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Sadagopa Ramanjiah and ors. Vs. Mackenzie and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Judge
Reported in(1892)ILR15Mad79
AppellantSadagopa Ramanjiah and ors.
RespondentMackenzie and ors.
Cases ReferredDonnell v. Bennett L.B.
Excerpt:
contract act, section 27--restraint of trade. - - in the present case the breach complained of was that the defendant sold to third persons the salt manufactured by him, which he ought to have delivered to the plaintiffs. it may well be that to the extent to which the contract purported to empower the plaintiffs to restrict the defendant's manufacture of salt, the contract might be considered void. section 27 of the act has therefore no application and the contract for breach of which damages have been given is clearly legal......in the present case the breach complained of was that the defendant sold to third persons the salt manufactured by him, which he ought to have delivered to the plaintiffs. it is an ordinary case of a breach of contract to manufacture and sell goods, and it cannot possibly be said that by such a contract the manufacturer is restrained from exercising his trade. on the contrary he is encouraged to exercise it because he is assured of a certain market for the products of his labour.3. it is true that there is a clause enabling the plaintiffs to limit the amount of salt which should be manufactured; and if the plaintiffs had acted under that clause, and, notwithstanding the limit prescribed by them, the defendant had manufactured a larger quantity of salt, a question might have arisen.....
Judgment:

1. Several points were raised by Mr. Rama Rau in this appeal, but the only one purporting to be a complete answer to the plaintiffs' claim and requiring any special notice is that the contract for breach of which damages have been decreed was invalid as being made in restraint of trade. The contract is expressed in two documents, dated the 13th May 1885, one of which was signed by the plaintiffs, and the other by the defendant. Shortly stated, the effect of it was on the one hand to oblige the defendant who had obtained a license under the Salt Commissioner to manufacture salt for a period of five years, and on the other hand to oblige the plaintiffs to take delivery of such salt at a certain price. Another material provision in the contract was that the defendant should not manufacture any salt in excess of the quantity which the plaintiffs might, at the commencement of any season, require to be manufactured. It was argued on behalf of the appellant that, as the contract had by implication prohibited him from selling the salt to third persons, and also empowered the plaintiffs to limit the amount of salt which he should manufacture, Section 27 of the Contract Act became applicable and there was no legal agreement. The Section provides as follows:-'Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.'

2. The agreement, it is to be observed, is only void in so far as it restrains any one from exercising his trade. In the present case the breach complained of was that the defendant sold to third persons the salt manufactured by him, which he ought to have delivered to the plaintiffs. It is an ordinary case of a breach of contract to manufacture and sell goods, and it cannot possibly be said that by such a contract the manufacturer is restrained from exercising his trade. On the contrary he is encouraged to exercise it because he is assured of a certain market for the products of his labour.

3. It is true that there is a clause enabling the plaintiffs to limit the amount of salt which should be manufactured; and if the plaintiffs had acted under that clause, and, notwithstanding the limit prescribed by them, the defendant had manufactured a larger quantity of salt, a question might have arisen as to the competency of the plaintiffs to restrain such manufacture in excess of the amount required by themselves. It may well be that to the extent to which the contract purported to empower the plaintiffs to restrict the defendant's manufacture of salt, the contract might be considered void. But this is not the question we have to consider. The plaintiffs are not seeking directly or indirectly to restrain the defendant from exercising his trade as manufacturer of salt. Section 27 of the Act has therefore no application and the contract for breach of which damages have been given is clearly legal. Carlisles Nephews & Company v. Ricknauth Bucktearmull I.L.R. Cal. 809 Donnell v. Bennett L.B. 22 Ch. D. 835.

4. Barclay, Morgan and Orr, Attorneys for Respondents.


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