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Mrs. M. Preston Vs. J.S. Humphreys - Court Judgment

LegalCrystal Citation
SubjectContract
CourtKolkata High Court
Decided On
Case NumberSuit No. 1834 of 1952
Judge
Reported inAIR1955Cal315
ActsContract Act, 1872 - Section 74
AppellantMrs. M. Preston
RespondentJ.S. Humphreys
Appellant AdvocateT.K. Ghose, Adv.
Respondent AdvocateSankar Ghosh, Adv.
DispositionSuit decreed
Cases ReferredDe Soysa v. De Pless Pol
Excerpt:
- .....30. it was argued by mr. s. ghose on behalf of the defendant that by granting of extension of the time for delivery this provision for compensation has been waived and so the plaintiff cannot ask for its enforcement. i do not think there is any force in this contention. the effect of this clause for compensation was that in case the defendant failed to complete the delivery ofthe plant by 6-3-1952, the plaintiff would accept the performance of the contract after the stipulated time subject to the payment of damages which are fixed. mere extension of time is only a waiver to the extent of substituting the extended time for the original time but this did not amount to a waiver of the provision for compensation. to deprive the plaintiff of this right of compensation it must be shown that.....
Judgment:

Bose, J.

1. This is a suit for recovery of Rs. 5500/- as damages for breach of a contract to deliver and instal a Soda Water plant and for refund of Rs. 3000/- paid as advance in respect of the price of the said plant and for other incidental reliefs.

2. The plaintiff's case is that on or about 11-12-1951, the plaintiff agreed to purchase from the defendant one aerated soda water plant on terms and conditions as set out below:

(1) The defendant would supply

(a) One reconditioned Niagara Carbonator by Barnett & Foster Ltd., London adapted for hand or power drive having a capacity of 70 dozen bottles per hour complete with pressure reducing value and two 40 lbs. capacity cylinders filled with gas and two electro motors.

(b) One Sankey two head back pressure filling machine with one operator.

(c) One hand power crowning machine on stand,

(d) One double headed Syruping machine with stainless steel syrup vessel.

(e) One bottle washing plant consisting of galvanised iron soaking tank electrically driven brushing machine and 12 jet rinsing machine.

(2) The price of the complete plant would be . Rs. 5800/- including delivery and installation at premises No. 7 Kyd Street, Calcutta. The price would include replacement of parts for 12 months from the date of installation.

(3) Rs. 3000/- would be paid in advance towardsthe price.

(4) Delivery and installation of the plant was to be completed within two weeks from 11-12-1951, (i.e., date of acceptance of the offer).

3. The defendant also guaranteed that the plant would be in perfect working order and condition and would produce high class soda water.

4. On 11-12-1951 the plaintiff paid Rs. 3000/-towards the price of the said plant in advance.

5. On 23-2-1952 the said agreement was modified as follows:

(a) The two electro motors were to be new.

(b) The galvanised iron tank of the washing machine was to be replaced by a new one.

(c) Delivery and installation of the plant was to be completed by 6-3-1952 and in the event of failure to give delivery on or before date,the defendant would pay compensation at the rate of Rs. 50/- per day after 6-3-1952.

6. It was further agreed that the plaintiff would arrange a mechanic to complete the fabrication of the connection and for the adjustment of the plant before it was put into use, under the supervision and in accordance with the instruction of the defendant. The plaintiff was ready and willing- to perform her part of the agreement but the defendant failed to carry out his obligations under the contract. The defendant delivered only some parts of the plant, which were scraps and not of merchantable quality and were useless for the installation and working of the plant. The plant is still incomplete and has not been installed and is not working at all. The plaintiff offered to return the parts supplied, but the defendant has refused to take them back. By reason of the breach of contract on the part of the defendant, the plaintiff has suffered damages which is assessed at Rs. 5500/-. The particulars of such damage are set out in para. 15 of the plaint. The plaintiff also claims refund of the advance of Rs. 3000/-.

7. In the written statement, the payment of Rs: 3000/- is admitted. It is stated further that the defendant was all along ready and willing to perform his part of the contract but the defendant was prevented from performing his part of the contract by the wrongful conduct of the plaintiff's landlord and the plaintiff's business partner Mr. Agabeg. It is alleged that time for performance was extended by mutual consent and the defendant performed his part of the contract within the extended time until he was hindered by the plaintiff not providing the electricity. It is admitted that the defendant did not supply the following parts;

(a) Two 40 lbs. Cylinders with gas.

(b) One brushing machine complete.

(c) One 1/4 H. P. Motor for brushing machine.

(d) Fittings for the plant and belting.

But it is stated that these articles were not necessary until the plant was installed, and electricity obtained. It is also stated that the value of the articles remaining undelivered would not exceed Rs. 500/-. It is further alleged that the plaintiff did not provide the mechanic and the plaintiff having accepted the goods cannot complain of their not being according to the contract. The defendant repudiates liability for damages and states that he is not liable to refund the sum of Rs. 3000/-.

8. The following issues' were raised at the hearing:

1. Did the defendant commit any breach of the contract as alleged in paras. 1, 2, 5 and 6 of the plaint?

2. Was the time for performance of the contract extended by mutual consent as alleged in para. 4 of the written statement?

3. Is the provision for payment of compensation at Rs. 50/- per day of a penal nature or enforceable in law as pleaded in para. 5 (d) of the plaint?

4. To what relief, if any, is the plaintiff entitled?

9. (His Lordship then discussed the oral evidence and the correspondence between the parties and concluded as follows;) It is thus clear from the correspondence and the oral evidence on record, that when the first agreement or contract was entered into in December, 1951, the parties thought and agreed that two weeks' time was reasonable and sufficient time for performing the contract including installation of the whole plant. The defendant undertook to complete the installation within that time.

10. It is however clear that for some reason or other not a single part of the machinery ordered by the plaintiff, was delivered till 23-2-1952.

11. Then the contract was modified on 23-2-1952 and fresh time for performance was stipulated. A further two weeks' time was agreed upon. So this period was according to the parties a reasonable time for performance. Thus the two letters of 4-12-1051 and 23-2-1952 show that a fortnight's time was considered as reasonable and sufficient time for performance of the contract.

12. But not a single part of the plant was delivered by 6-3-1952 which was the last date of the extended period. In fact three more weeks passed from 6-3-1952 and yet there was no sign of any part of the machinery. The evidence of the defendant that he supplied the bottom part of the Carbonator in the middle of March 1952 is, as I have shown already, obviously false in view of his letter of 10-4-1952 where he sets out the list of parts that he supplied on that day. Then on 2-4-1952, the defendant supplied only parts of the plant although the plaintiff insisted on the whole plant being delivered by that day. On 10th April, he sent few more parts. Then for another ten days no further steps were taken by the defendant. Mr. Agabeg called on the defendant on 21-4-1952 and used harsh words. The defendant took exception to this by his letter dated 21-4-1952. The plaintiff at once replied to this letter by her letter of 22-4-1952 and pointed out that certain specific articles had not till then been supplied and she also called upon the defendant to come and put the plant in order and supply the balance parts of the machine. No reply was received to this letter and no further steps were taken by the defendant. Naturally the plaintiff whose patience had been exhausted by this time, approached the solicitor and had the contract cancelled. Thus there can be no doubt that the defendant has committed breach of the contract and the plaintiff was justified in cancelling the contract.

13. It was suggested by the Counsel for the defendant that the plaintiff had at no time rejected the plant but had accepted it and so cannot complain of any breach of contract. There is no force in this suggestion. The defendant started sending parts of the machine in dribblets since the beginning of April 1952. There could be no questionof rejection until the plaintiff had seen the whole plant or machinery. But at no point of time, all the parts had been delivered. It is when the plaintiff despaired of getting the machine supplied and installed by the defendant that she cancelled the contract and asked- the defendant to take back the goods.

14. Mr. Ghose drew my attention to the case of -- 'Mackay v. Dick', (1880) 6 AC 251 (A), but this -case has no application to the facts of the case before me and so need not be dealt with. The plaintiff in my view has not been guilty of any laches nor has she failed in any way to perform her part of the contract, and so the principle enunciated in the decision of the House of Lords is of no assistance to the defendant.

15. The next question is what reliefs, the plaintiff is entitled to.

16. An incomplete Soda Water plant with some parts missing, was absolutely useless to the plaintiff. The contract was for the supply of a complete plant & for installation of the same & for putting the same in a working order. Admittedly certain parts, though they might be minor parts, and though the value thereof would not perhaps exceed Rs. 500/-, had not been supplied. The plaintiff was under no obligation to accept this incomplete plant. Moreover, it was not known unless the whole plant, was put in running order whether the parts actually supplied were at all fit for the purpose for which they were supplied. In the circumstances the consideration of the contract may be said to have wholly failed, and the plaintiff is entitled to refund of the advance of Rs. 3,000/-with interest thereon pending suit at the rate of 6 per cent, per annum.

17. The claim for damages of Rs. 2,000/- has not been pressed by the plaintiff and so this head of the claim need not be considered at all.

18. As to the claim for godown rent at the rate of Rs. 130/- per month from January to May 1952, it appears that this claim cannot be allowed in full. It is clear from the evidence of the plaintiff that she was paying the rent for the entire godown at the rate of Rs. 130/- per month. It is also clear from the evidence that even if the complete plant had been supplied and installed by the defendant, the same would not have occupied the entire space of the godown. Some parts of the godown would have been used as an office and for storing durwan's belongings as is being done now at the premises, where the plaintiff is now running a Soda Water plant purchased by her from some other dealer. Moreover the plaintiff had agreed to accept performance of the contract by 6-3-1952. The plaintiff has pleaded and proved that the contract of December 1951 was modified and substituted by another agreement on 23-2-1952 under which some new parts of the machines in place of the old parts would have to be supplied by the defendant and the time for performance was extended up to 6-3-1952. Having agreed definitely to accept performance within 6-3-1952, the plaintiff cannot properly make the defendant liable to pay the rent of the godown up to 6-3-1952. But after that she did not get any delivery till 1-4-1952.

On that date (1-4-1952) she insisted on delivery being given the next day and some parts were accordingly delivered on 2-4-1952. Some more parts were delivered on 10-4-1952. Then again no further delivery was made till 22-4-1952. The plaintiff then called upon the defendant by letter to deliver the balance of the parts. But as no steps were taken by the defendant to comply with the plaintiff's demand, the plaintiff cancelled the contract on 25-4-1952 and put it out of the power of the defendant to perform the contract any more. It has been suggested that time was extended till 24th April but there is no evidence of mutual consent. Plaintiff's admission on the point means that she expected delivery by the 24th April at the latest and so gave the defendant a final chance by her letter of 22-4-1952. In the circumstances, it appears to me that it will not be unreasonable to allow the plaintiff compensation under this head for the period 7-3-1952 to 25-4-1952 at the rate of Rs. 100/- per month (deducting Rs. 30/- per month out of Rs. 130/-, for the portion which would have been occupied by the office and the durwan's belongings). I therefore allow Rs. 160/- as damages under this head.

19. The next question is whether the plaintiff is entitled to claim compensation at the rate of Rs. 50/- per day as stipulated in the letter of the defendant dated 23-2-1952.

20. The relevant clause is as follows:

'The plant detailed in my letter dated 4-12-1951 is to be delivered at 7 Kyd Street, Calcutta, on or before 6-3-1952. In the event of my failure to do so for any reason except Riots, Civil Commotion, or my personal incapacitation due to serious illness or injury, I shall pay you as compensation for such delay the sum of Rs. 50/- per day or part of a day, delivery is effected after 6-3-1952.'

21. Mr. S. Ghose, the learned counsel for the defendant has submitted that this provision is of a penal nature or in other words the stipulation is a penalty and therefore all that the plaintiff can claim is reasonable compensation for the breach of contract (if there has been such breach) and not the sum mentioned in the clause in question. Mr. Ghose has further submitted that the onus is on the plaintiff to prove such reasonable compensation and in tbe absence of any proof the plaintiff is not entitled to any damage under this head.

22. Now the plaintiff has not given any evidence of damage under this head. Although she is admittedly running a Soda Water plant now, no evidence has been adduced to show what profit she is making per day and since when. No books of account have been produced, by the plaintiff. No other person who is in this line of business, has been called to show what profits a person normally makes by running such a plant. In the case of --'Bhai Panna Singh v. Arjun Singh Bhajan Singh', AIR 1929 PC 179 (B) Lord Atkin in delivering the judgment of the Judicial Committee observed as follows:

The effect of the Contract Act of 1872, Section 74, is to disentitle the plaintiffs to recover simpliciter, the sum of Rs. 10,000/- whether as penalty or liquidated damages. The plaintiffs must prove the damages they have suffered.'

23. Mr. S. Ghose, relies on this passage and contends that even if a sum is named in a contract as the sum payable in case of breach, or the contract contains any other stipulation by way of penalty, the party complaining of the breach cannot get any damage unless he proves actual loss or damage.

24. Ameer AU J. in the case of -- 'Mahadeo Prasad v. Siemens (India) Ltd. : AIR1934Cal285 has construed this passage in the Privy Council judgment (p. 286) and has also interpreted Section 74, Contract Act. The learned Judge came to the conclusion having regard to the words, 'Whether or not actual damage or loss is proved to have been caused thereby', that, if there is no evidence showing that the figure named is unreasonable or excessive, the contract made by the parties estimating their damages is in itself evidence and if there is no other evidence of damage, then in certain cases, this evidence alone will be considered sufficient. The learned Judge however made it clear that the sum named is not conclusive under all circumstances and in all cases. Ameer Ali J. thought that it was some proof. (See also -- 'Brahmaputra Tea Co., Ltd. v. Scarth', 11 Cal 545 at pp. 550-551 (D) per McDonell and Mcpherson JJ.)

This judgment of Ameer Ali J. has not been approved of by the Lahore High Court (See --'Mool Chand Beharilal v. S. D. Chand & Co.', AIR 1947 Lah 112 at p. 115, paras 18-19 (E) of the judgment). But it appears to me that the Lahore High Court has completely overlooked the words 'whether or not actual damage or loss is proved' as used in Section 74, Contract Act. In my view the judgment of Ameer Ali J. gives due stress on all the words of Section 74 and brings out its correct meaning, and I respectfully follow that decision. What Section 74, Contract Act means is that a party cannot get the full amount mentioned in the Contract as a matter of absolute right or as a matter of course. But if the party proves that he has suffered damage to the extent of the full amount or that the Court considers, even without any proof, that the full amount is a reasonable compensation which can be awarded under the circumstances, the Court can award the full amount. One thing is however certain, that the party is entitled to get some amount, not exceeding the sum named, which the Court considers as reasonable compensation, whether any actual loss or damage is proved to have been suffered by him or not.

25. It is true that in the case before me the defendant has given evidence to the effect that the clause for payment of Rs. 50/- per day is a penal clause and it was not a genuine pre-estimate of damages. He has also stated that a plant does not earn any profit for the first six months and after that period a plant like the one contracted for could earn profit from Rs. 5/- per day to Rs. 200/- per day at the highest. I have already indicated that I am unable to accept this testimony of the defendant as wholly true. The general impression made by the defendant on me has been that he cannot be relied on as a truthful witness. Moreover he had agreed to this figure of Rs. 50/- per day in his letter of 23-2-1952. It is not suggested that he was forced to agree to this figure at the suggestion of the plaintiff or her business partners though no doubt it is suggested that Mr. Agabeg suggested that some compensation should be paid. The defendant is a man of great experience in this line of business. He has been dealing in Sode Water plants for a long time. He was for a long time the factory manager under Andrew Yule & Co. in a factory which he describes as the largest in Asia. I have therefore no doubt that the defendant had agreed to and put in the figure of Rs. 50/- per day as he thought that this was a reasonable amount and a genuine pre-estimate of damages. I have dealt with this aspect in some detail in an earlier part of this judgment.

26. The learned counsel, for the plaintiff has invited me to hold that the provision for payment of Rs. 50/- per day is not a stipulation by way of penalty. It appears to me that in view of the decision of -- 'Law v. Local Board of Redditch', (1892) 1 QB 127 (F) it should be held that the sum of Rs. 50/- per day as mentioned in the letter of 23-2-1952 is liquidated damages and not penalty. The sum was payable on a single event only viz., non-completion of the delivery of the plant by 6-3-1952, and so according to the canon of construction laid down by Lord Esher M. R., Lopes & Kay L. JJ., the compensation payable was liquidated damages. (See also the case of -- 'Cellulose Acetate Silk Co. Ltd. v. Widnes Foundry (1925) Ltd.', (1933) AC 20 (G).

27. This question, however, whether the provision for payment of compensation at Rs. 50/- per day is a stipulation by way of penalty or liquidated damages is not of importance in view of the provision of Section 74, Contract Act.

28. As there is no reliable evidence that the sum named is an unreasonable or excessive one, the plaintiff would, in view of the interpretation of Section 74 as given by the Calcutta High Court, be entitled to get compensation at the rate of Rs. 50/-per day. But the defendant has stated the sum is an unreasonable one and this evidence stands uncontradicted and as it may be true to a certain extent, I think that if compensation is allowed under this head at Rs. 25/- per day, it will not be an unreasonable compensation. So in order that there may not be any injustice done to the defendant, I propose to award compensation at the rate of Rs. 25/- per day.

29. Now the further question that presents itself is, for what period is the plaintiff entitled to get this Rs. 25/- per day? Now, it is clear that on 25-4-1952, the plaintiff cancelled the contract and put it out of the power of the defendant to fulfil his obligations under the contract. So the plaintiff is entitled to Rs. 25/- per day up to 25-4-1952. Therefore for the period 7-3-1952 to 25-4-1952 the plaintiff is entitled to Rs. 1250/- on this head of claim (See -- 'De Soysa v. De Pless Pol', (1912) AC 194 at pp. 201 (bot) to 203 (H)).

30. It was argued by Mr. S. Ghose on behalf of the defendant that by granting of extension of the time for delivery this provision for compensation has been waived and so the plaintiff cannot ask for its enforcement. I do not think there is any force in this contention. The effect of this clause for compensation was that in case the defendant failed to complete the delivery ofthe plant by 6-3-1952, the plaintiff would accept the performance of the contract after the stipulated time subject to the payment of damages which are fixed. Mere extension of time is only a waiver to the extent of substituting the extended time for the original time but this did not amount to a waiver of the provision for compensation. To deprive the plaintiff of this right of compensation it must be shown that there, has been express waiver of this particular provision by the plaintiff. There is no evidence of such waiver.

31. There will therefore be a decree in favour of the plaintiff for Rs. 4410/- with interim interest (i.e., pending suit) on the sum of Rs. 3000/- at 6 per cent, per annum. The defendant will pay to the plaintiff the costs of the suit on Scale No. 2 including reserved costs, if any. There will be interest on decree at 6 per cent. The plaintiff will be entitled to be paid the sum of Rs. 3000/-lying in deposit with the defendant's solicitor and she is entitled to appropriate the same in pro tanto satisfaction of her claim. The defendant will be at libetry to remove at his own cost the goods supplied by him and lying at 7 Kyd Street, Calcutta.


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