of my bills as is being done now.' Towards the end the letter says:---' I shall be glad to have your order as to the particular sizes required so that I may start cutting as soon as I hear from you.' So notwithstanding Exs. XXXV and A, the plaintiff wanted to have the acceptance form and the defendant wants to have the order from the plaintiff. This was on the 6th November 1912. This letter was apparently written before Ex. XXXVI had reached the defendant for we find in Ex. XXXVI the defendant wrote again on the 21st of November in which he says: 'I subjoin an acceptance for six hundred tons as desired by you.' Then the form of acceptance was enclosed. As regards this letter there is one thing to be said. It refers to a telegram from the defendant to the plaintiff which apparently has not been produced. Then plaintiff wrote to the defendant Ex. XLIX dated the 30th November 1912 in which be acknowledges the acceptance form and gives the measurement of the scantlings for 300 tons. This is followed by another letter from plaintiff to the defendant dated the 1.3th March 1912 in which he says : 'As soon as the shipments of the sizes be ready please wire us and we shall arrange for the Bank advice.' Another letter of the 3lst gives further particulars and asks for a telegram from the defendant. This is Ex. X dated the 31st December 1912. On the 12th January 1913 the defendant wrote to the plaintiff Ex. XXXVII ' My shipment be made in time according to my arrangement with you and I am waiting to hear from the Bank that a credit has been opened by you in my favour.' On this the plaintiff gave a bond of indemnity Ex. J dated the 20th of January 191:5, to the Bank of Madras for Rs. 12,000. Ex. B. is the telegram of the 21st January 1913 from the plaintiff to the defendant informing the latter that account for Rs. 12000, has been opened in the National Bank. Ex. XLVII dated the 28th of January 1913 is an, intimation by the National Bank to the defendant that the Bank has been authorised ' to purchase your 3 days' sight drafts on A. M. Mylappa Chetty with full shipping and Insurance documents in respect of timber to the extent of Rs. 12,000. The credit shall remain in force till 20th of April 1913.' These documents practically conclude what is known of the first of the three contracts entered into between the plaintiff and the defendant. The documents relating to the second contract are Exs. XX, XXII and V and those relating to the third contract, Exs. 28, 45, 29, 46 and 30. They do not differ materially from the documents discussed. The questions in this state of correspondence are : (1) Who was the proposer and who was the acceptor : (2) Where did the cause of action arise, in Mandalay or in Negapatam : and (3) Did any portion of the cause of action arise in Negapatam

2. We shall now proceed to answer these questions with reference to the correspondence above set out and with special reference to the principles laid down as to the construction of C.I.F. contracts. On the facts our conclusion is that the plaintiff was the person who made the offer and that the defendant was the acceptor. This conclusion is supported by Boyers v. Duke (1905) 2 Ir. Rep. 617 cited . by the learned vakil for the respondent. That case is practically on all fours with the present case. Lord O' Brien L.C.J. and Madden, J., point out that an invitation to offer should not be confused with the offer itself, and that quotations given indicating the value of articles to be supplied should not be regarded as offer. Lord O' Brien L.C.J. at page 622 referring to the reply from the consignee says : 'In my opinion it is not the acceptance of an offer because the letter to which it was a reply was a quotation and not an offer.' Mr. Justice Madden puts the matter very clearly. He says : ' A quotation might be so expressed as to amount to an offer to provide a definite article or to do a certain work, at a definite price. But the ideas of quotation and an offer to sell, are radically different. The difference is well illustrated by the case of Harvey v. Facey (1893) L.R. A.C. 652. ' The principle on which this case was decided applies with greater force to mercantile transactions than to an application for a statement of the price of a single parcel of land. It is a matter of common knowledge that quotations of price are scattered broadcast among possible customers ... The catalogue has probably reached many collectors. The order of only one can be honoured ... Wholesale dealers have not in stock an unlimited supply of the articles the prices of which they quote to the public at large ... Transactions of the kind under consideration are intelligble and businesslike, if we bear in mind the distinction between a quotation, submitted as the basis of a possible order, and an offer to sell which, if accepted, creates a contract for the breach of which damages may be recovered. In my opinion, adealer or manufacturer by furnishing a quotation invites an offer which will be honoured or not according to the exigencies of his business. ' In Harvey v. Facey (1893) A.C. 522 Lord Morris in delivering the judgment of the judicial Committee said :--' Their Lordships are of opinion that the mere statement of the lowest price at which the vendor would sell contains no implied contract to sell at that price to (he person making the enquiry.' The learned vakil for the appellant contended that a contract is concluded when all the essential terms are settled and not when the formal document is executed. We accept this proposition. The decision in Perry v. Suffields Limited (1916) L.R. 2 Ch. 187 is a direct authority in favour of it, and we see no reason to think that the decision in Hussey v. Horne Payne (1879) 4 A.C. 311 is in any way inconsistent with that decision. In the latter case it was laid down that for a contract depending upon correspondence the whole correspondence should be read and not particular portions of the series. It was an action for specific performance of a contract for sale of land. Some letters passed between the parties, and it was contended that the first two letters had settled the terms and there was a concluded bargain. Lord Selbourne said in that case: 'It appears to me that no such contract ought to be held established, even by letters which would otherwise be sufficient for the purpose, if it is clear, upon the facts, that there were other conditions of the antecedent contract beyond and besides those expressed in the letters, which were still in a state of negotiation only, and without the settlement of which the parties had no idea of concluding any agreement.'' What was said in Perry v. Suffields Ltd. (1916) L.R. 2 is that where everything essential has been settled, the mere fact that a formal document had to be drawn up would not render the contract incomplete. Refering to 4 A.C. 311, Lord Cozens Hardy M. R. says : 'In those circumstances the House of Lords held that it was a fallacy to say that the letters concluded the whole agreement because it appeared from the allegations in the statement of claim itself that there were terms, namely, that the purchase money should be paid by instalments, the amount of such instalments and the periods at which they should be payable, which had not been settled between the parties at that date.' Then the learned M.R. says, 'Mere arrangements which in the ordinary course of business are left to the legal advisers to settle, such as the date for the completion, are subsequent matters which do not prevent the two letters constituting a concluded agreement.' The other two learned Lord Justices expressed the same opinion. Therefore if we are persuaded on the date of Ex. A all the main terms of the contract were settled, we would have held that that document concluded the contract. But the acceptance form was only sent later on. The place of payment which is a very important item and which had been a subject of difference of opinion between the parties was settled only subsequently, and the exact offer itself and the exact quantity required were only settled later on. Therefore we are of opinion that the plaintiff was the person who made the offer and that the contract was not concluded when Ex. A was sent.

3. Mr. Venkatarama Sastriar contended that even if the plaintiff should be regarded as the proposer, the cause of action must be taken to have arisen at the place where the offer was made. namely, in Negapatam and relied upon the recent judgment of the learned Chief Justice and Sadasiva Aiyar, J., in O.S.A. No. 43 of 1919. The facts of that case are different from the present. Further the decisions relied on in that case were considered and distinguished in Clarke Brothers v. Knowles (1918) 1 K B. 128 which was not referred to in the judgment of the learned Chief Justice. In this latter case Lush, J. says: ' The material question is not where the offer was sent from but where it was made, and the making of the offer is proved by showing that it was received.' No doubt where the plaintiff and the defendant are in the same place the offer could be communicated at once and would be received at the place from which it emanates. That was what happened in Green v. Beach 8 Exch. Cas. 208. But, where the acceptor resides in a different place it is when the offer reaches him that there can be a complete offer. The Indian Contract Act by Section 4 makes the position very clear. It says: 'The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.' Therefore until a proposal is received there is no offer. We do not think that the learned Chief Justice in the unreported case relied on, intended to lay down that the place from which the offer is sent furnishes a venue for a suit, even though the acceptor resides elsewhere.

4. The next point for consideration is whether any part of the cause of action arose in Negapatam. The course of dealing was this. The plaintiff in Negapatam made the offer. The defendant in Mandalay accepted it. He prepared scantlings and put down on board a ship which was properly neither the plaintiff's nor the defendant's. He then made out a bill of lading in his own name. By delivering the Bill of lading he drew from the National Bank the sum of money, which was due to him according to his estimate. The National Bank transmitted the Bill of Lading to the Bank of Madras which in its turn passed it on to the plaintiff. Very learned arguments were addressed to us on both the sides on the question whether in these circumstances a part of the cause of action did not arise in Negapatam. Mr. Muthukrishna Aiyar for the respondent strongly relied upon Crozier Stephens and Co. v. Anerbach (1908) 2 K.B. 161 for the position that the whole cause of action arose in Mandalay. That undoubtedly is a direct decision. In that case some goods were sold under c.i.f. contract by a foreigner to a purchaser in England who paid the price in exchange for the bill of lading. But on the goods arriving in England the purchaser after examination refused to accept them on the ground that they were not according to the contract. He brought a suit for breach of contract in England against the foreigner. The Court of Appeal held that no part of the cause of action arose in England. Vaughan Williams, L.J., said : ' For myself, I cannot see that it makes any difference whether the action is for non-delivery or for delivering goods not according to the quality stipulated for in the contract; in either case, the time and place of delivery are the time when and the place where the vendor delivers the goods on board ship, it being admitted that the property in the goods passes to the purchaser at the moment of delivery on board and that they are at the purchaser's risk throughout the voyage. ' Farwell, L.J., said: ' In the present case the alleged breach was in Hamburg, where the defendant shipped the wrong sort of aluminium and the issue of the writ and the leave to serve the notice of the writ out of the jurisdiction must be discharged.' If this case stood alone it would be conclusive of the present case. But the decision in Bid-dell Brothers v. E Clemens Horsl Company (1911) I.K.B. 214 which went up in appeal and is reported in the same volume at page 934 which was ultimately concluded in the House of Lords in Clemens Horst Co., v. Biddell Brothers (1912) A.C18 appears on its face to be not quite consistent with the view taken by Vaugham Williams, L.J., and Farwell, L.J., in Biddell Brothers v. Clemens Horst Company (1911) I.K.B. 214. The contract was for the sale of hops 'to be shipped to Sunder-land, provided that the buyer shall pay for the said hops at the rate of 90 sh. per 1121 lbs c. i. f. to London, Liverpool or Hull, terms net cash.' Justice Hamilton held ' that the seller was entitled to payment against shipping documents upon the delivery of the hops on board ship at the port of shipment, and that the buyer had the right of rejection, if they were found upon examination not to be in conformity with the contract. Crozier Stephens & Co.v. Anerbach (1908) 2 K.B. 161 was quoted in argument. But we do not find the learned Judge making any reference to it in his judgment. In appeal the judgment of Hamilton, J., was reversed by Vaugham Williams, L.J., and Farwell, L.J. But Kennedy, L.J., was for affirming it. It must be remembered that the first two Lord Justices decided Crozier Stephens Co v. Anerbach (1908) 2 K.B. 161. Before the Court of Appeal also that case was quoted although in the judgment of the learned Lord Justice there is no reference to it. We must refer to a sentence or two in the judgment of Kennedy, L.J., because it was that judgment that was ultimately upheld by the House of Lords. He says in page 956 : ' The bill of lading in law and in fact represent the goods. Possession of the bill of lading places the goods at the dispoal of the purchaser. ' A cargo at sea,' says Bowen, L.J., in Sanders v. Maclean while in the hands of the carrier, is necessarily incapable of physical delivery. During the period of transit and voyage, the bill of lading by the law merchant is universally recognised as its symbol and the indorsement and the delivery of the bill of lading operates as a symbolical delivery of the cargo. Property in the goods passes by suchendorsement and delivery of the bill of lading, whenever it is the intention of the parties that the property should pass, just as under similar circumstances the property would pass by an actual delivery of the goods.' It is not necessary to quote further from this judgment. The House of Lords confirmed it. In E. Clemens Horst Company v. Biddell Brothers (1912) A.C. 18 Lord Chancellor Earl Loreborn says ' Now, Section 28 of the Sale of Goods Act says in effect that payment is to be against delivery. Accordingly we are supplied by general law an answer to the question where this cash is to be paid. But where is the delivery of goods which are on board ship That may be quite a different thing from delivery of goods on shore. The answer is that delivery of the bill of lading when the goods are at sea can be treated as delivery of the goods themselves, this law being so old that I think it is quite unnecessary to refer to authority for it.' This case establishes this proposition that a mere delivery at the port to the shipping company is not sufficient to pass the goods. It is the delivery of the bill of lading that has that effect. On that proposition it may be said that the performance of the contract is to be in the place where the bill of lading is delivered. Under the Indian Law that would be a place where the cause of action in part arises because Section 17 of Act XIV of 1882 Explanation III Clause (3) states:--'the cause of action would arise in the place where in performance of the contract any money to which the suit relates was expressly or impliedly payable.' Section 20 Clause (c) of the New Code says 'Every suit shall be instituted in a court where the cause of action wholly or in part, arises.' Whether one agrees with the suggestion that Section 20 of the Act of 1908 gives extended jurisdiction and is wider than Section 17 of the old Code or not, there can be no doubt that the new section is not restrictive of the right of suit. Therefore if it is held that the place where money is payable on the bill of lading is the place where the contract is to be performed and if we come to the conclusion in this case that it was in Negapatam that the Bill of Lading was really tendered for payment,following Clemens Horst Company v. Biddell Brothers (1912) A.C. 18 we would hold that the cause of action arose in Negapatam. Before expressing our final view upon that question we may as well deal with a decision quoted by Mr. Venkatrama Sastriar namely Arnold Karberg Company v. Green Jourdin and Co. (1915) 2 K.R. 379 which is also a case dealing with c. i. f. contracts. Scrutton, J., says ' I understand the effect of those judgments (refering to Mirabita v. The Imperial Ottoman Bank 3 Exch Div. 164 and some other cases) to be that where the seller by taking the bills of lading in his own name or to his own order has reserved the jus disponendi or power of dealing wrth the goods, the property does not pass on shipment, but is vested in the vendor until he receives payment from the buyer in exchange for the documents of title. On appeal from the judgment of Scrutton J, it was held in Arnold Kerburg Coy. v. Blythe Green Jourdain and Co. (1915) 2 K.R. 379 Theodorand Sehneider and Go. v. Burgett Newsmum (1916) 1 K.B. 495 that a c. i. f. contract is a contract for the sale of goods to be performed by the delivery of documents. The view of Scrutton, J., that the contract itself is a sale of documents relating to goods and not a sale of goods did not find favour with the court of appeal. In a subsequent case Manbre Saccharine Company v. Corn Products Coy. (1919) 1 K.B.198 McCardie,]., in referring to the judgment of Scrutton, J., and of the Court of Appeal says: ' For in reality, as I have said, the obligation of the vendor is to deliver documents rather than goods, to transfer symbols rather than physical property represented thereby. If the vendor fulfills his contract by shipping the appropriate goods in the appropriate manner under a proper contract of carriage, and if he also obtains the proper documents for tender to the purchaser, I am unable to see how the rights or duties of either party are affected by the loss of ship or goods, or by knowledge of such loss by the vendor, prior to actual tender of the documents.' In the opinion of the learned Judge in the last mentioned case the loss of goods or the loss of the ship would not, in the least affect the obligations of the parties. Therefore, it seems to us, if we may say so with respect, that the decision in Crozier Stephens & Co. v. Anerbach (1908) 2 K.B. 161 is not quite reconcileable with all these subsequent cases.

5. Now the question is, was the plaintiff entitled to a tender of the bill of lading at Negapatam and did defendant's rights to money arise in Negapatam on such tender It seems to us that upon this matter the correspondence to which we have already referred and the course of business agreed to between the parties make it clear that the plaintiff did not stipulate for a tender of the bill of lading in Negapatam. The bill of lading was made in the consignor's name and was according to arrangement deliverable to the National Bank, Mandalay. Vide Ex. XXXII. As we pointed out early in our judgment the National Bank were simply the agents of the Madras Bank. The whole: money was paid to the consignor in Mandalay. The Bank of Madras and the National Bank were respectively the agents of the plaintiff for the receipt of the bill of lading and for the payment of the money in Mandalay. Through their agency the defendant received the money at Mandalay. That was the stipulation which the defendant insisted upon and that was the stipulation which was finally acceded to. Therefore it seems' to us that the cases beginning with Biddell Brothers v. Clemens Horst Co. (1911) 1 K.B. 214 do not cover the present case. We base our judgment not upon the decision of Crozier Stephens & Co. v. Anerbach (1908) 2 K.B. 161 but on the observations in subsequent cases wherein it is pointed out that the delivery of the bill of lading is delivery of the goods. According to our construction of the correspondence, that delivery was to be made to the plaintiff's, agent at Mandalay and the duty of paying for the bill of lading was entrusted to the plaintiff's agent at Mandalay. Consequently the performance of the contract did not become due in Negapatam. For these reasons we are of opinion that no part of the cause of action arose in Negapatam and that the conclusion of the Subordinate Judge is right. This appeal should be dismissed with costs.

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