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Nannier and anr. Vs. N.M. Rayulu Iyer, Nagasami Iyer and Co. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Reported inAIR1926Mad778
AppellantNannier and anr.
RespondentN.M. Rayulu Iyer, Nagasami Iyer and Co.
Cases ReferredAbdul Rahiman Sahib & Co. v. Shaw Wallace
Excerpt:
- odgers, j.1. this is a suit for damages for breach of contract. the defendants contracted with the plaintiffs for the purchase of 25 bales of yarn of certain quality, orders for which had already been placed by the plaintiffs' bombay agents with the agent of peolad factory at bombay. the price was rs. 21-8-0 per box and each bale was to contain 20 boxes of 10 lbs each. the varthamanam letter, ex. a, is dated 27th august 1918. the plaintiffs allege that the defendants accepted delivery of 5 bales in accordance with the plaintiffs' arrival advice on the 2nd september 1918, but they afterwards did not pay for or take delivery of the remainder of the goods. the plaintiffs claim rs. 3,405-15-8 or the difference between the contract and the market prices prevailing at the dates of the breaches......
Judgment:

Odgers, J.

1. This is a suit for damages for breach of contract. The defendants contracted with the plaintiffs for the purchase of 25 bales of yarn of certain quality, orders for which had already been placed by the plaintiffs' Bombay agents with the agent of Peolad Factory at Bombay. The price was Rs. 21-8-0 per box and each bale was to contain 20 boxes of 10 lbs each. The Varthamanam letter, Ex. A, is dated 27th August 1918. The plaintiffs allege that the defendants accepted delivery of 5 bales in accordance with the plaintiffs' arrival advice on the 2nd September 1918, but they afterwards did not pay for or take delivery of the remainder of the goods. The plaintiffs claim Rs. 3,405-15-8 or the difference between the contract and the market prices prevailing at the dates of the breaches. The defendants in their written statement, rely on time as being of the essence of the contract, and they say also that the plaintiff's were not justified in selling the unaccepted goods against the defendants which they did on the 27th January 1919, there having been a breach on 13th October 1918. The written statement was filed on 12th April 1919. On the 11th October 1919 an additional written statement was put in consequence, it is said, of an examination caused to be made by the defendants of small quantity of the yarn contained in the bales accepted by them. In the additional written statement they plead that the goods offered by the plaintiff weighed only 8 1/2 lbs. as against 10, that the yarn was not No. 20, and that the dye was not fast. For these reasons they were tot bound to receive the bales.

2. The only issue that we are really concerned with in the case is Issue No. 5:

whether all or any of the plaintiffs' offers to perform the contract were made within a reasonable time in accordance with the terms of the contract and valid.

3. This issue inter alia was settled on the 3rd September 1919 and no additional or amended issue seems to have been thought necessary in consequence of the additional written statement of the defendants. This, as far as I can see, seems to have been completely neglected throughout. The Additional Subordinate Judge in fact notices that no supplementary written statement was filed by the defendants with reference to the alternative claim to damages which the plaintiffs were allowed to add to para. 10 of the plaint on 9th October 1920. The case on which the defendants went to trial throughout was that the plaintiffs should have delivered the 25 bales within a month. This has been found against by both the Courts and is of course, binding on us in second appeal. The Additional Subordinate Judge, however, held that the plaintiffs were bound to prove that the goods tendered and refused wore in accordance with the contract in respect of quality and that, therefore, this, not having been proved, all that the defendants could recover in consequence of the breach committed by the plaintiffs was the amount of their advance.

4. The learned District Judge, on the other hand, held that, on the authority of Braithwaite v. Foreign Hardwood Co. [1905] 2 K.B. 543, the Subordinate Judge was not justified in allowing the 5th issue to be taken and in giving judgment for the defendants upon it. The District Judge found that the defendants absolutely repudiated the contract by Ex. F and that by that repudiation they absolved the plaintiffs from proving any of the conditions precedent, e.g., as to quality of the goods. (His lordship examined the evidence as regards the repudiation of the contract and proceeded.) I think, therefore, the learned District Judge was right in holding that there was 'a repudiation of the contract by Ex. F, Now the question is: Was he right in refusing to permit the defendants to take advantage of any defects such as non-performance of the conditions precedent to the contract?

5. A long argument has been addressed to us on the principle of Braithwaite's case [1905] 2 K.B. 543 and as to the exact principle which was laid down in that case. The principle, as enunciated there, appears to be that, if the defendants repudiate the contract, they are not entitled to allege thereafter that the plaintiffs were not in a position to tender the goods according to the contract. It was urged in argument in the Court of appeal in that case, for the plaintiffs, that the defendants were really endeavouring to contend that a continuing repudiation of a contract has the effect of reviving conditions precedent, the performance of which they had already waived by their original repudiation. Braithwaite's case [1905] 2 K.B. 543 was perhaps complicated by the fact that the original repudiation was not accepted by the plaintiffs. This took place while the goods were still on the sea and in spite of it the plaintiffs tendered the goods after they arrived. Collins, M. R., said:

In my opinion that act (namely, the repudiation) of the defendants amounted in fact to a waiver by them of the performance by the plaintiff of the conditions precedent which would otherwise have been necessary to the enforcement by him of the contract which I am assuming he had elected to keep alive against the defendants notwithstanding their prior repudiation, and it is not competent for the defendants now to hark back and say that the plaintiff was not ready and willing to perform the conditions precedent devolving upon him, and that if they had known the facts they might have rejected the instalment when tendered to them. One answer to such a contention on the part of the defendants is that, tested by the old form of pleadings, it would have been a good replication by the plaintiff to aver that the defendants had waived performance by him of the conditions precedent by adhering to their original repudiation of the whole contract, and would not accept any instalment if tendered to. them. The defendants are not in a position now by reason of their after-acquirad knowledge, to set up a dafeuce which they previously elected not to make.

6. In so far as the additional written statement in this case is concerned, those words apply to the present case. We have heard a great deal of the effect of British and Beningtons Ltd. v. North Western Cacher Tea Co. [1923] A.C. 48, on the decision in Braiihwaite's case [1905] 2 K.B. 543. It is even said that this decision has displaced the authority of Braithwaite's case [1905] 2 K.B. 543. Lord Atkinson, who delivered the leading opinion of the House of Lords in that case was, think, of opinion that Braithwaite's case [1905] 2 K.B. 543 was perfectly good law. He cited in extenso, and apparently with approval the quotation which I have given above from the judgment of Collins, M.R. Lord Sumner, who was counsel for the defendants in Braithwaite's case [1905] 2 K.B. 543, said discussing the case that:

it was dealt with as one in which the buyers had explicitly waived all conditions precedent, while retaining a right to rely on them as terms, the breach of which would sound in damages that could be given in evidence in reduction of the claim.

7. Hence, I take it the consideration that a certain percentage of the cargo in Braithwaite's case [1905] 2 K.B. 543, was inferior to the contract quality. Further, remarks Lord Sumner:

It does not anywhere appear that, even if the first cargo might rightly have been rejected, the seller could not have found another exactly conforming with the contract, which he might have duly tendered and so have put himself right....I do not think that the case, as reported, lays it down that a buyer, who has repudiated a contract for a given reason which fails him, has, therefore, no other opportunity of defence either as to the whole or as to part, but must fail utterly...what he says (i.e., on the alleged repudiation) is of course very material upon the question whether he means to repudiate at all, and, if so, how far, and how much, and on the question in what respects, he waives the performance of conditions still performable in future or dispenses the opposite party from performing his own obligations any furthor ; but I do not see how the fact, that the buyers have wrongly said 'we treat this contract as being at an end, owing to your unreasonable delay in the performance of it' obliges them, when that reason fails, to pay in full, if, at the very time of this repudiation, the sellers had become wholly and finally disabled from performing essential terms of the contract altogether.

8. Braithwaite's case [1905] 2 K.B. 543 was further considered in Taylor v. Oakes, Roncoroni Co.[1922] 27 Com. Cas. 261, where Greer, J., in the original Court said:

If I have rightly interpreted the judgment of Gollins, M.R., the decision merely means that a buyer cannot justify his refusal of an offer to deliver goods under the contract by proving that if he had not refused, the goods, when delivered, would not have been in accordance with the' contract. It does not decide that if wrong goods or wrong documents of title are actually presented for acceptance to the buyer, and refused by him without the knowledge of their defects for an untenable reason, he, the buyer, is liable for damages for his justifiable refusal because he gave a wrong reason for it.

9. In the Court of appeal Bankes, L.J., said:

It seems to me, after the decision in Braithwait's case [1905] 2 K.B. 543, which binds this Court, that where there has been a repudiation by way of anticipatory breach, the contract is at an end, if the repudiation is accepted, and it is immaterial afterwards to consider what would have happened if there had been no repudiation, and the contract had continued and the plaintiff had been obliged to perform it.

10. Scrutton, L.J., was of opinion that by reason of Braithwaite's case [1905] 2 K.B. 543, the Court was precluded from considering the argument of the defendant to the effect that if he had not repudiated, the plaintiff would not have been able to deliver the goods according to the contract. The case has been elaborately examined by a Bench of this Court (Ramesam and Reilly, JJ.,) in a case which bears a strong similarity to this. In fact we are told that one of the parties is the same. The case is reported as Rayulu Iyer v. Kuppu Iyer A.I.R. 1925 Mad. 974. There the contract was 50 bales of yarn. The defendants took delivery of two consignments of five bales each and afterwards did nothing. They relied on the defence that the boxes were not of 10 lbs. weight but only 8 & 1/2 lbs. apparently on an examination by an expert of a small portion of the bales accepted. The Subordinate Judge in that case held, as in this, that the plaintiffs had not proved that the 40 bales answered to the description in the contract and found the issue against the plaintiffs. Braithwaite's case [1905] 2 K.B. 543 was there carefully examined in the judgment of Ramesam, J., and I agree with the learned Judge that the present ease is as a fortiori case and the difficulties in understanding Braithwaite's case [1905] 2 K.B. 543 if any need not affect it. But I should like to express my concurrence with him that Lord Sumner in British & Benington Ltd. v. North Western Cachar Tea Co. [1923] A. C. 48 applied the principle of Braithwaite's case [1905] 2 K.B. 543 and did not dissent from it. I think the present case is very like the case in Rayulu Iyer v. Kuppu Iyer A.I.R. 1925 Mad. 974, and we are told that the contracts are entirely similar, but the contract in Rayulu Iyer v. Kuppu Iyer A.I.R. 1925 Mad. 974, was of a higher value and consequently it took the form of a first appeal to this Court whereas this is a second appeal. Reilly, J., also delivered a judgment in that ease and was of opinion that as it had not been proved that the 40 bales in question were not of the contract description, and as even if they were not of that description plaintiffs had still time to supply others in their stead, had the quality been duly objected to by the defendants, the exact interpretation of Braithwaite's case [1905] 2 K.B. 543 was not of immediate importance. I. therefore, think on the consideration of this case that the learned District Judge was right in debarring the defendants from setting up any defence from their after-acquired knowledge, other than that as to time which they raised in the first instance and which they did not succeed in establishing.

11. The matter is really governed by Section 39 of the Contract Act. In the note to Section 120 of the Act, the learned authors of Pollock and Mulla's Contract Act point out that two courses are open to the promisee when the promisor repudiates. He may either treat the repudiation of the other party as a wrongful putting an end to the contract and may at once bring his action as on a breach of it, or:

he may treat the notice of intention as inoperative, and await the time when the contract is to be executed, and then hold the other party responsible for all the consequences of non-performance; but in the latter case he keeps the contract alive for the benefit of the other party as well as Ins own; he remains subject to all his own obligations and liabilities under it, and lenables the other party not only to complete the contract, if so advised, notwithstanding his previous repudiation of it, but also to take advantage of any supervening circumstance which would justify him in declining to complete it.

12. In the case in hand, on my construction of Exs. F and L, the repudiation contained in Ex. F was accepted in Ex. L subject to 24 hours grace. It is not suggested that during the 24 hours the defendants did anything in compliance with the contract.

13. The only other point raised is as to damages. It is not suggested that if the District Judge is right the basis of damages is wrong. The appellants say, however, that the District Judge was in error in taking the date of Ex. F, 13th January 1919, as the date when the contract was finally put an end to, and that 12th October 1918, the date of the first refusal to accept further bales, should be the date at which the market price is to be ascertained. In Rayulu Iyer v. Kuppu Iyer A.I.R. 1925 Mad. 974 the dates of breach were taken as the dates on which the plaintiffs gave notice that certain bales were ready for delivery. There, as has already been pointed out, after the acceptance of the first consignment the defendants did nothing. But here we have the letter, Ex. F, in which they absolutely repudiate the rest of the contract. The only question raised here is as to the market rate of the first consignment refused. I think, however, the learned Judge was justified in taking the date of Ex. F as the time when the contract was finally put an end to by the defendants and that he was right in assessing the damages as he did. The second appeal is, therefore, dismissed with costs.

Spencer, J.

14. I entirely agree. I am of opinion that the principle of Braithwaite's case [1905] 2 K.B. 543 is still good law, and that its authority has not been shaken by the decision of the House of Lords in British & Benington Ltd. v. North Western Cachar Tea Co. [1923] A. C. 48, as conceived by Devadoss, J., in Abdul Rahiman Sahib & Co. v. Shaw Wallace & Co. : AIR1925Mad292 . Later decisions of English Courts must be taken to have discussed and explained Braithwaite's case [1905] 2 K.B. 543 rather than dissented from what was therein propounded as the legal consequences of a repudiation of a contract.


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