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V.K. Kumaraswami Chettiar and ors. Vs. P.A.S.V. Karuppuswami Mooppanar - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtChennai High Court
Decided On
Case NumberLetters Patent Appeal Nos. 67 and 68 of 1949
Judge
Reported inAIR1953Mad380; (1952)2MLJ785
ActsSale of Goods Act, 1930 - Sections 4 and 12; Contract Act, 1872 - Sections 38 and 39
AppellantV.K. Kumaraswami Chettiar and ors.
RespondentP.A.S.V. Karuppuswami Mooppanar
Appellant AdvocateV. Meenakshisundaram, Adv.
Respondent AdvocateN. Rajagopala Iyengar and ;K. Subramanyam, Advs.
DispositionAppeals allowed
Cases ReferredBorrowman v. Free
Excerpt:
indian contract act, section 39--scope of--refusal to perform after the time fixed for performance--section 39 not applicable illustrations to section--value of--date of performance--fixing of--option given to one party--effect;section 39 of the indian contract act (ix of 1872) is not applicable to a case when there is a refusal to perform the contract after the time for performance has arrived. the words 'has refused to perform', contained therein, when read along with the other words of the section, properly apply only when there is something to be performed under the contract and they are not apt to describe the position when a contract has been already broken. there is a fundamental difference between a refusal to perform a contract before performance has become due and a failure to.....1. these are appeals preferred under the letters patent against the judgment of satyanarayana rao j., in s. a. nos. 464 and 465 of 1946 whereby he reversed the judgment of the district judge of mathurai in a. s. nos. 294 and 295 of 1944 which in turn had reversed the judgment of the subordinate judge of mathurai in o. s. no. 100 of 1943 and no. 82 of 1943. the appellants in this court were the plaintiffs in o. s. no. 100 of 1943, sub-court, mathurai and the suit was for damages for non-acceptance of goods under a contract dated 13-5-1943. the defendant in this suit filed o. s no. 82 of 1943 in the sub-court, at mathurai, against the plaintiffs in o. s. no. 100 of 1943 claiming damages for non-acceptance of goods under contract dated 3-6-1943. both the suits were heard together and.....
Judgment:
1. These are appeals preferred under the Letters Patent against the judgment of Satyanarayana Rao J., in S. A. Nos. 464 and 465 of 1946 whereby he reversed the judgment of the District Judge of Mathurai in A. S. Nos. 294 and 295 of 1944 which in turn had reversed the judgment of the Subordinate Judge of Mathurai in O. S. No. 100 of 1943 and No. 82 of 1943. The appellants in this Court were the plaintiffs in O. S. No. 100 of 1943, Sub-Court, Mathurai and the suit was for damages for non-acceptance of goods under a contract dated 13-5-1943. The defendant in this suit filed O. S No. 82 of 1943 in the Sub-Court, at Mathurai, against the plaintiffs in O. S. No. 100 of 1943 claiming damages for non-acceptance of goods under contract dated 3-6-1943. Both the suits were heard together and disposed of by a common judgment and so were the appeals in the District Court and in, this Court.

2. The facts material for the purpose of these appeals are these : Both the parties are prominent merchants in Mathurai doing business in yarn. On 13-5-1943 they entered into an agreement, Ex. P. 1. under which the appellants agreed to sell and deliver ten bales of yarn to the respondent in August 1943. As the construction of this contract is one of the main points for determination in these appeals it is necessary to set out its terms in extenso :

__________________________________________________________________

CONTRACT FORM

Dated 13-5-1943

Name oE the seller : V. K. Ramaswnmy Chettiar & Sons, Madurai, M. D. 87 Name of bujer : P. A. S. V. Karuppasami Moopa nur A Co. Madurai, M. D No. 29

Sold through broker : C. A. Mathavachaii.

__________________________________________________________________

The buyer agrees to purchase subject to conditions and terms noted below the following: goods & accepts the seller's go down delivery at seller's option between the first and last day of the below mentioned month and to pay the full value for the same before delivery and to accept the goods even if any delay is made for any reason by the sellers in giving delivery.

__________________________________________________________________

Description ... 20 x 10 Harvey Mills Yaro

Quantity ... (10) ten bales each containing 40 bundles of 10 lbs. Price. ... Rs. 27-12-0 twenty seven, annas twelve only net por bunrtle. Despatch ... August 19iS. Cnshbcfore delivery of the bales, Subject to the terms and conditions a bo-re the Mills, Madura godown delivery. __________________________________________________________________

The respondent paid an advance of Rs. 1100 under this contract. Vide Ex. P. 2. On 3-6-1943 there was another agreement between the parties under which the respondent agreed to sell and deliver to the appellants five bales in July 1943 Ex. P. 18. On 2-8-1943 the appellants gave notice to the respondent that ten bales of yarn were ready, that he might pay for and take delivery of them in accordance with the contract dated 13-5-1943, Ex. P. 3. The respondent neither replied to this notice nor did he make any attempt to pay for the goods and take delivery. On 26(16?)-8-1943 the appellant sent a further notice, Ex. P.

4. Therein it was stated that alter the notice, Ex. p. 3, there was an agreement between the parties on 3-8-1943 under which five bales which had to be delivered to the appellants under Ex. P. 18 were adjusted out of the ten bales which had to be delivered by them and that the respondent was to take delivery of the remaining five bales before 20-8-1943. The notice called upon him to take delivery of the goods under this agreement. The respondent replied to this notice by Ex. P. 5 dated 30-8-1943. To understand the attitude taken up by the respondent in this reply it should be stated that on 19-8-1943 the Textile Commissioner, acting under the Yarn Control Order issued under Rule 81(2), Defence of India Rules, published a statement fixing the maximum price for yarn and on 31-8-1943 there was a formal statutory notification on the lines of the statement and it was published on 4-8-1943. The ceiling prices fixed under this statement were less than the contract rate under Ex. P. 1. In Ex. P. 5 the respondent denied that there was any such agreement on 3-8-1943 as was alleged in Ex. P.

4. This question is no longer material because in the suit both the parties disclaimed this arrangement and were content to have their rights determined on the basis of the original contracts. Then the notice stated that the plaintiffs had not "August ready bales" with them on 2-8-1943 when they sent Ex. P. 3 a complaint which was made for the first time; and offered to take delivery of the goods at the prices fixed in the statement of the Textile Commissioner. With reference to the five bales purchased by the appellants under Ex. p. 18, the notice stated that as they had failed to take delivery, the goods would be sold by public auction and that the appellants would be liable for damages resulting on such resale.

To appreciate this move of the respondent it must be mentioned that the yarn control statement dated 19-8-1943 operated only on contracts where deliveries remained to be made after 15-8-1943 and the result would be that while Ex. P. 18 would not be hit by it because delivery had to be made in July, Ex. P. 1 would be hit, if the contract was subsisting on 15-8-1943. The scheme of the respondent was obviously to recover from the appellants the full contract price for the five bales under Ex. P. 18 while paying them only the controlled price for the ten bales under Ex. p. 1. After further exchange of notices between the parties, two suits came to be filed on the two contracts. In O. S. No. 82 of 1943 the respondent claimed damages for breach of the contract dated 3-8-1943, Ex. P. 18 and also refund of the advance of Rs. 1100 paid under Ex. P. 1. In O. S. No. 100 of 1943 the appellants claimed damages for breach of the contract dated 13-5-1943, Ex. p. 1. In O. S. No. 82 of 1943 both the Courts below held that the appellants had broken the contract and that they would be liable in damages; and this question is no longer in Issue between the parties. As for the claim for return of Rs. 1100 it is bound up with the decision in O. S. No. 100 of 1943 as to who broke the contract, Ex. p. 1 and L. P. A. No. 68 of 1949 relates to this.

3. In L. P. A. No. 67 of 1949 the question that has to be decided is whether Ex. P. 1. was broken by the appellants or by the respondent. That in turn depends on the question whether the contract was alive on 15-8-1943. If it was, it is conceded by the appellants that it would fall within the mischief of yarn control order notifications; in which case the appellants would be in breach as they refused to deliver the goods on payment of the ceiling price as per the offer of the respondent in Ex. P. 5. It is likewise conceded on behalf of the respondent that if in fact the contract, Ex. p. 1 had been broken on 2-8-1943 and was not alive on 15-8-1943 the breach was on the part of the respondent. The contention of the appellants is that they had made a proper tender of the goods on 2-8-1943 under Ex. P. 3, that the respondent refused to accept the same and thereby committed breach of the contract and that the contract was not subsisting on 15-8-1943. The respondent contends firstly that the goods tendered under Ex. P. 3 were not in accordance with the contract and that there was no proper tender; & secondly that even if there was a proper tender of the goods on 2-8-1943 and the respondent was in default in not accepting them, the appellants did not elect to put an end to the contract but that it was kept alive and was subsisting on 15-8-1943. These are the two questions that arise for determination.

4. On the first question the contention of the respondent is that he agreed under the contract, Ex. P. I, to purchase only yarn which was to be despatched from the Madura Mills in August 1943, that the goods actually tendered on 2-8-1943 were not goods despatched by the Mills in August 1943 and that, therefore, they were not in accordance with the contract. If this contention is well-founded, there is no question but that there was no proper tender by the appellants on 2-8-1943. The appellants did not deny that the goods tendered were not despatched by the Madura Mills in Aug. 1943 but their contention was that there was no agreement that the goods to be delivered under Ex. P. 1, should have been goods despatched by the Madura Mills in August 1943. The decision on this question turns on the interpretation to be put on the terms of Ex. P. 1.

5. The contract is in printed form with particulars noted in handwriting against the headings: Description, quantity, price, despatch. Under the heading "description" what is noted is: 201/2 x 10 -- Harvey Mills yarn. There are no words here qualifying description such as "despatched from the mills in August". It is argued for the respondent that on a question as to what was the subject-matter of the contract the conclusion must be reached on a reading of the document as a whole and not merely on what is expressly described as "description." In --'Montague L. Meyer v. Osakeyhtio Carelia Timber Co Ltd', 36 Com. C. 17, the contract described the timber sold as "Wood goods, hereinafter specified" and "to be ready for shipment on 15-6-1928". Though the, goods tendered were in accordance with the specifications they were not "ready for shipment on 15-6-1928", but only in 1929. It was held that the words "Ready for shipment on 15-6-1928", were words of description and not a mere warranty. We agree that the entire contract must be looked into for ascertaining what, was agreed to be sold but at the same time when certain words which are contended to be part of the description do not occur where they might naturally be expected to as where there is a heading expressly provided for it, it is not unreasonable to require that it should plainly and clearly appear that those words were intended to be words of description. The words relied on| by the respondent as forming part of the description are set out against the heading "despatch". The words, it will be noted are not "August despatch" -- but "despatch August 1943". In its setting the words must refer to despatch by the seller and not by the mills. What is more, there is no other provision in the contract mentioning when the seller is to deliver. In the opening words which are in print, it is stated that the goods are to be delivered at the option of the seller between the first and last day of the below mentioned month. Apart from the words "Despatch August 1943" there is no other place where the month is mentioned. Therefore the words must refer to delivery by the seller as mentioned in the opening words. If that is so, the words in question mean that the seller has to deliver the goods in August 1943. It is conceded by Mr. N. Rajagopala Aiyangar, the learned advocate for the respondent that those words must bear that meaning. Otherwise, as already stated there are no other words mentioning when the seller is to deliver the goods. But he argues that the operation of the words is not exhausted by being read as signifying delivery by the seller in August and that in addition the words can also bear the meaning that the goods must have been despatch, ed by the Mills in August. That is to say the words serve a double purpose. They at once describe the goods which were the subject-matter of the sale and also prescribe the time when have got to be delivered. But this is clearly opposed to all sound canons of construction. In the language of Mimamsa writers

(Editor: The text of the vernacular matter has not been reproduced.

required.)

"A word used once yields sense only once". Reliance was placed on Clause 6 of the printed conditions which runs as follows:

"In case of Vaida or despatch of Indian mills goods, the terms and conditions of the Mills whose goods are sold shall be binding on the buyers".

It is argued that the despatch in this clause must mean despatch by the mills and it should, therefore, bear the same meaning in the body of the contract. But clause 6 is in printed form and is general in its character and it cannot be read so as to conflict with what is set out in the body of the document in handwriting. Moreover even on this construction the objection still remains that the words "despatch August'.' must be read as referring at the same time both to delivery by the seller and by the mills. With reference to this reasoning it must be stated that the learned Judge appears to have been under the impression that the time for delivery had been fixed in the opening words in Ex. P. 1 for he observes "The time of delivery was also fixed by the first clause as between the first and last day of August 1943." This it is conceded, is erroneous and deprives the reasoning on which the judgment rests of much of its force.

6. In this view it becomes unnecessary to consider at any length the authorities cited on either side on the construction of other contracts as to whether, the particular words in those contracts were words of description so as to constitute a condition that the goods must conform to that description or whether they were mere descriptive statements which might at best amount to a warranty. Writing on this subject Benjamin remarks:

"The rules of law on this subject are very subtle and perplexing and the decisions so numerous and in many instances so contradictory and the distinctions so refined that no attempt can here be made to do more than enunciate a few general principles".

(Benjamin on Sale, 8th Edn. p. 554)

One of those principles is that terms as to time or place or mode of shipment are in general, construed as forming part of the description of the goods and treated as conditions. Vide Ss. 6 and 7 of Chapter II at pages 591 to 598. In -- 'Bowes v. Shand', (1877) 2 A. C. 455 the contract was for supply of 300 tons of "Madras rice to be shipped at Madras or coast during the months of March and April 1874 per 'Rajah of Cochin'". In fact the goods were shipped in February 1874. The purchaser refused to accept the goods. In an action for damages for non-acceptance it was held that "shipment in March and April" was part of the description of the goods and that the tendered goods were not in accordance with the contract. In -- 'Vigers Bros v. Sanderson Bros', (1901) 1-K. B. 608 the contract was for the sale of laths to be "about the specification stated below". The goods were not of the specified length and were rejected by the purchasers. It was held that they were not liable for damages for non-acceptance. This was followed in the case of -- 'Montague L. Meyer v. Osakethtio Carelia Timber Co, Ltd, 36 Com. C. 17, already cited where the words "ready for shipment 011 15-6-1928" were held to be part of the description of the goods. In -- 'Wilson v. Wright', (1937) 4 All. E. R. 371 the contract was for the sale of potatoes to be shipped by "next steamer". They were not sent by the next steamer and it was held that the purchaser was entitled to reject them. In --- J. Aron & Co. Comptoir Weg-mort', (1921) 3 K. B. 435 the contract provided for "shipment by steamer or steamers from U.S.A. ports during October 1919". The goods were actually shipped in November 1919. There was a clause in the agreement that the purchaser was not to reject the goods on account of "difference in value from description "specified". It was held that words "shipment in October" were more than description of goods; that they amount, ed to a condition and that the purchaser was not precluded by the clause aforesaid from rejecting the goods. It is argued for the respondent that adopting the same rule of construction the words "despatch August" if construed as meaning goods despatched by the mills in August must be held to be words of description and that the tender of goods which are not despatched by the Mills in August would not be in accordance with the contract.

7. We consider that the principle underlying the decisions cited on behalf of the respondents has no application to the present case. That principle is stated by Benjamin in the following terms:

"If time appear on a fair consideration of the language and the circumstances to be of the essence of the contract stipulations in regard to it will be held conditions precedent", (Benjamin on Sales, 8th Edn. p. 591).

In -- 'Bowes v. Shand', (1877) 2 A. C. 455, in construing the terms as to "shipment in February and March" as words of description Lord Cairns observed as follows:

"It is quite obvious that merchants making contracts for the purchase of rice, contract which oblige them to pay in a certain manner for the rice purchased, and to be ready with the funds for making that payment, may well be desirous both that the rice should be forthcoming to them not later than a certain time, and also that the rice shall not be forthcoming to them at a time earlier than it suits them to be ready with funds for its payment.' Therefore, it may well be that a merchant making a number of rice contracts ranging over several months of the year will be desirous of expressing that the rice shall come forward during such times, and at such intervals of time, as that it will be convenient for him to make the payments and it may well be that the merchant shall consider that he has obtained that end if he provides. for the shipment of rice during a particular month, or during particular months & that he will know that provided he has made that stipulation the rice will not be forthcoming at a time when it will be inconvenient for him to provide the money for the payment".

In --'Montague L. Mayer v. Osakeythtio Carelia 'Timber Co, Ltd', 36 Com. C. 17 at 24 where the effect of the words "ready for shipment on 15-6-1928" was construed, Greer L. J. stated the law thus:

"It is old law in this country as applied to commercial contracts that the dates, at any rate so far as they are an important part and are incorporated in a description of the goods, are of the essence of the contract and it seems to me that as it has been decided that the date of the shipment of the goods is of the essence of the contract, when the contract deals not merely with the date of shipment but with the date of the readiness for shipment, that the latter date is as much of the essence of the contract as it was held that the date of shipment was in the well known case of -- 'Bowes v. Shand', (1877) 2 A. C. 455."

8. These cases are illustrations of the principle stated by Mr. Benjamin that the time of shipment is regarded as of the essence of the contract. That principle can have no application to the facts of the present case. Here it is the seller that has to deliver the goods to the respondent, and not the mills; and the stipulation as to the time of performance by the seller is mentioned as the month of August with an option to deliver on any date between the first and the 31st. The date of despatch of the goods by the mills to the seller has no bearing on the performance by the seller of his obligation. Nor is it suggested that there is any difference between the goods despatched by the Mills in July and those despatched in August. Indeed it is admitted by P. W. 1 that though the goods agreed to be sold under the contract, Ex. P. 18, between the same parties mentions July despatch the goods tendered were actually acquired on 12-8-1943 and that clearly shows that the despatch by the Mills in any particular month was not regarded as of the essence of the contract. If it had been established that there was any such difference in quality between the goods despatched in July and those despatched in August different considerations might have arisen. In -- Hopkins v. Hitchcock', (1863) 14 C. B. (N. S.) 65: 143 E. R. 369 the contract was for the sale of iron bars with marks "S. & H. Crown". These goods were manufactured by a firm called Suowden and Hopkins and sold with the marks "S. & H. Crown". Then Snowden retired and firm's name was chaned to Hopkins & Co, and the marks on the goods were altered into "H. & Co". The seller tendered the goods with marks "H and Co. Crown". But they were relented by the purchasers on the ground that they did not bear "S. & H Crown" and were, therefore, not in accordance with the description. The jury found" that the goods were of the same quality and on that it was held that there was a proper tender. Erle C. J. observed at page 371.

"I am quite aware of the extreme importance in all contracts of words descriptive of things sold: they may and frequently do amount to a condition and may be most essential. It is upon the construction of the words of this contract that I rely. I think it is not a contract for iron of a particular brand but for iron of a, known quality and that the plaintiff tendered the article for which the defendant contracted".

With this opinion Willes, Byle and Keating JJ. agreed. On the facts, the decision in -- 'Hopkins v. Hitchcock', (1863) 143 E. B. 369 would appear to be nearer the present case than the authorities cited on behalf of the respondent. In --- 'Subbier v. Venkatachalapathi Aiyar', 91 Ind. Cas. 580 (Mad) the contract was for the sale of goods which the seller was to purchase from the Madura Mills and notice was required to be given to the purchaser on "arrival of the bale or bales". The seller gave notice but at that time he had not the bales. It was contended that there was not a proper tender as the arrival of the bales was part of the description of the goods. In overruling this contention Ramesam J. observed' as follows:

"Ex. A cannot be construed as if the words 'arrival of bale or bales' amount to a description of the goods similar to the words 'July or August shipments' in -- 'Bowes v. Shand', (1877) 2 A. C. 455".

Even if the words "despatch August" mean despatch by the mills in August, we should be inclined to hold that without more, they cannot be regarded as forming part of the description of the goods but as already stated we think that those words refer only to the time of delivery by the seller and have no reference to the despatch of goods by the mills to the seller. We accordingly hold that there was a proper tender of the goods by the plaintiffs under Ex. P. 3 and that the respondent is in breach in not taking delivery of them.

9. The question that next arises for decision is whether the contract, Ex. F. 1 was subsisting on 15-8-1943 notwithstanding the refusal by the respondent to take delivery of the goods on 2-8-1943. It is contended by Mr. N. Rajagopala Aiyangar that even if there was a proper tender on 2-8-1943 the mere non-acceptance of the goods by the respondent did not by itself and without more constitute a breach of the agreement; that the refusal to take delivery amounted only to a repudiation giving a right to the seller to put an end to the contract under S. 39, Contract Act; that the plaintiff did not elect to do so with the result that the contract was kept alive for the benefit of both the parties; that accordingly the defendant was entitled to claim delivery as he did on 30-8-1943 and as the appellants then refused to deliver the goods they were the party in breach and not the defendant.

10. This argument is based on a misconception of the true scope of Section 39, Contract Act, and of the principles on which it is based. Where a contract is to be performed at a future date and before the time for performance arrives one of the parties gives notice to the other party that he is not willing to perform his part of the agreement, then there is what has been called an "anticipatory breach" of the contract by him. This expression was characterised by Lord Wrenburv as unfortunate in -- 'Bradley v. Newsom', (1919) AC 16, because strictly speaking there can be no breach in praesenti of an obligation which is to he performed in future. The substance of the matter, however, is that when a party refuses to perform his part of the agreement before the due date, he in effect throws up the contract: and then the question is what the other party might then do. He might either accept the repudiation and treat the contract as broken then and there and proceed to claim damages or he might, notwithstanding the repudiation by the other party, get ready for performing his part of the contract in due course, offer performance when the time for it arrives and on the refusal by the other party claim damages for breach of the contract by him. In that case he keeps the contract alive for the benefit of both the parties. This was laid down by Cock-burn C. J. in the leading case on the subject, -- 'Frost v. Knight', (1872) 7 Ex.

111. Vide also --'Hochster v. Delator", (1353) 2 El & Bl 678, --"Avery v. Bowden', (1855) 5 E & B 714, -- John-stone v. Milling, (1836) 16 QBD 480 and -- Millet v. Van Heek & Co.', (1921) 2 KB 369.

11. A repudiation before the due date is in the nature of an offer by a party to a concluded contract to vary the terms thereof. If accepted there comes into existence a new contract in supersession of the old one; if not accepted, the original contract continues to remain in force with the rights and obligations of either party unaffected. By its very nature, this situation is possible only, when the contract is executor and the time for performance has not arrived. The principle has also been applied to continuing contract performance under which is in progress and has not been completed; the most familiar example being where the goods are to be delivered in instalments spread over several months. In such a case when a party refuses to deliver the future instalments, the other party has the option either to accept the repudiation and put an end to the contract with reference to the future instalments and claim the damages or keep it alive and claim performance when the instalments actually fall due. But where the time for performance has arrived and one party has actually offered to perform his part, then the other party has to perform his portion of the contract; in default the contract is broken and comes to an end. It is a well recognised juristic concept that when a contract is broken it is discharged giving rise to a new obligation which the law imposes on the party in default to pay damages.

"A breach or default in performance discharges a contract wholly or in part in the sense that it converts it into a right of action for damages or pecuniary compensation."

(Vide Leake on Contracts, page 671, 8th Edn). Mr. Anson enumerates five modes by which a contract may be discharged and one of them is breach.

"It may be broken; upon this a new obligation connects the parties, a right of action possessed by the one against the other" ...... and "if one of two parties to a contract breaks the obligation which the contract imposes, a new obligation will in every case arise, a right of action conferred upon the party injured by the breach." (Vide Anson's Law of Contracts, 8th Edn. p. 304 and p. 318).

12. Therefore the principle that it is open to lone party to keep the contract alive can have application only when the contract is executory or where there is still something to be performed under the contract. It can have no application where time for performance has arrived and there has been a breach. When a contract has I been broken it is dead and there is nothing which could thereafter be kept alive. Even if the parties subsequently come to an agreement in respect of the same subject-matter it is in law a new contract. Thus there is a fundamental difference between a refusal to perform a contract before performance has become due and a failure to perform it after it has become due.

13. In -- 'Steel Bros and Co. Ltd. v. Dayal Khatav & Co.', 47 Bom 924, emphasising this distinction Mullah J. observed as follows:

"A good deal was said on both sides as to the rule of 'anticipatory breach' in its relation to C. I. F. contract. It is now elementary law that where in a contract for sale of goods a buyer clearly shows his intention not to be bound by it and repudiates the contract it amounts to a breach of the contract (Indian Contract Act, Section 120). In such a case the seller may treat the notice of intention as inoperative, in which case he keeps the contract alive for the benefit of the buyer as well as his own or he may treat the repudiation as wrongful putting an end to the contract and may at once bring his action as on a breach of it. (Indian Contract Act, Section 39). But the repudiation which absolves the seller from the performance of conditions precedent must have been made before the due date for the performance of the contract. This date in the case of C. I. P. contracts is the date on which the documents ought to have been tendered. A repudiation made after that date does not operate as a waiver of the performance of the conditions precedent on the part of the seller."

14. The decision in favour of the respondent on this part of the case is based on certain observations occurring in the speech of Viscount Simons in -- 'Heyman v. Darwins Ltd.', 1942 AC 355- In that case the appellants were appointed selling agents for the respondents for a minimum period of three years under an agreement dated 1-4-1938. Disputes arose between the parties on the working of the agreement. On 7-11-1939 the respondents wrote to the appellants that if they could not agree to the terms they could cancel the agreement. On 21-12-1939 the appellants replied that the letter of the respondents dated 7-11-1939 amounted to a repudiation of the contract and commenced an action for damages. The respondents applied for stay of the action by virtue of an arbitration clause in the agreement. That was ordered. On appeal it was argued on behalf of the appellants that as the contract had been repudiated by the respondents the arbitration clause also fell to the ground. This argument was negatived. The decision by itself does not bear on the question now in issue but the law with reference to anticipatory breach was thus stated:

"The first head of claim in the writ appears to be advanced on the view that the agreement is automatically terminated if one party repudiates it. That is not so ......If one party so acts or so expresses himself as to show that he does not moan to accept and discharge the obligations of a contract any further, the other party has an option as to the attitude he may take up. He may notwithstanding the so-called repudiation, insist on holding his co-contractor to the bargain and continue to tender due performance on his part. In that event the co-contractor has the opportunity of withdrawing from his false position and even if he does not, may escape ultimate liability because of some supervening event not due to his own fault which excuses or puts an end to further performance; a classic example of this is to be found in -- 'Avery v. Bowder', (1855) 5 El & Bl 714. Alternatively the other party may rescind the contract or (as it is sometimes expressed) "accept the repudiation" by so acting as to make plain that in view of the wrongful action of the party who has repudiated, he claims to treat the contract as at an end, in which case he can sue at once for damages ........But repudiation by one party standing alone does not terminate the contract. It takes two to end it, by repudiation, on the one side and acceptance of the repudiation on the other."

It is on these passages that the judgment under appeal rests. But it will be seen that the contract there was for a period of three years and the repudiation was long before the period had expired. Thus it is a case of a premature repudiation of a continuing contract and as already mentioned the principles of anticipatory breach can be and have been applied in such cases so long as there is still something remaining to be performed under the contract. The observations quoted above do not carry the matter further than the limits of the previous authorities which are preferred to in the judgment and do not apply to a case where the time for performance in its entirety has matured, and default has been made.

15. It is argued by Mr. N. Rajagopala Aiyangar that the rights of the parties must be determined solely with reference to the provisions of the Indian Contract Act; that Section 39 requires that when there is a repudiation or refusal to perform by one party, there must be acceptance of that refusal or repudiation by the other party and an election to put an end to the contract and that until that is done the contract is alive. But the language of Section 39, Contract Act, does not when carefully examined, lend any support to this contention. It runs as follows:

"When a party to a contract has refused to perform, or disabled himself from performing, his promise 'in its entirety the promise may put an end to the contract, unless he has signified by words or conduct his acquiescence 'in its continuance'. "

It is argued that the words "has refused to perform" the contract would take in not merely repudiation before the due date but also refusal after performance has become due. But these words must be read along with the words "in its entirely" and "the promisee may put an end to the contract unless he has signified his acquiescence in its continuance." These words are not apt to describe the position when a contract has been broken. They can properly apply only when there is something to be performed under the contract. That is made clear by the illustrations which refer to continuing contracts under which there are obligations remaining to be performed. That illustrations to a section are valuable guides in ascertaining the meaning of a section is well sttled. In -- 'Mahomed Syedol Ariffin v. Yeohooi Gark;', (1916) 2 AC 575 the Judicial Committee observed as follows:

"Illustrations appended to sections of a statute should be accepted if that can be done as being of relevance and value in construing the text; they should only be rejected as repugnant to the section as the last resort of construction. Vide--'Muralidhar Chatterjee v. International Film Co, Ltd.1, (1943) 2 Mad LJ 369 at p. 373 and Maxwell on Interpretation of Statutes, page 46 (9th Edn). In -- Sultanchand v. Schiller', 4 Cal 252 Garth C. J. explaining the scope of Section 39 observed that "this section only means to indicate what was the law in England and the law here before the Act was passed, namely, that where a party to a contract refuses altogether to perform or is disabled from performing his part of it the other side has a right to rescind it."

16. In --Sultan Ahmed v. Maksad Hussain', 22 Pat 305 it was held by a Bench of the Patna High Court consisting of Fazl Ali C. J. and Sinha J., that Section 39 applied only to executory contracts and not to executed contracts.

17. Considerable reliance was placed by the respondent on the decision of the Privy Council in -- Muralidhar Chatterjee v. International Film Co.', (1943) 2 Mad LJ 369. There the appellant had entered into a contract with the respondents for distributing films in various areas and had paid a sum of Es. 4000 as advance. On 1-12-1933 the appellant wrote a letter complaining that the defendants had committed several breaches of the contract and that he Would have no more business dealings with them. After some correspondence the respondents accepted the repudiation by letter dated 31-1-1937. Then the plaintiff filed an action for damages for breach of contract and also for the return of the advance. It was found that the defendants had not broken the contract and on that finding the claim for damage was dismissed. With reference to the claim for return of advance it was contended by the defendants that the plaintiff who was in default could not recover the same; while the plaintiff contended that as the contract had been rescinded by the respondents on 21-1-1937 he was entitled to its return under Section 64, Contract Act. The Privy Council accepted this contention and held that the plaintiff was entitled to recover the advance amount and that the right of the defendants was to make a cross claim for damages against the appellants for breach of contract. The decision as such has no bearing on the point now under discussion but it is argued that the case was dealt with as one falling under Section 39, Contract Act. that the repudiation by the appellant contained in his letter dated 1-12-1936 was held to give a right to the respondents to avoid the contract and the letter dated 31-1-1937 was treated as an acceptance of the repudiation by them. In the same manner, contends Mr. N. Rajagopala Aiyangar, the failure of the respondent to take delivery of the goods on 2-8-1943 gave the appellants only a right to avoid the contract and they not having done that, the contract stood. But the agreement which the Privy Council had to consider in -- 'Muralidhar chatterjee v. International Film Ltd.', (1943; 2 Mad L. J. 369 was a continuing contract involving mutual obligations and is similar to the one which came before the House of Lords in --'Heyman v. Darwins', (1942) A. C. 356. For the reasons already given, this decision cannot be taken as an authority for the contention that Section 39 applies even when there is a refusal to perform the contract after the time for performance has arrived.

On the other hand the decision in 'A. K. A. S. Jamal v. Moola Dawood Sons & Co;, 43 Cal 493 would clearly appear to negative such a contention. There- the contract was for the sale of certain shaves and the date fixed for performance was 30-12-1911. on that date the shares were tendered to the defendants but they did not accept them. Then there was some further correspondence between the parties and ultimately the seller sent a notice on 26-2-1912 claiming damages, and the suit was filed in March 1912. The shares were subsequently sold by the plaintiff at a profit. On a Question as to the quantum of damages the defendants claimed that the profits made by the seller subsequently by the sale of the shares should 20 in reduction of the claim. The Privy Council held that the contract was broken on 30-12-3911 when the plaintiffs tendered the shares and the defendants refused to accept them; "Upon the breach by the purchaser his contractual right to the shares fell to the ground. There arose a right to damages; that the damages were to be ascertained on the basis of the market rate on 30-12-1911 and that subsequent rise or fall in the value of the shares would neither reduce nor increase the damages payable by the purchaser. If the contention of the respondent that a mere refusal to take delivery is only a repudiation and that' it becomes a breach only when it is accepted by the seller is correct then the damages will have to be ascertained not as on the date when the purchaser refused to take delivery but on the later date when the seller chooses to accept it as a breach; and that such would be the logical result of his contention was conceded by the learned Advocate for the respondent. No authority was cited in support of that position. It is opposed to the decision in --Jamal v. Moola Dawood Sons & Co.', 43 Cal 493 where damages were fixed as on the date fixed for the performance, 30-12-1911 notwithstanding that there were negotiations going on between the parties and the final notice was given on 23-2-1912.

In -- 'Muthiah Manigarau v. Lakku Reddiar', 37 Mad 412 the defendant had agreed to deliver cotton on 12-6-1909 but failed to do so. The plaintiff sent a notice to the defendant calling upon him to deliver the goods in September and again in October 1909. The defendant took no notice of them. The plaintiff claimed damages for non-delivery of goods 011 the basis of the market rate in October 1909 but it was held that in the absence of an agreement between the parties extending the time for performance the contract was broken on the date fixed for the performance and that the plaintiff was entitled to damages only as on that date. This decision is directly against the respondent, the only difference between that and the present case being that there it was an action by the purchaser for damages for non-delivery whereas here, it is an action by the seller for damages for non-acceptance and it is not contended that on principle there is any difference between the two. This decision was followed in -- 'Anandram Mangturam v. Bholaram Tanumal, AIR 1946 Bom 1. There the contract was for the delivery of cloth before the end of February 1943. Only five bales were delivered and there was a failure to deliver the remaining 36 bales. Then there was correspondence between the parties and ultimately the plaintiff sent a notice on 28-7-1943 claiming damages. It was held that there having been no extension of time by agreement of parties, the contract was broken on 28-2-1943, that the damages should be ascertained as on that date and not on 28-7-1943 when the plaintiff claimed damages. This decision again is against the contentions of the respondent. We arc accordingly of opinion that a contract must be held to be broken when one of the parties thereto refuses to perform his part on the date fixed for the performance, and no question of keeping it alive thereafter arises.

18. It is finally contended that even on this view of the law there was no breach by the respondent because there, was no date fixed for performance in Ex. P. 1. It will be remembered that the agreement provided that the sellers were to deliver the goods on a date between the 1st and 31st of August at their option and they exercised their option under Ex. P. 3 and called upon the respondent to take delivery on 2-8-1943. It is argued that any election made by the sellers is not final, that they themselves could go back upon it and if so me contract was not at an end on 2-8-1943 and must be held to be subsisting on 30-8-1943. It is difficult to see how it would make a difference in principle whether the contract itself fixed a particular date as the date for performance or whether it gave the option to one of the parties to fix the date for the performance. When once the option is exercised and a date is fixed it is as if the contract itself had fixed that date as the date for performance. It is conceded that when an option is exercised by one party and is assented to by the other it becomes irrevocable and no reason has been shown why it should be otherwise when the assent to the exercise of the option 5s given at the time of the agreement and as part of it. If the contention of the respondent is to be accepted then the clause conferring an option on the seller to determine when the delivery should be made has no meaning and serves no purpose.

19. In -- 'Gath v. Lees', (1865) 159 E. R. 650: 3 H. & c. 553, the plaintiff agreed to sell cotton "To be delivered at the seller's option in August or September 1864". The plaintiff gave notice that the cotton was ready in August but he failed to deliver according to the notice and tendered the goods in September. The defendant declined to take delivery and contended that the seller having exercised the option the contract became one for delivery in August and that it was broken by failure to deliver the goods in that month. This plea was accepted and the action was dismissed. This decision is directly in favour of the appellants. But the respondent relies on the discussion of this case in -- 'Boorow-man v. Free', (1879) 4 Q. B. D. 500. In that case the plaintiff agreed to sell "Cargo of mixed American maize" as per bills of lading by date between the 15th of May and 30th of June 1877. A tender made of the cargo by the seller was rejected by the purchaser for reasons which were held to be valid. Then the seller again delivered another cargo within the period mentioned in the contract. This was rejected by the defendant on the ground that the plaintiff was not entitled to make a fresh tender. In an action for damages for non-acceptance the Court held that the plaintiff was entitled to tender the goods in accordance with the contract at any time within the period fixed and the fact that he made an ineffectual tender earlier did not prevent him from making a proper tender in time. The defendant appears to have argued that if the seller was bound by his election when he has the option to fix the time for delivery, as was held in -- 'Gath v. Lees', (1865) 159 E. B. 650. he was likewise bound by the tender once made and if that was not proper there was a breach of the contract. Referring to this case Bramwell L. J. remarked:

"The defendants have relied on -- 'Gath v. Lees', (1865) 159 E. R. 650, but the decision is distinguishable. In that case cotton was to be delivered at seller's option in August or September 1864, The seller elected to exercise the option in August and notice that it would be so exercised was accepted by the buyers. The seller had the right to exercise that option; but in this case the plaintiff exercised their option in an improper manner."

Brett L. J., however, observed

"-- 'Gath V. Lees', (1865) 159 E. B. 650 was not decided upon the doctrine of election, but upon the ground that the defendants, having acted upon the notice of the plaintiff, had altered their position for the worse."

But it is not clear from the report of the case in -- 'Gath v. Lees', (1865) 159 E. R. 650 that this is the basis of the decision. Mr. Mellish argued on behalf of the seller that

"the plaintiff having the whole of the two months for the delivery of the cotton, does the circumstance of his having given the defendant notice that he was ready to deliver it in August, and having failed to do so, absolve the defendant from his contract? (Martin B: Your construction gives no meaning to the words "at seller's option)". Lush on behalf of the purchaser contended "when the plaintiff exercised his option and gives notice that the cotton was ready for delivery on a certain date in August, the contract becomes a contract to deliver in August * (Martin B. -- The seller could not give two notices. When the notice was given the buyer was bound to be ready with the money which he might have had difficulty in getting; then is the seller to say 'I will not deliver the cotton according to my notice - but will put you off until next month")."

The headnote in the report that the plaintiff having exercised the option was bound to deliver the cotton in August appears to be correct. Cotton L. J. after observing that "if there had been an election within the terms of the contract it would have been binding on the defendants," distinguished -- 'Gath v. Lees', (1865) 159 E. R. 650 as a case where the other party had altered his position by acting on the notice of the plaintiff and entering into sub-contracts; and that it was an equitable defence. It was not suggested in -- 'Borrowman v. Free', (1879) 4 Q. B. D. 500, that if the notice had not been accepted by the purchaser in --'Gath v. Lees', (1865) 159 E. B. 650 the seller would not have been bound to give delivery in August or that he would have been entitled to tender the goods in September. There was no term giving an option for fixing a date for performance in -- 'Borrowman v. Free', (1879) 4 Q. B. D. 500 and no decision was given as to the effect of the exercise of such an option where there was such a term. In Leake on "Law of Contracts" this decision is cited as authority for the position that

"a 'tender of goods not answering the description is not a final breach of the contract as the seller may still tender other goods answering the contract before the time of completion has elapsed".

Writing on the effect of a term in a contract conferring on cither side an option to fix the date of performance, the same learned author writes as follows:

"An election once made is final and irrevocable, according to the maxim quod semel placuit in electionibus amplius displicere non potest."

The decision in -- 'Gath v. Lees', (1865) 159 E. R, 650 is one of the authorities cited in support of this proposition. In Benjamin on "Sale" the effect of these two decisions is thus stated:

"It is submitted that in Gath v. Lees', (1865) 159 E. R. 650 the seller, having duly made and communicated his choice, was bound by it. unless the buyer himself had dissented: and that in-- 'Borrowman v. Free', (18791 4 Q.B.D.500 the buyer's objection would have given the seller a 'locus paenitentiae' even if his first tender had been valid."

It may be added that in the present case we are not concerned with a promisor who having This passage of Martin, B. comes in the argument made by Cohen in reply to the argument of Lush -- Ed. made an ineffectual tender wants to make a proper lender but a promisor who having made a proper tender affirms it and bases his claim for damages on it. No authority has been cited that on these facts it is open to the promisee to insist that the tender is not final. The decision in -- 'Borrowman v. Free', (1879) 4 Q. B. D. 500, is no authority for it and the observations of Cotton L. J. quoted above are against it. The decision in -- 'Phulchand Fatechand v. Jugal Kishorc Gulab Singh, 8 Lah. 501 is similar to the one in -- 'Borrowman v. Free', (1879) 4 Q. B. D. 500.

20. The plaintiff had agreed to deliver the goods by 10-10-1918. On 3-10-1918 he wrote to the defendant to take delivery on certain conditions, which he had no right to impose and so the tender was not proper. On 10-10-1918 a proper and an unconditional tender was made but the defendant declined to accept it. It was contended on his behalf that the plaintiff had broken the contract on 3-10-1918 when he made an improper tender. This objection was overruled and it was held that the improper tender made on 30-10-1918 was no bar to the plaintiff making a proper tender in time. This decision again does not touch the point now under discussion.

21. In the result both the defences raised by the respondent, namely, that there was no pro per tender of goods on 2-8-1943 and that the contract was kept alive on 15-8-1943 must be overruled. The appellant will, therefore, be entitled to damages for breach of the contract. Ex. P. I, and the advance of Rs. 1100 paid will go in reduction of the same. The appeals are accordingly allowed and the decrees of the District Court of Mathurai in A. S. Nos. 294 and 295 of 1944 are restored with costs throughout. Advocate's fee one set both in the second appeals and in these appeals.


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