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M.P.V. Sundararama Iyer and Company Vs. V.V.C.R. Murugesa Mudaliar - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai High Court
Decided On
Case NumberAppeal Nos. 127 and (Tr.) 933 of 1952
Judge
Reported inAIR1957Mad228
ActsSales of Goods Act, 1930 - Sections 35 and 54; Contract Act, 1872 - Sections 73 and 74
AppellantM.P.V. Sundararama Iyer and Company
RespondentV.V.C.R. Murugesa Mudaliar
Appellant AdvocateV.C. Gopalaratnam and ;L.V. Krishnaswami Iyer, Advs.
Respondent AdvocateK.S. Ramamurthy, ;V. Seshadri and ;K. Vaitheswaran, Advs.
Cases ReferredKnatchbull v. Hallett
Excerpt:
contract - breach of contract - sections 35 and 54 of sales of goods act and sections 73 and 74 of contract act, 1872 - in suit for damages for breach of contract brought by seller under contract for sale of goods against buyer for not taking delivery of goods it is not necessary to show that he had physical possession of goods - sufficient if it is shown that seller had domain over them and could deliver them as and when buyer applied for them and tendered their sale price. - - 13,404-15-8. the defendant on the other hand has claimed damages on the ground that the plaintiffs purchasers have committed breach of contract and failed to take delivery of the goods by paying the price and therefore the defendant had to sell the goods which fetched a lower price than was contracted, the.....govinda menon, j.1. the plaintiffs in o. s. no, 113 of 1946 on the file of the sub-court. madurai are the appellants in appeal no. 127 of 1952 and the plaintiff in o. s. no. 31. of 1950 on the file of the same court is the appellant in appeal no. $33 of 1952.the subject matter of these two suits related to cross claims and as such, in this judgment the plaintiffs in o. s. no. us of 1946 who are the defendants in o. s. no. 31 of 1950 will be known as the plaintiffs appellants and vice versa the defendant in p. s. no. 118 of 1946 who is the plaintiff in o. s. no. 31 of 1950 will be known as the defendant respondent. the facts which have given rise, to these proceedings can be summarised efliortly in the following way: there were five contracts evidenced by exs. a-l ,to a-5 entered into.....
Judgment:

Govinda Menon, J.

1. The plaintiffs in O. S. No, 113 of 1946 on the file of the Sub-Court. Madurai are the appellants in Appeal No. 127 of 1952 and the plaintiff in O. S. No. 31. of 1950 on the file of the same court is the appellant in Appeal No. $33 of 1952.

The subject matter of these two suits related to cross claims and as such, in this judgment the plaintiffs in O. S. No. US of 1946 who are the defendants in O. S. No. 31 of 1950 will be known as the plaintiffs appellants and vice versa the defendant in p. S. No. 118 of 1946 who is the plaintiff in O. S. No. 31 of 1950 will be known as the defendant respondent. The facts which have given rise, to these proceedings can be summarised Efliortly in the following way: There were five contracts evidenced by Exs. A-l ,to A-5 entered into between the parties by which on the whole 133 bales of cotton yarn were agreed to be purchased by the plaintiffs for which purpose a sum of Us. 10,560-8-0 was advanced to the defendant. On the ground that the defendant did not deliver the goods contracted for the plaintiffs have filed O. S. No. 118 of 1946 for the return, of the advance amount with interest thereon totalling to Rs. 13,404-15-8.

The defendant on the other hand has claimed damages on the ground that the plaintiffs purchasers have committed breach of contract and failed to take delivery of the goods by paying the price and therefore the defendant had to sell the goods which fetched a lower price than was contracted, the difference between the contract price and the price fetched at the resale being Rs. 13,308-2-0 which along with the brokerage paid by the defendant came to Rs. 13,421-2-0. Out of this deducting the deposit amount of Rs. 10,560-8-0 the balance came to Rs. 2,860-10-0 from which interest at four per cent per annum on,Rs. 10,560-8-0 as per vaddi chittai of Rs. 63,15-5 was deducted. The balance of Rs. 2,796-10-7 with interest thereon at six per cent per annum from the date of sale namely 11-I1-1943 till the date of the suit came to Rs. 3,300-13-2 aifd the defendant claimed a sum of Rs. 3,300/-.

2. The learned Subordinate Judge found that the defendant had not committed any breach but on the other hand the plaintiffs were not ready and willing to perform their part of the contract. But on the finding that there is no evidence as regards the. market price or the price which the goods would have fetched had they been sold on 31-10-1943 which was the last date for delivery of the. goods, the defendant's suit for damages was also dismissed on the ground that the amount of damages has not been proved.

3. It has bean held In Rattamma v. Krishnamurthi, 54 Mad LJ 40: AIR 1928 Mad 326? (A) Which decision has not so far been overruled . or ' dissented from - at least no case, to that effect has been brought to our notice-that a sum of money paid as advance by the purchaser to the vendor in respect of the sale of goods can be recovered by the purchaser even though the transaction of sale fell through owing to the purchaser's default, unless the vendor proves a contract express or implied, that the money paid as advance should bp treated as security for the pur. chaser's fulfilment of the bargain and as such liable to be forfeited on his default. The learned Judges refer to Collins v. Stimson, (1883) (11 Q. B, D 142) (B) and Howe v. Smith, (1884) (27 Ch. D. 89) (C), regarding the import of the .term 'deposit' and observing that the connotation put upon it in the English courts should not be applied to Indian contracts, held that the defaulting purchaser is entitled to a refund of the advance Paid.

Even if therefore, the plaintiffs broke the contract they are entitled to get back their advance but since damages in O. S. No. 31 of 1950 has been computed by deducting the advance paid from the actual loss sustained by the defendant at the resale, and, therefore, if we are to hold that the defendant has sustained damages and that has been proved to the satisfaction of the court, then the set off claimed in O. S. No. 31 of 1950 can be rightly allowed. If on the other hand the defendant has not proved what exactly was the market value of the goods on 31-10-1943 as the learned Subordinate Judge has found then he will not be entitled to damages, over and above, the advance which has been debited towards the quantum of damages.

4. We have, therefore, to find out from the evidence whether there Has been a breach of contract and if so, who is liable for it.

5. Exs. A-l to A-5 are the contracts in question and they range between 29-8-1943 which is the date of Ex. A-l and 7-10-1943 the date of Ex, A-5- As the terms and conditions of each of them are similar in contract r we may take Ex. A-l 84 a sample contract. Under that, the buyers who are the plaintiffs agreed to purchase from the defendant who is the seller, subject to conditions and terms noted therein, a certain quantity of yarn and accepted the seller's godown .delivery at the seller's option between the first and the last date of October 1943 find to pay the full value. for the same and to accept the goods delivery as per the contract terms of Messrs. The Madural. , Mills Limited with the seller. Clause 4 of this contract is to the following effect:

'If the buyer fails to take delivery as required. by the seller's notice, the seller shall have the right to sel1 such goods by public or private sale at buyer's risk.'

These contracts were entered into through a broker, Jambu Subbarama Iyer who has been examined as D. W. 3. The contracts are in printed forms and relate to yam Issued by Messrs. Madurai Mills Limited. Ex. A-l Is with respect to 38 bales of October delivery of various kinds at prices mentioned in the contract. Ex. A-2 is for P5 bales to be delivered in October. Ex. A-3 is with respect of 20 bales of 40 counts and Exs. A-4 and A-5 relate to 25 bales each. In all. thp quanity of yarn agreed to be purchased was 133 bales out of which on 5-11-1943 the plaintiffs tosk delivery of 15 bales of the October delivery and the balance of 118 bales had to be taken delivery of.

6. The plaintiffs' case is that these goods not having been delivered by 31-10-1943 the defendant has committed breach of contract in which case the plaintiffs are entitled to a refund of the advance paid. See Ex. A-15 dated 9-11-1943- It Is the defendant's cpse that there was no necessity to deliver the goods before 31-10-1943 for the reason that when 15 bales were offered for delivery on 26-10-1943 under Ex. A-7 and the plaintiff took delivery of those 15 bales on 5-11-1943 the parties understood that the remaining quantity Of goods need be delivered only later.

The defendant further, states that in reply to Ex. A-7 the plaintiffs wrote Ex. A-8 dated 30-10-1943 claiming debate from the price to be patd by the plaintiffs, of allowances and concessions which the Madurai Mills would give to the defendant arid unless that was settled the plaintiffs' did not want to take delivery. It was the question of reducing the agreed price by allowances or concessions granted or to be granted to the defendant by the Madurai Mills that prolonged the paid under which the plaintiffs agreed to take delivery. Though the contracts were vaida contracts or forward ones, in the present case the correspondence between the parties show that delivery need not be before 31-10-1943 so argueg the defendant's Counsel.

Under Ex. A-11 dated 4-11-1943 the defendant informed the plaintiffs that if he got allowance or rebate from the Harvey Mills for the bales sold in September. October and November 1943 he would give the whole of it to the plaintiffs and obtain a receipt therefor. Under these conditions, Exs. A-7. A-8 and A-ll would, according to the defendant, show that there was no imperative necessity to have deliverv of the goods before 31st October 1943. The defendant also pleaded that according to trade usage and custom though the contract was specifically mentioned as vaida contract for October, the goods need be delivered only to the succeeding month. The learned Subordinate Judge was not prepared to accent this plea of a custom or trade usage and nothing has been urged before us against the conclusion arrived at by the lower Court.

7. That the goods were not delivered in the month of October 1943 but were resold later has not been questioned before us. It is admitted that the goods were sold by private sale under condition 4 of the contract. 113 out of 118 remaining bales were sold, through the broker Jam. bu' Bubhrama Iyer and Ex. B-3 is the receipt passed by him for sale of 113 bales. This is spoken to by Jamby Subburama Iyer as D. W. 3. D. W. 1, deposed that the remaining bales were sold to one Hajee Moosa Sait and Ex. B-22 is the concerned ; bill. Ex. B-8 shows that the sale took place on the 10th of November 1943 in respect of 113 bales and Ex. B-22 is with respect to the sale on 12-11-1943. It is seen from Ex A-19 dated ll-l-194a and Ex. A-21 dated 12-11-1943 that the defendant offered to deliver 43 and 10 bales respectively and stated that unless the plaintiffs took delivery of those bales the goods will be sold at the plaintiffs' risk.

8. What then, is the construction to be put upon the clauses in the agreement. According to thp learned counsel for the plaintiffs appellants the condition 4 of the contract presupp ses that the seller being entitled to deliver the goods at any time during the delivery month, the initiative must be with the seller to notify the buyer that he is prepared to give delivery and if such notice is given and the buyer does not take delivery or comply with the notice, the seller has the right to resell the goods treating the contract as terminated. Therefore this condition contemplates that the seller shall notify the buyer when he requires the buyer to take delivery and the buyer must accept it at any time during the month. Hence as the seller has to take the initiative and inform the buyer (The time of the delivery of the goods, an application by the buyer is not contemplated.

9. A contract containing a similar clause, as the one before us, came up for construction before Gentle, J in C. S. No. 13 of 1938 (Mad) (D) wherein the present plaintiffs were the plaintiffs but the defendants were different, and the learned Judge's interpretation can surely be treated though not as a binding authority but as of great value and assistance. The learned Judge referring to clause 4 stated thus:

'By condition 4 of the suit contracts it Is provided that if the buyer fails to take delivery as required bv the seller's notice, the seller shall have the right to sell such goods. The seller being entitled to delivery at anv time during the delivery month, he must notify the buver when he is prepared to glvp delivery and if there Is non compliance with this notice he has the right tc resell, thus treating the contract as terminated. This condition contemplates that the seller shall notify the buyer when he requires him to take delivery and the buver must accept delivery at any time during the month.

Since the buyer must take deliverv in accordance with the seller's requirements, application by, him for delivery is not contemplated. Elsewhere, the contract provides that the buyer must pav for the goods against deliverv and therefore on receipt of notice fom the seller he must be ready to pay the price and to take deliverv in accordance with the recuirements in the notice. Since these things must be ('one when notified bv the seller, application for delivery ts unnecessarv and is not contemplated in the contract. The provision that if the buyer fail? to take deliverv after receipt of notice, the seller has the right to sell the goods at the buyer's risk, does not in my view allow the seller to give or withhold notice at his wish and may await application by the buyer for deliverv. The contract contemplates a notice being sent and upon its receipt, the buyer must comply with it.'

10. Again the learned Judge observed: 'The wording in condition 4 of the suit contracts is what is contemplated in Section 35 by the words 'apart from, any express contract' In my view the express contract was that the seller should; notify the buyer when ''delivery would be given and when he would be required to take it' Therefore there has been an express contract which would not make the general provisions of Section 35 of the Sale of Goods Act applicable. , If this decision is to be followed, then there is no doubt whatever that there is no obligation cast upon the plaintiffs to apply for delivery until the notice is received. But the defendants learned counsel Mr. K. S. Ramamurthi contends that the expression 'as required by the seller's notice' relates to a point' of time after the per. iod of vaids has expired and before the seller proposes to resell the goods. It is according to the learned counsel, in sense an intimation to a party who has broken the contract that the goods would be sold at his risk.

We do not think that such a farfetched construction is possible. The opening words of condition 4 namely 'that if the buyer fails to take delivery' surely connotes delivery as contemplated by the contract and not after the breach has taken place. We are also fortified in this view by the preamble portion of the contract where mention is made of the buyer accepting the seller's godown delivery at the seller's option between the first and last day of the month. This would mean that the initiative has to be taken by the seller to inform the buyer that the goods are ready for delivery. But Mr. Ramamurthi contends that according to Section 35 of the Sale of Goods Act a statutory liability is cast upon the buyer to ask for delivery apart from the express contract and so the seller is riot bound to ask the buyer.

He contends that the condition as construed by Gentle, J. will not be an express contract. It is argued that assuming that there is an obligation on the vendor to Inform the purchaser before 31-10-1943. the defendant had offered delivery but the plaintiffs failed to take delivery thinking that they would get some concession or rebate or allowance which the Madurai Mills would pay to the defendant. Next It is arged that a sum ng that time is the essence of the contract in these valida matters on account of the conduct of the parties the plaintiffs have extended the time by awaiting for the rebate.

Lastly it is urged that the plaintiffs having to their Income-tax return acknowledged the liability to pay the balance of the amount to the defendant as claimed in O. S. No. 31 of 1950 have . admitted their liability. In Ex. B-18 plaintiffs' ledger for 1943-44- at page 240 there is a credit entry for Rs, 13,308/2/0 on 17-3-1944 in the name of the, defendant and it is on that footing that the plaintiffs got a rebate of a large sum in the Excess Profits Tax.

11. The decision, therefore depends to a large extent on the question whether the plaintiffs should apply for delivery or that the defendant should intimate to the plaintiffs that the goods are ready for delivery. As stated already the view taken by Gentle, J is in favour of the plaintiffs' contention that clause 4 of Ex. A-l amounts to an express contract which would take the case out of the generalisation contained in Section 35 of the Sale of Goods Act. It is urged by the learned counsel for the defendants, that the buyer has not applied for delivery and if there is no express contract, the breach has been committed by the plaintiffs.

The absence of any specific pleading or averment m the plaint that clause 4 of Ex. A-l amounted to an express contract is pointed out by the defendant's counsel as Indicative of the plaintiffs' frame of mind at the time of the filing of the suit. Except saying that the plaintiffs were ready and willing to pay the price and take dellvery of the bales and calling upon the defendant to give delivery of the goods there is no mention that a duty was cast upon the defendant to give notice to the plaintiffs regarding the availability of the goods and his readiness to deliver them. On the other hand, it is stated that the defendant has specifically put forward his case in paragraph 8 of his written statement that the plaintiff did not pay the price 'and ask for delivery in October 1943.

If they had done so, it would have been not only the easiest thing for the defendant to do, but also very profitable for him to have purchased t'ne bales at lesser cost and given deliverv thereof. Having committed default themselves the plaintiffs cannot take advantage of an imaginary default on the part of the defendant. Not only is there anything in the correspondence showing that the plaintiffs demanded delivery but even the available piece of evidence according to the defendant is the other way No doubt P.W, 1, the managing partner of the plaintiffs' firm, stated that on 31-10-1943 he phoned fo the defendant asking him to deliver and sent word through his. clerk, Krishna Rao.

But we do not think that oral evidence of this kind would be of much use this Krishna Rao. has not been examined on the side of the plaintiffs. .

12. The case of the detendant is very much weakened by .the admission made bv D.w. 1 who has been the defendant's kariasthan for twenty years. In cross-examination he states that delivery is 'our godown delivery' as the contract provides for. 'seller's godown delivery' Further the witness goes on to say as follows:-

'Q, You said that plaintiff should apply for delivery. On what date can he insist upon delivery?

A. On no date can he insist. Unless we intimate to the plaintiff that goods were ready for delivery on a particular date he cannot apply.'

13. We agree with Mr. V. C. Gopalaratnam, learned counsel for the plaintiffs, that the expression 'seller's option' in the preamble to Ex. A-l means, that the seller should first intimate to the buyer of the availability of the goods and the readiness to deliver, and until the seller exercises that option the buyer cannot do anything and therefore, the important factor is the communication of the date by the seller, when the goods will be delivered, in which case alone the buyer can apply for delivery. Learned counsel also contended that performance of contract after such notice is simultaneous with the payment of price and delivery of the goods, and if after intimation by the seller of the delivery on a particular date the buyer does not tender the price and get delivery then the contract is broken on that date.

But the respondents rely upon that part of the evidence of P.W. 1 where he stated that the defendant promised to pass on to him the concession which he got for September, October and November deliveries. About the 15th of October defendant agreed to pass a letter to him undertaking to pass on to him the concession in respect of September, October and November deliveries but he did not give him such a letter. In these circumstances it is urged it Is possible to infer that the plaintiffs allowed the defendant to extend the time for delivery by making him believe that unless the concessions were passed over, they would not insist upon the delivery of goods.

14. There is a further .argument put forward by Mr. K. S. Ramamurthi, that the interpretation put upon clause 4 by Gentle J. was obiter because on the facts of that particular case it is shown that the plaintiffs, there, duly called upon the defendant to deliver the goods after receiving the price payable, but the defen'dant failed and neglected to effect delivery. Such being the case in any event it was unnecessary to interpret clause 4 as an express contract. We do not think that that is the correct interpretation to be put upon that clause. It seems to us, therefore, that the obligation is upon the defendant to intimate to the plaintiffs the fact of the goods being ready for delivery.

15. But the further question is whether the plaintiffs by their conduct made the defendant believe that such a thing was unnecessary and in this connection letters Exs.A-9, A-10, A-11 and A-13 may usefully be referred to under Ex. A-9 the defendant promised to give to the plaintiffs any allowance which he would get from the manufacturers, Messrs. Harvey Mills considering the ceiling rate and the rates at which the goods have been sold to them. Therefore on 22-10-1943 the defendant did not intimate to the plaintiffs of the availability of the goods. Again under Ex. A-10 dated 31-10-1943 the defendant sPeaks of 32 bales being ready for delivery within 1-11-1943 and asks the plaintiffs to take delivery of the same. The further statement is that since the plaintiffs have to take delivery of a large number of bales in the month of October in the mill the defendant trusted that the plaintiffs will make arrangement to take delivery without delay. He also promised that with regard to September, October and November contracts he would accept the decision arrived at by the Association. Ex. A-ll dated 4-11-1943 contains an unequivocal agreement to give the entire rebate or allowance to the plaintiffs if the defendant got any from the Harvey Mills. Ex. A-31 dated 3-11-1943 also contains indications that the defendant would take delivery instructions and would supply finance. But is the fact that the plaintiffs have not demurred to these letters a sufficiently significant consideration? It is also urged that because Ex. A-12 dated 5-11-1943 contains an offer that under October contract 15 bales of 40 counts, 2 bales of 30 counts and 10 bales of 32 counts in all 27 bales were ready for delivery and that the plaintiffs should within 24 hours of the receipt of the letter pay the amount and take delivery of the bales this would indicate that the parties had agreed to postpone the delivery even after 31-10-1943, But then, it has to be remembered that with respect to the letter, Ex. A-7 dated 26-10-1943 which also related to October deliyery the offer was made before the vaida time expired and it was the goods referred to therein that was taken delivery of on the 5th of November.

16. There is nothing on the evidence to lead one to the conclusion that after 31-10-1943 the plaintiffs had either by express correspondence or by implication deducible from their conduct agreed to take delivery of any goods offered. Mr. Ramamurthi invited our attention to the passages in the evidence of P. W. 1 to the effect that when a question was put to him 'You Were not prepared to take delivery of October bales unless a letter was given to you agreeing to pass on the entire concession to' the reply was that it had reference only to September delivery. 'If the October delivery was made I was bound to have accepted, letter or no letter.' We also find that P.W. 1 had stated that he was ready and Willing to take delivery of the October vaida during the whole month.

17. Learned counsel also relied upon the. testimony of the broker, Jambu Subbarama Iyer examined as D.W. 3 that in respect of October Vaida he did not ask anything of the plaintiffs. In October he told' the plaintiffs that bates Were ready to be delivered and P.W. 1 said that if the difference was given he would take deliyery. This witness also stated that the Vaida delivery can be made within 15th of the month following the month described as Vaida month. The vendee has to ask or apply for delivery and that plaintiffs never applied for delivery.

18. If the testimony of D. W. 3 had been supported by any documentary evidence we would have Placed reliance upon it but the correspondence shows that there is no written record to indicate that the plaintims had demanded that their taking delivery of October Vaida would be conditional to the passing on of the concession or rebate from the Harvey Mills. It. may be, though there is no evidence to justify it, that the defendant finding that the price of yarn was declining wanted to induce the plaintiffs to take delivery by offering a bait as it were on the score of rebate or concession. It is also worthy to note that in Ex. A-8 the plaintiffs were accusing the defendant of not complying with the promise-made of the passing of the concession or allowance for the October delivery. But there is nothing to show in that letter that the delivery of October Vaida goods depended upon the condition precedent of the passing of the allowance or concession. Exs. A-31 and A-ll do not contain any notice of the goods being ready for delivery. It is only on the 5th of November 1943 under Ex. A-12 that the defendant offered to deliver 27 bales. Under these conditions and especially . since we are in agreement with the construction put upon a clause similar to clause 4 of Ex. A-l we feel constrained to hold that since the defendant did not intimate that the goods were ready for delivery before the month of October. was over, it is difficult to say that there has been any breach on the part of the plaintiffs.

19. But Mr. Ramamurthi relies upon certain decisions to show that it is the seller's option that is to decide the time for performance of the contract. Passages at pages 678, 679 and 680 of the decision in Sivayya v. Ranganayakalu were relied upon. It has to be remembered that their Lordships were dealing with Section 93 of Act IX of 1872 which was replaced by Section 35 of the Sale of Goods Act. Section 93 of the Contract Act stated as follows:-

'In the absence of any special promise, the seller of goods is not bound to deliver them Until the buyer applies for delivery' and the words used in Section 35 of the Sale of Goods Act are 'Apart from any express contract' in the place of 'in the absence of any special promise'. But the facts of. that Particular caseshow that the observations there are distinguishable as stated by Gentle, J. in the Judgment referred to already. The appeal before their Lordships arose out of a suit by the sellers against their buyers for non-acceptance of the goods and the defendants, buyers, resisted the Claim on the ground that their sellers were unable to give delivery. Their Lordships observed at pages 681-82 (of ILB Mad): (at pp. 70, 71 of AIR) as follows: 'There is no evidence? to show, that if the respondents had applied for delivery and at the same time tendered the contract price as they . were bound to do, the appellants would not have been able to satisfy the demand.'

Their Lordship refer .to the case in British and Benningtons Ltd. V. North Western Cachar Tea Co., (1923) A. C 48 at p. 71 (P). But what we have to remember in the present case is that if we construe clause 4 of Ex. A-l as an express contract as we have done, then it is the duty of the seller to intimate to the buyer that the goods are ready for delivery and ask him to tender the price and take delivery of the goods.

That, not having been done, we do not thinkthat the observations of the Judicial Committeecan be of any help to the respondent. The fivecontracts which formed the subject matter of thedecision in , do not contain any clause resembling clause4 of Ex. A-l.

20. In discussing the applicability of Section 35 of the Sale of Goods Act, Kaushalendra Rao, J. in Kamiruddin Kadibhal and Co. v. Municipal Committee, Anjangaon Municipality AIR 1951 Nag 148 (G) observed that it is not an effective application for delivery on the part of the buyer to merely send notices or letters if goods are to be delivered at the place of the seller. Some person must be sent to whom the goods can be delivered. When the buyer does not make any effective application for delivery up to a certain date the seller Is entitled to reasonable charges for care and custody up to that date. Then again in Jagannath v. Aaron & Co., AIR 1940 Rang 284 at p. 285 (H) there are observations to the effect that as delivery of the shares was under the contract to be at the seller's option there ' must be implied an additional term to the contract that the seller shall give to the buyer sufficient notice of his intention to make delivery and a reasonable time in which to arrange for funds with which to pay for the shares. But that case did not relate to an express contract deviating from the general provisions of Section 35 of the Sale of Goods Act. We do not think that the observations in AIR 1951 Nag 148 (G) and AIR 1940 Rang 264 (H) afford any help to the respondent. In our view, therefore, the liability for the non-performance of the contract cannot be laid at the plaintiffs door as the defendant had not called upon the plaintiffs by notice intimating to them that the goods were ready for delivery as contemplated in the preamble and in clause 4 of Ex. A-l.

21. But it is. urged by Mr. Ramamurthi that the inference to be drawn from the correspondence that the defendant could have delivered the goods and that the plaintiffs knew about the fact that the goods were ready for delivery at the mills where yarn was manufactured and that being the case, it Is not necessary for the defendant to show that he had physical possession of the goods which could be delivered. A number of cases have been cited to justify this contention. The following observations of Mc-Cardie, J. in Levey & Co. v. Goldoerg, 1922 1 KB 688 (I) at page 692 are relied upon:-

'Mr Cartwright Sharp suggested that the plaintiffs were not ready and willing to deliver during August. The plaintiffs were not bound actually to tender delivery; it was sufficient If they were ready and willing to deliver. That principle is amply established by Jackson v. Allaway, (1844) 6 Man & G. 942 (J) and Baker v. Firminger (1859) 28 LJ Ex. 130 (K). The question Of readiness and willingness is substantially a question of fact.'

These observations are not applicable to the facts of the present case because there is nothing to show on the facts that the defendant was ready and willing to deliver the goods before 31-10-1943.

22. A line of cases tending to show that in a suit for damages for breach of contract brought, by a seller against his buyer for not taking delivery of goods it is not necessary that the seller should show that he had physical possession of the goods but that it would be sufficient if it is shown that the seller had domain over them and could deliver them as and when the buyer applied for them and tendered their sale price, has been cited before us

23. Mulchand Chandolia v. Kundun Mull, ILR 47 Cal 45: All 1920 Cal 521 (L) was a case where a seller under a contract for sale of ready goods sued the buyer to recover damages for not taking delivery of the goods. The defence was that the seller had not the goods in his possession at the date of the contract and the buyer was not therefore bound to take delivery. It was held that if at the time of entering into the contract and during the period intervening, between that date and the due date the seller was in a position at any moment when called upon by his buyer, to deliver the goods he had sufficiently complied with the terms of the contract. That is, it is sufficient if the seller could show that he could give delivery of the goods if' called upon to do so.

24. Ganesh Das Ishar Das v. Ram Nath, ILR 9 Lah 148; AIR 1928 Lah 20 (M) was a converse case where it was held that in a suit by the buyer it is his duty under section 51 of the Contract Act to satisfy the court that he was ready and willing with the money or had the capacity to pay for the goods in suit or that he had at all events made proper and reasonable preparations and arrangements for securing the purchase money.

25. Though the observations at pages 150 and 164 (of ILR Lah): (at pp. 21 and 26 of AIR) were brought to our notice we do not think that there is any guidance to be got from this decision. Similarly in Lakshmikanthan v. Narayanaswami Iyer : AIR1926Mad1109 which had been noticed in ILR 9 Lah 148: AIR 1928 Lah 20 (2) ) (M) the learned judges held that where the performance of a contract is to be simultaneous and a suit is brought for damages for breach of contract each party must show that he was ready to perform his part of the contract. For example in a suit for damages for breach of ,a contract to sell and purchase, the seller must show that he was able and willing to perform his part of the contract and the buyer must show that he was; ready and willing to pay the price. The other case, Satyanarayanamurthi v. Erikalappa, 50 Mad LJ 150: AIR 1926 Mad 410 (O) related to a set of circumstances where it was held that if the seller can show that he could supply the goods contracted for either from the open market or from any other source he would have performed Ms part of the obligation. That is it is not necessary for the seller to snow that he had actual domain over the goods. The learned Judges relied upon the decision in 1923 A.C. 48 (F) where at page-72 Lord Sumner refers to Braithwaite v. Foreign Hardwood Co., 1905 2 K.B. 543 (P) and proceeds to say that the seller would have satisfied his part of the contract if it is found that he could have got the goods for delivery to the buyer in the open market. But the learned Law Lord also says that the question is purely one of construction of the words of the contract. Lord Sumner's observations in 1923 A. C. 48 (F) have beern extracted and commented upon in Benjamin on Sale (8th edn.) at page 820 and the learned. Author says that the seller would have satisfied his part of the contract If he had shown on thee buyer's repudiation of the contract that he could haye had tile goods ready for delivery as and when the requisition was made. It seems to us that the principle enunciated in these cases would have no application to the circumstances here for the reason that there is no repudiation by the plaintiffs of their liability to purchase the goods before 31-10-1943. If the defendant had intimated to the plaintiffs that the goods were ready for delivery either at the seller's godown or at the premises of the Mills then the principle enunciated in these cases would have application. But even if the plaintiffs knew that the defendant could have got the bales of yarn from the Mills as and 'when it is necessary, that would not be sufficient unless the initiative is taken by the defendant to inform the plaintiffs of his readness and willingness to deliver the goods and also to ask the plaintiffs to tender the sale price. The correspondence and especially the letters written by the defendant do not show that the plaintiffs were apprised of the fact that the bales were ready for delivery either in the seller's godown or in the Mills. In these circumstances we are of the opinion that it is not shown that the plaintiffs have repudiated the contract before 31-10-1943.

26. This fact is made clearer by the Plaintiffs' letter, Ex. A-15 dated 9-11-1943 wherein the plaintiffs state that all the 65 bales should have been delivered to them on or before 31-10-1943 as per the terms of the Contract and as per rules, resolutions and bye-laws of the Madura Yarn Merchants' Association Ltd., and that, not having been done, the plaintiffs are not bound to accept delivery of the goods. The plaintiffs charge the defendant with having committed breach of contract by not giving delivery of October Vaida bales in time. Then a demand is made for the return of Rs. 10,560-8-0 with interest thereon at 4 per cent per annum up to 31-10-1943 and at 9 per cent per annum from 11-1-1943 up to the date of payment.

27. It is after this that the defendant sold 29 out of 65 bales by private sale at the Plain, tiffs' risk on 10-11-1943 and intimated that fact to the plaintiffs bv a lawyer's notice. Ex. A-17 dated ll-ll-43 and by Ex. A-23 dated 12-ll-43 by Which details of the entire sale were communicated to the plaintiffs, Ex. A-93 contains a post script to the effect that the claim set out in Ex. A-l7 no longer stands out as an independent item of claim since the adjustment of the deposit amount towards the damages payable by the plaintiffs had been made as per terms and intent of the deposit arrangement. The plaintiffs were called upon to pay Rs. 2.747-10-0 after deducting the advance of Rs. 10,560-8-0 which is mentioned as a deposit in this letter. As we have already remarked, none of the Incidents of a deposit as contemplated in mercantile transactions Is present in the advance paid my the plaintiffs to the defendant.

28. In the alternative Mr. V. C. Gopalaratnam for the plaintiffs contends that even if the contract created an obligation on the part of the plaintiffs to apply for delivery of goods on or before 31-10-1943 and failure to do so amounted to a breach still the defendant is not entitled to hold back the deposit unless it is shown that after giving notce of re-sale to the plaintiffs the goods were sold which resulted in a loss to the seller In fact what has happened is that no notice oT resale has artually been given to the plaintiffs but after portions of the goods had been sold the plaintiffs were intimated about it. Sub-Section (2) of section 54 of the Sale of Goods Act which corresponds to Section 107 of the Contract Act states that where the unpaid seiler who has exercised his right of lien or stoppage in transit give notice to the buyer of his Intention to resell the unpaid seller may if the buyer does not within a reasonable time pay or tender the price, resell the goods within a reasonable time and recover from the original buyer damages for any loss occasioned by his breach of contract but the buyer shall not be entitled to any profit which may occur on the re-sale. If such notice is not given, the unpaid seller shall not be entitled to recover such damages and the buyer shall be entitled to the profit, if any, on the re-sale.

29. From this it is urged that on no account should the goods have been sold by private treaty and that too without previous nottce. There is a discussion about the law on the subject in the Indian Sale of Goods and the Indian Partnership Acts by Pollock and Mulla at pages 231 and 232 to the following effect:-

'The question whether a seller of goods has the right or re-sale is important, for where he has such a right he is entitled to claim as damages the difference between the contract price and the amount realised on the re-sale, less the costs of the re-sale, while if he has no such rights he is entitled to the difference between the contract price and the market price on the date of the breach. Now that power to resell may, be either statutory or it may be conferred on the seller by the terms of the contract of sale: in the former cose it can be exercised only if the property in the goods has passed to the buyer, as is implied by the words of this section, in the latter case it can be exercised even if the property in the goods has not passed to the buyer. Thus if it is provided in a contract of 'indent' that on default on the part of the buyer to pay for and take delivery of the goods within a specified time the seller should be at libertv to resell the goods and that the buyer should pay all the loss arising on the contract with interest, the seller is entitled to resell the goods on default on part of the buyer even if the property in the goods had not passed to the buyer and to sue the buyer for the loss on resale, but it is necessary to the exercise of this power that the goods contracted for should at least have been appropriated for the purpose of the contract.'

We have already found that it was the duty of the defendant to give' notice of resale and that not having been done the unpaid seller shall not be entitled to recover any damages whatever.

30. The answer put forward by Mr. Ramarnurthi is that in any event it is open to the defendant to appropriate the advance when there is default on the part of the buyer. He contends that the amount or Es. 10,560-8-0 is in the nature of a deposit and cites passage from Mayne on Damages at page 234 and paragraph 517 at page 378 of Halsbury's Laws of England (2nd edn. 29) dealing with forfeiture and recovery of deposit. Paragraph 517 states as follows:

'The vendor if he becomes entitled to rescind the contract owing to the purchaser's default, can both rescind and retain the deposit. The contract being thus at an end, the forfeiture of the deposit is not strictly in the nature of damages for breach of contract though it has been said to be in the nature of liquidated damages and not a penalty. But the purchaser is not entitled to terminate the contract bv giving up the deposit. Notwithstanding the deposit the vender can insist on the contract and sue either for specific performance or for damage beyond the deposit.'

Palmer v. Temple, (1839) 9 Ad. and E1. 508 (Q) is Sought to be cited. The observations in Kumaraswami v. Karuppuswaml : AIR1953Mad380 by Venkatarama Aiyar, J. at page 798 (of Mad LJ): (at p. 388 of AIR) on a similar topic were also brought to our notice. But the principles enunciated in all these authorities would have been applicable only if there had been default on the part of the plaintiff and also if the advance amount could be treated as a deposit. The nature of a deposit is described in (1884) 27 Ch. D. 89 (C) and ether cases cited at pase 234 of Mayne on Damages. We do not think that the advance paid in. this case can be considered as a deposit of that nature.

31. That the vendor in matters like this can resell the goods and damages sustained by him need not be the difference between the contract price and the market Price on the, date of sale but can be the diuerence between the agreed price and what has actually been reassert even at a private sale is the contention of the defendant, respondent. To substantiate this a lew cases were cited. The full bench in Moll Sehutte & Co. v. Luchmi Chand, ILR 25 Cal 505 (S) related to a case where the plaintiffs sold the goods 'under an indent' contract on an agreed price. On arrival of the goods the defendant refused to pay for and take delivery of the goods on the ground that they were not the goods contracted for. After notice to the defendant the P'aintiffs resold the goods and sued to recover the expenses of the re-sale and the difference between the price realised and the contract price with interest. It was held that clause 1 of the indent contract gave the plaintiffs a right to resell the goods and sue for damages mentioned therein and that Section 107 of the Contract Act had no bearing on the case. The facts of that case are very different from what we have to consider here. The learned Judges of the Calcutta High Court in holding that Section 107 of the Contract Act has no application relied upon the terms of the contract and the passage at page 511 in this connection is important:- 'Section 107 of the Contract Act has, in my Judgment no bearing on this case. I base my decision on the terras of the contract between the parties. Here the parties, two mercantile men, perfectly competent to contract, have made their own bargain and one of the terms of that bargain is that if there were any such default on the part of the purchaser as is mentioned in clause 1 (as there was) the vendor was bo have the right to resell the goods and any loss or deficiency arising from such resale with interest at the rate of 12 per cent, per annum was bo be paid by the purchaser to the vendor. We are told upon the authority of the passage in the case to which I have referred and upon that authority alone, that such a resale is bad and that the course which the vendor (the Plaintiff) took in this case was not Justified under the ccntract. I am Quite unable to assent to that view.'

32. This case has been followed in Best v. Haji Muhammad Sait, ILR 23 Mad 18 (T) where also the question for consideration related to a clause in the indent and Section 107 of the Contract Act could not have been attracted. At Page 23 it is observed thus:-

'Since judgment was given the law has been reviewed in the Calcutta High Court ILR 25 Cal. 505 (S) and the full bench has decided that a clause such as that contained in the indent before us comes into operation notwithstanding that the property has not passed to the buyers and the same view has been adopted in this court in a case referred to by the Chief Judge of the Presidency Small Cause . Court; Ronaldson v. Chella Pillai Chetti, referred case 29 of 1897 (Mad) (U).

Following this authority we hold that theappellants are entitled to charge the deficiencyresulting from the re-sale of the several lots ofgoods.'

The other case on which ,Mr. Ramamurthilaid stress is Harichand and Co. v. Gosho Kabushiki Kaisha Ltd., ILR 49 Bom. 25 : AIR 1925Bom 28 (V) which also related to a clause inthe contract for the sale of , goods, which provided that the seller on the failure of the buyerto take delivery shall be at liberty at any timeto re-sell the goods and recover the loss resulting from such resale, gave to the seller a validright to recover damages on the basis thereinmentioned, but if that right is not exercisedwithin a reasonable time, he is thrown back onhis remedy of damages on the ordinary basisof the difference between the contract rate andthe market rate at the date of breach. ILR 23Mad. 18 CD and the other cases were followed.Paragraph 266 at uage 199 of the Halsburv'sLaws of England Vol. 29 (2nd edn.) dealing withdamages fixed by contract car. have no relevancy to the facts of the present case.

33. We are not satisfied that there is anything useful at p 1237 of Cort v. Ambergate Etc. Rly. Co., (1851) 117 ER 1229 (W) which related to a contract for the manufacturing and supply of goods from time to time and as to how damages have to be assessed on the breach of such contract. So also is the discussion at pages 602 and 603 of 'Williams on Vendor and Purchaser'. Mr. V. C. Oopalaratnam drew our . attention to the observations of the learned Judges in B. Muniswami Chetty and Co. firm v. Muniswami Chetti and Co. Firm : AIR1944Mad418 to the effect that there is nothing in the Sale of Goods Act which is inconsistent with Section 73 of the Contract Act. It does not seem to us that our decision in the case need, be'based upon these observations.

34. On the whole, after a review of the evidence & the cases cited at the Bar in relation to the terras contained in Exs. A-l to A-5, we are of opinion that the defendant ought to have intimated to the plaintiffs that the goods were ready for delivery before 31-10-1943 and that not having been done, the plaintiffs cannot be mulcted with any liability for having broken the contract. In these circumstances the defendant Is not entitled to any damages and the plaintiffs would be justified in asking forrefund of the advance which cannot be considered as a depbiSlt as understood in English Law.

35. The next argument of Mr. Ramamurthi is that since in Ex. B-18 the plaintiffs have themselves accepted the liability for damages, as is seen from the entry therein to the effect that the defendant is Riven credit for Rs. 13.308-2-0, and having obtained benefit from the excess profits by acknowledging their, liability to that extent and thereby reducing the excess profits for the year, it is not now open to the. plaintiffs to sav that they are entitled to Set . back their advance; In Re Tarun Kumar Ghose AIR 1945 Cal. 509 (Y) Remiry J. touk the view that when a man acted in a particular way he cannot be heard to say for his benefit that he acted wrongfully. The facts of the case show that a person deposited a sum of money in the , Post Office Savings Bank account in the name of his minor so and thereby escaped liability of paying inccme-tax and on the death of the minor he applied for letters of administration claiming that the money was invested in the minor's name with a view to escape the liability of paying income-tax and that, therefore he should not be compelled to. pay duty in respect of that sum, the learned Judge held that such a plea cannot be countenanced. Mr. Ramamurthi relies upon the principle enunciated in this decision which has the support of a large body of case law in England such as In re. Hallette's estate; Knatchbull v. Hallett; (1879) 13 Ch D 696 (Z). But we do not know whether as a matter of fact the plaintiffs have obtained any advantage by this entry or that the plaintiffs had to pay less of excess or profits tax.

36. Mr. V. C. Gopalaratnam contends that if the plaintiffs got back the advance paid, that would be income for the year during which the same was realised in which event income-tax would have to be paid on that. If that is so. there is no question of any advantage accruing to the plaintiffs. The plaintiffs' case is that the entry was made 'without prejudice' and what is spoken to by P. W. 1 is as follows:-

'I told the clerk to write the entry with the expression 'without prejudice'. The entry in the ledger, Ex. B-18 is by another clerk, Sesha lyer. I did not instruct him not to write 'without prejudice'. In the absence of any evidence that the plaintiffs have actually obtained any benefit we do not think that this contention of the defendant can prevail.

37. The last point for consideration is, whatrelief the plaintiffs are entitled to. It seems tous that the claim for interest made by the plaintiffs is unsustainable for the reason that by theirconduct the defendant rightly or wrongly believed to. some extent that the goods would be takendelivery of after 31-10-1943 though the plaintiffshad not, by anything in writing or in expresswords indicated that. On that account, we dohot allow them any interest on the advance paidby. them. In the result Appeal 127 of 1952 is ellowed and the plaintiffs will be given a decreefor Rs. 10,560-8-0 with interest at six per cent, perannum thereon from the date of the plaint. Eachparty will bear their costs in the lower court andhere. The result of allowing Appeal 127 of 1952means the automatic dismissal of Appeal No. .933of 1852 which is accordingly dismissed withoutcosts.


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