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G.C. Sett and anr. Vs. Madhoram Hurdeodass - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported in33Ind.Cas.540
AppellantG.C. Sett and anr.
RespondentMadhoram Hurdeodass
Cases ReferredAtkinson v. Ritchie
Excerpt:
contract - war, effect of--parties to contract for sale of goods on credit to be shipped, rights and obligations of--contract, breach of--damages. - .....plaintiff firm sues to recover rs. 3,5653-14-6 as damages for breach on the part of the defendant firm of a contract, dated 2nd february 1914, by which they agreed to sell 150 tons basic steel bars to be shipped in june, july and august 1914 in equal proportions. the plaintiffs allege that in pursuance of the said agreement they paid for and took delivery of the june shipment, and they received invoices in respect of the july shipment of the said goods on the 2nd october 1914, the goods actually arriving in calcutta on or about the 2nd january 1915, that thereupon they offered to pay for and take delivery of the july shipment, but the defendant firm put them off under various pretexts, the time for delivery of the said goods was extended, according to the plaintiffs, by mutual consent.....
Judgment:

Chaudhuri, J.

1. The plaintiff firm sues to recover Rs. 3,5653-14-6 as damages for breach on the part of the defendant firm of a contract, dated 2nd February 1914, by which they agreed to sell 150 tons basic steel bars to be shipped in June, July and August 1914 in equal proportions. The plaintiffs allege that in pursuance of the said agreement they paid for and took delivery of the June shipment, and they received invoices in respect of the July shipment of the said goods on the 2nd October 1914, the goods actually arriving in Calcutta on or about the 2nd January 1915, that thereupon they offered to pay for and take delivery of the July shipment, but the defendant firm put them off under various pretexts, The time for delivery of the said goods was extended, according to the plaintiffs, by mutual consent till the 12th February 1915. They allege that they made a tender on the 19th January 1915 which was not accepted.

2. The defendants in their original written statement admitted the agreement, but denied that the plaintiff firm paid for and took delivery of the June shipment, alleging that the defendant firm had to institute a suit to recover the price of the said goods in which they obtained a decree on the 26th January 1915. They allege that copies, not the original, invoices of the July shipment were sent to the plaintiffs, and that on arrival of the said goods on the 2nd January, they called upon the plaintiff firm to take delivery in accordance with the terms of the contract of the 2nd February 1914, but the plaintiffs failed and neglected to take delivery in terms of the contract. They denied that any time had been extended for delivery and submitted that the defendant firm had a lien on the goods of July shipment for the price of the goods of the two shipments, namely, of June and July, inasmuch as the plaintiff firm had committed a breach of the contract by not paying the price thereof. They denied that the plaintiffs were ready and willing, and alleged that the tender was not valid or proper. They further alleged that without prejudice to their rights they, on or about the 27th January 1915, at the request of the plaintiff firm, offered to deliver the goods of the July shipment on receipt of the price, godown rent and charges, but the plaintiff firm refused to take delivery of the goods on those terms.

3. When the case came on to be heard, Counsel for the defendants raised various issues which were not covered by the original written statement. I thereupon directed them to put in a further written statement which was filed on the 30th November 1915. The points raised in this written statement were: (1) that the goods were shipped from Antwerp on or about the 2nd July 1914 per Section s. 'Steinturm'. On the outbreak of the war the said steamer which was on the high seas became liable to seizure, and was in fact seized and detained by His Majesty's Government at Colombo and was subsequently condemned with all the cargo on board by the Colombo Prize Court, and that accordingly the contract with the plaintiffs became impossible of performance.

(2) That alternatively should this Court come to a contrary conclusion, the charges specified in a bill of the defendants alleged to have been sent to the plaintiffs on the 23rd February 1915 were proper charges, but inasmuch as the plaintiffs refused to pay same, they could not get delivery of the goods. They further submitted that on the outbreak of the war the contract became unlawful and the defendant firm was discharged from all liability thereunder. They also denied that the market rate was correctly stated in the plaint.

4. Having regard to the contention so raised by the defendant firm, the plaintiffs asked for leave to amend the plaint and submitted in the alternative that they were entitled to the reliefs claimed in this suit on the footing that both the parties treated the said contract as subsisting on the arrival of the said goods in Calcutta, and that the defendant firm was estopped by its conduct, as evidenced by the correspondence between the parties, from relying upon any alleged discharge of the said contract.

5. The defendants have denied that they ever treated the contract as subsisting on the arrival of the said goods.

6. The contract in this suit is contained in a letter dated 2nd February 1914. It is for 150 tons basic steel bars with 'usual ten per cent, second class extras at 5-7-6 per ton c. f. i., that is, free Hooghly shipment in three monthly lots commencing June 1914. Delivery to be completed within three days from the date of the landing of the goods. Terms 45 days' credit from the date of delivery of the goods, failing which due date will be calculated from the due date of the delivery, that is, three days from the landing of the said goods.' The sale purported to be made on basis of 'the existing terms and conditions in the contract for this class of goods as are current in the market.'

7. The undisputed facts of the case are as follows:

8. That the plaintiffs failed to pay the price of the June shipment and a suit had to be instituted against them which was decreed on the 26th January 1915: that copies of three invoices were sent to the plaintiffs by the defendant firm of the goods per Sections 'Steinturm'. In or about the end of September 1914 the defendant firm asked the plaintiffs to keep themselves in readiness to pay for the goods in cash against shipping documents on arrival of the steamer: see their letter dated 24/30 September 1915. Apparently there was a mistake in the invoices as regards the weight, and the plaintiffs called upon the defendants to correct it, but the defendants stated that they were not liable to make any corrections. On the 2nd January 1914, the defendant firm intimated to the plaintiffs that the vessel had arrived in port and requested them to take delivery of the goods by paying for them as early as possible. The cause of late arrival was the seizure of the steamer at Colombo.

9. By an order dated 25th August 1914, on the application of the Crown, the steamer was handed over by the Colombo Prize Court to the custody of the principal Collector of Customs, and the following undertaking and decree was entered on record, namely, The Solicitor-General on behalf of the Crown undertakes that the Crown will restore the ship to its present place, whenever it is called upon to do so by this Court, if the Government of Ceylon on behalf of the Crown are allowed to take charge of the ship, and moves that the Crown be allowed to take charge of the ship on these terms. It is ordered and decreed that the application be allowed and that the Marshal be directed to let the Government of Ceylon have possession of the ship, after the cargo, goods wares and merchandize have been warehoused. It is further directed that the Marshall shall require from any person taking over the ship on behalf of the Government an authority to do so, signed by His Excellency the Governor or by the Colonial Secretary.' The President of the Prize Court appears to have made an order on 19th November 1914 that inasmuch as the steamer contained general cargo sent to Madras, Calcutta and Chittagong it was for the interest of all persons concerned that the cargo entitled to release, which was consigned to Calcutta, should be delivered at Calcutta. It was further ordered that 'In the event of the Crown in the exercise of its power conveying the said cargo to Calcutta, the Crown was authorised to re cover against all cargo released and delivered certain expenses, namely:

In respect of freight Rs. 15, 50 per ton weight or measure.

In respect of agency charges, such reasonable expenses as may be incurred.

10. And that the steamer was not to depart from Colombo until after the expiration of 3 weeks from the date of that order. On the 2nd September 1914 the Prize Court on hearing the Attorney-General made the following orders that the Marshall be authorised for the purpose of warehousing the cargo to put the cargo in the hands of the Crown, the Attorney-General undertaking on behalf of the Crown that in the event of the cargo or any part; of it being removed out of the jurisdiction of this Court, it was to be brought back within the jurisdiction upon the order of the Court.' What happened was that Messrs; Graham & Co., merchants of Calcutta were employed as agents on behalf of the Crown to give delivery of the goods consigned to Calcutta to the consignees. Graham & Co., thereupon, communicated with the defendant firm in respect of the July shipment of the goods which had come out in that steamer, and these goods arrived, as stated above, on the 2nd January. The defendant firm had to pay certain charges for freight and commission to Messrs. Graham & Co, for these goods. The defendants allege that by the said letter dated 23rd February 1915, they gave particulars of the cost and charges incurred by them in respect of the consignment including therein the charges occasioned by the seizure and release, that prior to that date and after the arrival of the goods in Calcutta some correspondence ensued. The defendant firm wrote to the plaintiffs on the 4th January 1915 that unless the plaintiff firm immediately sent the price of the goods of the June shipment which had already been delivered to them as also the price of the goods per Sections 'Steinturm', they would be compelled to re sell the goods on the plaintiffs' account. The plaintiffs wrote on the same date that they were prepared to pay for and take delivery of all the goods with the exception of 22 pieces of basic steel bars, the weight of which had been incorrectly stated in the invoice. They said that if they (defendants) failed to make over the bill of lading for the goods they would not be liable for any wharf rent, if incurred. On the 8th January the plaintiffs said that they were prepared to pay the full price of the three lots which had come per Sections 'Steinturm' on the defendant firm handing over to them the bills of lading and other documents. They offered to pay the necessary charges for obtaining delivery of the goods from the jetties, and asked for information as to the exact amount payable by them. There was no reply to this letter. On the 19th January they offered Rs. 4,370 as being the price of the goods including the usual charges. On the 27th January Charu Chandra Bose, Attorney for the defendants, wrote to the plaintiff's Attorneys the following: 'As arranged my clients are now ready to deliver the goods demanded by you on receipt of the price, godown rent and charges.' It will be noticed, this letter was written the day after the decree above referred to. It was a consent decree, and the defendants say that the terms arranged between the parties were that the goods of the July shipment would be taken delivery of by the plaintiffs after payment of all dues, that Nepal Chand on behalf of the plaintiffs 'agreed to pay all cost in respect of the July shipment, freight, etc., that is to say, the extra freight and other charges incurred in respect of the consignment.' This arrangement is entirely denied by the plaintiffs. No reply was sent by the plaintiffs to that letter until the 4th February 1915, when they said that nothing had been arranged as suggested by the defendants, They said that the defendants were not entitled to godown rent, and refused to pay same. They complained that the defendants had not specified what charges they were claiming, and expressed their readiness and willingness to pay the price of the goods and the duty, landing and proper charges in respect thereof as was usual in the case of deliveries ex-jetty. On the 4th February the defendants' Attorney said that if the goods were not taken delivery of within three days, the defendants would re-sell on the, plaintiffs' account. Apparently these two letters crossed each other. On the 9th February the defendant firm said that the price and charges to be paid were mentioned in their bills sent to the plaintiffs. Over and above that, the plaintiffs would have to pay godown rent and cartage for the removal of the goods, and unless the plaintiffs took delivery of the goods within three days, the defendants would re-sell the goods on the plaintiffs' account and risk. On the 12th February the plaintiffs denied that any bills had been submitted to them for payment and refused to pay godown rent and other incidental charges. Nothing further was done by the plaintiffs until the 8th March, when their Attorneys wrote a letter to the defendants' Attorney asking for a statement of the charges the defendants claimed in respect of the said goods, and if they found the same reasonable and proper, they would ask the plaintiffs to take delivery. On the 10th March they were informed that the defendants had sold the goods to a third person.

11. It is quite clear from the correspondence that the defendants treated the contract as subsisting. They had called upon the plaintiffs to take delivery according to the terms of the contract and they threatened to re-sell the goods on the plaintiffs' account.

12. In the first written statement also nothing was said about the contract having been put an end to by seizure of the steamer at Colombo. The case now is that by the seizure of the steamer at Colombo the contract was put an end to and the voyage terminated there, and the correspondence after the arrival of the goods must be treated as merely an offer on the part of the defendant firm to deliver on certain terms, but inasmuch as the plaintiff's did not agree to take delivery on those terms, the plaintiffs were not entitled to recover anything in this suit. To determine the points so raised, it is necessary to consider the following points:

13. None of the contracting parties in this case is an alien enemy, they may be taken to have been British Subjects. The contract was concluded before the declaration of war. The goods were partly of Belgian manufacture and partly German. They were purchased from a friendly trading company (the Beige-Asiatic Trading Company) who shipped the goods at a friendly port (Antwerp) before the declaration of war, namely, on the 2nd July 1914. The goods such as were of German origin had become the property of a friendly firm at the time of shipment. The steamer was German. It was seized at Colombo by His Majesty's Government. On the 25th August 1914 the Ceylon Admiralty Court directed the Marshal to let the Government of Ceylon have possession of the ship 'after the cargo, wares and merchandise had been warehoused.' This was a seizure of the ship, apparently not of the goods.

14. On the application of the Crown, the Ceylon Court by its order dated the 2nd September 1914 authorised the Marshal to make arrangements for warehousing the cargo on board that steamer at Calcutta. Then by its order dated 19th November 1914 it authorised delivery at Calcutta 'of the cargo entitled to release' and which was consigned to Calcutta. Messrs. Graham & Co. acted as agents of the Ceylon Government and gave delivery of the goods to the consignees. The goods arrived on or about the 2nd January 1915 and were actually delivered to the defendant firm about the 11th of January 1915.

15. This is an executory contract which was concluded before the outbreak of war. Such contracts even with an alien enemy are merely suspended during the war as regards the right to performance and right of action, and are avoided or dissolved only in certain circumstances, among them, if its performance necessitates intercourse with the enemy during the war Esposito v. Bowden (1857) 7 El. & Bl. 763 : 27 L.J.Q. B 17 : 3 Jur. (N.S.) 1209 : 5 W.R. 732 : 119 E.R. 143 : 110 R.R. 816. It is argued in this case that inasmuch as the goods were on board a German steamer, the performance of the contract necessitated intercourse with the enemy, which was prohibited by the Enemy Proclamation No. 2 of the Crown dated 9th September 1914, Clause (5), Sub-clause (7), which runs thus: 'nor directly or indirectly to supply to or for the use or benefit of, or obtain from, an enemy country or an enemy any goods, wares or merchandise, nor directly or indirectly to supply to or for the use or benefit of, or obtain from, any personally goods, wares or merchandise for or by way of transmission to or from an enemy country or an enemy, nor directly or indirectly to trade in or carry any goods, wares or merchandise destined for or coming from an enemy country or an enemy'. This clause was considered by this Court in the case of Indra Chand v. Emperor 33 Ind. Cas. 289 : 19 C.W.N. 1239 : 42 C. 1094. This clause divides itself into three parts. Mr. Justice Greaves summarised the clause as follows: Clause 5(7) divides itself into three parts and forbids (1) the supply of goods, etc., to or for the use of the enemy or the obtaining of goods, etc., from the enemy, (2) the supply of goods by way of transmission to or from the enemy; (3) trading in or carrying of goods destined for or coming from the enemy and the direct or indirect carrying out of any of the acts above mentioned is prohibited by the sub-clause.

16. These goods were not coming from or going to any alien country. They were being carried in an alien ship and that ship was seized at Colombo. After seizure the goods were recognised as being entitled to release and were released. This was, I believe, due to the decision of this Court in In re Cargo ex Sections Rappenfels 30 Ind. Cas. 174 : 42 C. 334. Section 56 of the Contract Act deals first with an agreement impossible in itself, which this is not, and next with contracts which become impossible or unlawful after they are made. The contract was to deliver at Calcutta, Such delivery in Calcutta of goods recognised as being entitled to release was not unlawful and certainly not impossible. It is clear law that a temporary embargo, such as seems to have been the case here, does not invalidate a contract. No doubt a promise is excused by a supervening impossibility caused by act of law Atkinson v. Ritchie 10 East 530 at p. 534 : 10 R.R. 372 : 103 E.R. 877 but a temporary interruption of the voyage followed by a release of the goods as being entitled to release does not, in my view, avoid the contract. No authority has been cited to me to the contrary. The goods were in the custody of the Crown at the time of the above proclamation. The voyage was interrupted but was continued by the Crown and the goods were delivered by the agents of the Crown at Calcutta to the consignees, and I do not think it is right to hold that the contract was at an end at the time the ship was seized. This again is an unconditional contract and as a general rule such contracts are not dissolved by their performance becoming impossible owing to war. Here in fact the performance was possible and the plaintiffs were invited by the defendant firm to take delivery on the arrival of the vessel at Calcutta, see the defendants' letter dated the 2nd January 1915. The defendants in then letter of the 4th January threatened to re-sell the goods on the plaintiffs' account if they did not pay for them. The plaintiffs tendered the price of these goods including the usual charges on the 19th January 1915, which the defendants did not accept. Then comes the alleged agreement on or about the 20th January 1915 at the tin;e of the consent decree. The defendants' gomashta Ramdas Groenka is the only witness who spoke about it. He gave a confused account as to how and where the agreement was arrived at. The Court minutes of the 26th January relating to the consent decree do not show that the terms had been arrived at beforehand. There appears to have been a discussion with regard to the terms at that time. Groenka is not corroborated by any one. The letter of the defendants dated the 27th January suggesting an arrangement loses much of its value, having regard to the denial, although tardy, of the plaintiffs on the 4th February. I cannot, therefore, hold that the agreement has been established.

17. Apart from the letter dated 23rd February 1915, Exhibit 10, there is nothing in the correspondence to show that the items of the charges claimed by the defendants due to the seizure and release were ever specified. Defendants' letter of the 9th February mentions a bill having been sent. The plaintiffs deny that they ever received such a bill. The evidence of the delivery of that bill is not satisfactory, but in all likelihood it was sent. It appears that the defendants sent similar letters to other buyers, some of whom, it was stated, paid under protest. The plaintiffs submit that they were entitled to get the bills of lading on payment of the amount of the draft according to the invoice, and if they could not get delivery of the goods without paying the extra freight and charges to Messrs. Graham & Co., they would have paid the amount to them. It seems to me that neither party was quite clear in their minds as to who was liable for the extra freight and charges in respect of these goods on account of the seizure and release, and in consequence the correspondence is not at all clear about the matter. Both parties apparently were fencing over that question. Panna Lal Seal, one of the plaintiffs, stated in the witness-box that he was not prepared to pay unconditionally the cost incurred between Colombo and Calcutta, that he was prepared to pay if he got the charges, i.e., if he realised them from the Insurance Company--the Company with whom the goods were insured. If he could not so realise the loss would be his.' He said: 'I want the right to recover from the Insurance Company. If I cannot get it from that Company, then I shall sue the defendants. I shall pay the charges, if I am entitled in law to recover the charges. I shall recover it from the party from whom I am so entitled.... If it is properly payable by me I am prepared to pay. I do not know whether it is properly payable by me, as no demand has been made from me, so I have made no offer up to now. If demand was made I would have consulted my lawyers.' That evidence makes it quite clear to me that the plaintiffs had not made up their minds as to whether they were to pay these charges or not, but it Seems to me that the defendants were not justified in keeping back the bills of lading when they were offered the amount Covered by the invoices and usual charges of landing by the plaintiffs. What seems to have actuated the defendants was, firstly, that the plaintiffs had failed to pay for the June consignment, and nextly, the market having risen owing to the war, they were not quite sure as to whether they were justified in asking for the extra charges.

18. Having regard to the fact that the contract was c. i. f., I think that the plaintiffs were entitled to receive the documents of title to enable them to obtain delivery of the goods. If they were not prepared to pay the amount claimed by Graham & Co. for the extra charges, they would not have got the goods, but I do not think the defendants were justified in refusing to give delivery of the documents. They need not have taken delivery of the goods but may have left the plaintiffs to take their own course with Messrs. Graham & Co. There was no duty cast upon them to take delivery of the goods. They need only have done so on failure of the plaintiffs. Taking everything into consideration, I hold that the plaintiffs were ready and willing to take delivery and the defendants have failed to perform their part of the agreement which subsisted inspite of the seizure at Colombo. The only question, therefore, left remaining is the market rate, The plaintiffs' evidence is mainly that of retail dealers and, it is well-known that retail prices are higher than whole-sale rates. The defendants by their letter of the 9th February gave three days' further time, and, therefore, the time may be taken as having been extended up to the 12th February and the plaintiffs have given evidence of the market rate about that date. The defendants, on the other hand, have only proved a sale on the 31st January at Rs. 5-10 per cwt. of some flat iron. They have given no other evidence. Plaintiffs' Counsel submits that their evidence shows that an average rate of Rs. 8-8 per cwt. has been made out. The price, therefore, of the goods would be about Rs. 9,025-6. As against that, the contract price including jetty Rs. 53-13-9 and customs Rs. 58-2 was Rs. 4,408-4. Deducting therefrom the discount for 45 days, Rs. 42, brings the figure down to Rs. 4,366-4-3/4. The balance thus shown is Rs. 4,659-2 but they are claiming Rs. 3,563-14-6 in this suit. Having regard to the fact that the market rate as proved is somewhat unsatisfactory and as the defendants actually paid the extra freight and charges, I think it would be fair to allow the plaintiffs a decree for Rs. 2,500 only with costs on scale No. 2 including reserve costs.


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