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S.R. Muthuswami Ayyar and Sons Firm Vs. V.V.C. Ramalinga Mudaliar and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Reported inAIR1926Mad485; 94Ind.Cas.334
AppellantS.R. Muthuswami Ayyar and Sons Firm
RespondentV.V.C. Ramalinga Mudaliar and ors.
Excerpt:
.....have to go further and say that by reason of the plaintiff's default to deliver-to hanumantha ayyar the plaintiffs are disentitled to take the attitude that this contract must be looked at by itself, as they were indirectly responsible by their failure to fulfil the contract' with a third person for the default-the inevitable default-of the defendants. if i am right in my view that the defendants took the risk of all previous contracts being duly executed they took the risk of the breach of the plaintiffs' contracts, either with venkatachalapathi ayyar as buyer or with hanumantha ayyar as seller, as well as any other of the link. 6. although we listened to a very able and interesting argument from both the learned vakils, i do not myself think that it is really a matter of very..........have to go further and say that by reason of the plaintiff's default to deliver-to hanumantha ayyar the plaintiffs are disentitled to take the attitude that this contract must be looked at by itself, as they were indirectly responsible by their failure to fulfil the contract' with a third person for the default-the inevitable default-of the defendants.5. the point is not covered by any direct authority, but it appears to me that the law on the subject is clear. the defendants undertook to deliver bales to the plaintiffs and ran the risk of, a break of any one of the links of the chain which preceded their contract. in my opinion, it is a mere accident that one of those links-it may be the defaulting link-is the plaintiffs themselves. if i am right in my view that the defendants took.....
Judgment:

1. This appeal has given rise to a very interesting argument none the less so that both Mr. Alladi Krishnaswami Aiyar and Mr. S. Varadachari, who argued the appeal with great ability, agreed in saying that whatever the result of the case was to be, the judgment of the learned Judge, which was a sort of compromise between the case of the plaintiffs and the defendants, could not possibly stand.

2. The facts are very short: The contract relates to a batch of bales of yarn and the contract in question in this suit is one of 28th August, 1918, for the sale of 86 bales by the defendants as sellers and the plaintiffs as buyers. The plaintiffs paid on the contract an advance of Rs. 6,966 and their claim is for that money with interest.

3. The point that arises in the appeal is best shown by an account of the history of these bales. There was a sale in the first instance by the Madura Mills to Venkatachalapathy Ayyar & Sons, who sold them to the plaintiffs, who sold to Hanumantha Ayyar, who sold to P.S.N. Muruganathan Chettiar & Sons, who sold to Arumuga Mudaliar & Sons, who again sold to the defendants, who sold, in their turn to the plaintiffs, so that the plaintiffs occur twice in the chair. What happened, of course, was that the market was in a highly speculative state and that each one of these sales was made at a profit. But at the end the market price had fallen and the goods were not worth what the various buyers had paid for them. In these circumstances the plaintiffs brought the action in which they did not claim damages based on the difference between the contract and the market price, but agreed to treat the contract as a nullity on the return of the advance they had paid together with interest. The answer of the defendants is that the plaintiffs cannot sue them because they themselves were in default higher up in the chain of buyers and sellers. Plaintiffs did not take delivery from Venkatachalapathy Ayyar or give delivery to Hanumantha Ayyar, and all the contracts down to the goods reaching the defendants were settled in one way or another, the ultimate result being that the bales were never delivered to anybody because the ultimate buyer Venkatachalapathi Ayyar obtained a cancellation of his contract with the Madura Mills and the defendants themselves settled with Arumuga Mudaliar who got some money out of them. The short point put for the defendants is that as the plaintiffs themselves were in default higher up in the chain of buyers and sellers they cannot have any remedy against the defend ants.

4. The first t0hing that emerges is that this was in effect a contract for specific goods. The bales are described and their whole history is given. On that it would be possible for Mr. Varadachariar to argue that the contract on its true construction was a contract for specific goods conditional on their reaching the hands of the defendants. But that argument is of no assistance to him, because the position would then be that its impossibility of performance having arisen, though through no fault of the defendants, they could not under Indian law retain the moneys they had received from the plaintiffs by way of advance. I am putting it in favour o the defendants, because, it is quite-obvious, that it would be equally arguable to say that as the defendants had agreed to deliver certain bales of yarn they had put themselves in the position of warranting that the sellers in all the preceding links in the chain would fulfil their contract. In order to succeed in this suit, which 1 have already pointed out is not one for damages, the defendants have to go further and say that by reason of the plaintiff's default to deliver-to Hanumantha Ayyar the plaintiffs are disentitled to take the attitude that this contract must be looked at by itself, as they were indirectly responsible by their failure to fulfil the contract' with a third person for the default-the inevitable default-of the defendants.

5. The point is not covered by any direct authority, but it appears to me that the law on the subject is clear. The defendants undertook to deliver bales to the plaintiffs and ran the risk of, a break of any one of the links of the Chain which preceded their contract. In my opinion, it is a mere accident that one of those links-it may be the defaulting link-is the plaintiffs themselves. If I am right in my view that the defendants took the risk of all previous contracts being duly executed they took the risk of the breach of the plaintiffs' contracts, either with Venkatachalapathi Ayyar as buyer or with Hanumantha Ayyar as seller, as well as any other of the link. I may further point out that if the defendants were right in their contention, it would be difficult for them to justify the fact that having brought a suit against Arumuga Mudaliar & Sons they settled it on terms whereby they put money into their pockets for this breach. In my opinion, the defendants having contracted to deliver these bales to the plaintiffs they cannot be heard to say that the plaintiffs are out of Court because they had been in default at an earlier stage of the series and broken a contract not with the defendants but with somebody else.

6. Although we listened to a very able and interesting argument from both the learned vakils, I do not myself think that it is really a matter of very great difficulty, and it seems to me, for the purpose of this case that it may be treated as an accident that the plaintiffs' name recurs twice in the series of buyers and sellers because I think that for the purpose of adjusting the rights of parties each contract must be considered solely by itself.

7. The result is that the appeal will be allowed with costs throughout and the defendants ordered to return the deposit.

8. I see no justification for the plaintiff claiming interest at the rate of 12 per cent. and 1 think the justice of this case will be met if the defendants, who have had the plaintiff's money in their pocket all these years, be ordered to pay interest at the rate of 6 per cent. from the date of default which is the 2nd September. 1921, till do-day and further interest at the rate of 6 per centotill payment.

9. The other Appeal No. 99 of 1924, will in consequence be dismissed without costs.

Viswanatha Sastri, J.

10. I agree with my Lord.


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