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1952 DIGILAW 337 (MAD)

M. Gulamali Abdul Hussain & Co. v. A. P. M. S. Mohamed Yousuf and Brother

1952-11-14

P.V.RAJAMANNAR, VENKATARAMA AYYAR

body1952
Venkatarama Ayyar, J.- This is an appeal by the defendants against the Judgment and Decree in C.S. No. 158 of 1945 on the Original Side of this Court. That was a suit instituted by the respondents for damages for non-acceptance of goods under six contracts. The appellants are a firm of merchants carrying on business in the export and import of metals in Bombay and they have branches in Madras and other places. The respondents are a firm of merchants carrying on business in the purchase and sale of scrap metal in Madras. From 1942 the appellants were also doing business as manufacturers of brass-sheets and have been purchasing for that purpose scrap brass in the market of Madras and elsewhere. In this litigation, we are concerned with six contracts entered into by the appellants with the respondents for purchase of scrap brass as per particulars mentioned below: Dates of Contract Quantity Price 1. 30th November 1944 .. 5 tons. Rs. 136 per cwt. 2. 1st December 1944 .. 5 " " 138 " 3. 17th January 1945 .. 10 " " 166 " 4. 16th April 1945 .. 5 " " 149 " 5. 17th April 1945 .. 15 " " 147 " 6. 24th April 1945 .. 20 " " 147 " All these contracts were c.i.f. Bombay: no time was fixed for the performance of the contracts. In the performance of these contracts, the plaintiffs despatched 15 tons per s.s. “Seawall” on 19th April, 1945 and sent Invoice No. 406 therefor to the defendants (Exhibit P-17). The price charged thereunder is Rs. 166 per cwt. for 10 tons and Rs. 149 per cwt. for 5 tons. That would be the price payable under contracts Nos. 3 and 4 respectively. It must be noted that no goods had been despatched in performance of contracts Nos. 1 and 2, under which the prices were respectively Rs. 136 and Rs. 138 per cwt. That is to say, the plaintiffs appropriated the 15 tons to contracts Nos. 3 and 4, while contracts Nos. 1 and 2 remained unperformed. On 20th April, 1945, the plaintiffs shipped 10 tons per s.s. “Janaki” from Cochin port and sent invoice No. 408 therefor to the defendants (Exhibit P-18). The price charged in this invoice is Rs. 147 per cwt. and that is the price fixed under contracts Nos. 5 and 6. 3 and 4, while contracts Nos. 1 and 2 remained unperformed. On 20th April, 1945, the plaintiffs shipped 10 tons per s.s. “Janaki” from Cochin port and sent invoice No. 408 therefor to the defendants (Exhibit P-18). The price charged in this invoice is Rs. 147 per cwt. and that is the price fixed under contracts Nos. 5 and 6. Both the above invoices (Exhibits P-17 and P-18) were received by the defendants on 23rd April, 1945 and the same was acknowledged by them in Exhibit P-21. On 2nd May, 1945, the plaintiffs despatched 12 tons by rail from Bangalore to Karla and sent invoice No. 411 therefor to the defendants (Exhibit P-24). In this also the price charged was Rs. 147 per cwt., that being the price fixed in contracts Nos. 5 and 6. The relative railway receipts were sent to National Bank, Calcutta, with a draft for Rs. 34,708-3-0 being the amount of the invoice and the Bank issued a notice to the defendants on 7th May, 1945, that the bill should be honoured within a week (Exhibit D-11). On 12th May, 1945, the defendants sent a wire to the plaintiffs protesting against the amount of the invoice and followed it up with a letter Exhibit P-30 in which they stated that the consignment should first be appropriated towards the first two contracts and priced at the rates fixed under those contracts and that on that basis the amount of the bill should be reduced by Rs. 5,800. The goods actually arrived at Karla on 13th May, 1945 and the defendants retired the bank draft and took delivery of the goods. On 14th May, 1945, the defendants sent the wire Exhibit P-33 to the plaintiffs. It is as follows:- “240 bags of Karla wagon arrived yesterday on weighment found.....(?) gross weight cwts. 233, please send representative or ask anyone check (?) clear soon will not pay other hundi.” At this stage, the goods shipped per s.s. “Seawall” arrived in Bombay. On 15th May, 1945, the defendants sent the following telegram to the plaintiffs (Exhibit P-38): “Instruct bank receiving less shortage and other amounts, goods arrived, not responsible shortage and wharfage.” Meantime the plaintiffs had shipped 3 tons by s.s. “Jalaganga” on 7th May, 1945 and sent invoice No. 384 therefor to the defendants (Exhibit P-28). On 15th May, 1945, the defendants sent the following telegram to the plaintiffs (Exhibit P-38): “Instruct bank receiving less shortage and other amounts, goods arrived, not responsible shortage and wharfage.” Meantime the plaintiffs had shipped 3 tons by s.s. “Jalaganga” on 7th May, 1945 and sent invoice No. 384 therefor to the defendants (Exhibit P-28). On 28th May, 1945, they despatched a further quantity of 8½ tons by rail to Cochin for being shipped to Bombay and sent invoice No. 390 therefor (Exhibit P-42). By 27th May, 1945, they had secured the balance of 11½ tons for delivery to the defendants and they had stocked the same in Madras harbour ready to be shipped, and sent invoice No. 391 to the defendants (Exhibit P-47). The defendants, however, raised several disputes and declined to take,delivery of the goods; there was an exchange of telegrams and letters and lawyer’s notices ending with Exhibit D-12, dated 18th June, 1945, wherein the defendants unequivocally refused to take delivery of the goods or pay for them. The plaintiffs representatives thereafter went to Bombay with a view to settle the matter amicably. But nothing came out of the negotiations and eventually the plaintiffs filed the suit out of which this appeal arises on 14th August, 1945, claiming a sum of Rs. 56,775-6-6, as damages for non-acceptance. It will be seen that under the six contracts the plaintiffs had to deliver in all 60 tons. Twelve tons were sent by rail to Karla and the defendants took delivery of them. The suit is for damages for non-acceptance of the remaining 48 tons. According to the plaintiffs, 15 tons had been shipped per s.s. “Seawall”; 10 tons per s.s. “Janaki”; 3 tons per s.s. “Jalaganga”; 8½ tons had been consigned to Cochin for being shipped to Bombay (Exhibit P-42) and the remaining 11½ tons were kept ready for delivery in Madras harbour (Exhibit P-47); and they were not despatched owing to repudiation by the defendants. The plaintiffs alleged that the contract was finally broken by the defendants on 10th August, 1945, when the negotiations in Bombay broke down and damages are claimed on the basis of the market rate as on 10th August, 1945. The plaintiffs alleged that the contract was finally broken by the defendants on 10th August, 1945, when the negotiations in Bombay broke down and damages are claimed on the basis of the market rate as on 10th August, 1945. The defendants, beside contesting the claim of the plaintiffs for damages for non-acceptance of the 48 tons, filed a counter-claim with reference to the 12 tons consigned to Karla of which they had taken delivery after payment. They pleaded that the goods actually sent by the plaintiffs to Karla were not in accordance with the contract and were inferior in quality, that there was shortage in quantity, that the plaintiffs were, therefore, liable in damages, therefore, that the action of the plaintiffs in appropriating the goods to later contracts while the earlier contracts had remained unperformed was illegal and in contravention of an express agreement between the parties that the contracts should be performed in chronological order, that the goods sought to be supplied were not of the quality agreed, that therefore, the defendants were within their rights in not taking delivery of them, and that in any event the contract must be deemed to have been broken on 20th May, 1945 and that the damages claimed were excessive. The suit was tried by Bell, J. He held that the goods tendered were in accordance with the contract; that no shortage in quantity had been established; that there was no agreement that the contract should be performed in chronological order; and that the defendants were in breach in not taking delivery of the goods. He also held that the contracts were broken by the defendants only on 10th August, 1945, when the negotiations finally broke down. In the result, he dismissed the counter-claim and decreed the suit as prayed for. The defendants appeal. Before us Mr. K. Narasimha Ayyar, the learned counsel for the appellants, did not press the counter-claim for damages in respect of the Karla consignment. In the result, he dismissed the counter-claim and decreed the suit as prayed for. The defendants appeal. Before us Mr. K. Narasimha Ayyar, the learned counsel for the appellants, did not press the counter-claim for damages in respect of the Karla consignment. With reference to the decree for damages for non-acceptance granted in favour of the plaintiffs, he raised two contentions (1) that the goods tendered were not in accordance with the contract and that, therefore, the defendants were not bound to take delivery of them and (2) that even if the defendants were in default in not taking delivery of them, the breach of the contracts accrued on 18th June, 1945 and that the damages should be computed on the basis of the market rate as on that date and not as on 10th August, 1945. On the first contention, the point for determination is, what was it that the defendants agreed to purchase under the contracts and what was it that the plaintiffs actually tendered. * * * * * [His Lordship then considered the evidence and concluded.] On a consideration of the entire evidence, oral and documentary, we agree with Bell, J., that ‘brass scraps’ and ‘brass utensils bhangar’ mean the same thing and that the parties entered into the contracts on the basis that they are identical and that, therefore, the defendants are in breach in not taking delivery of the goods. We have assumed so far that it is open to the defendants to plead that the goods which were consigned per s.s. “Seawall”, “Janaki” and “Jalaganga” were not in accordance with the contract. That, however, is not the true legal position. The contracts were c.i.f. and in a c.i.f. contract, the purchaser is bound to accept the documents which represent the goods and honour the draft and is not entitled to raise at that stage any question as to whether the goods are in accordance with the contract or not. If after taking delivery of the goods, it is found that they are not in accordance with the contract, then of course the purchaser has a right to reject the goods and to pursue his remedies against the seller. If after taking delivery of the goods, it is found that they are not in accordance with the contract, then of course the purchaser has a right to reject the goods and to pursue his remedies against the seller. Therefore, the plea that the goods were not in accordance with the contract, though open to consideration in the counter-claim of the appellants, is not admissible as a defence to the action of the plaintiffs for damages for wrongful refusal to accept the documents and to honour the drafts. The contention of the defendants that they were not bound to honour the hundies because the goods were not in accordance with the contracts must accordingly be over-ruled. In the result, it must be held that the defendants committed breaches of the contracts and are, therefore, liable to the plaintiffs in damages. The next question is, to what damages the plaintiffs are entitled and that depends on what date the contracts were broken by the defendants. The appellants contend that the breach was on 18th June, 1945, while the respondents maintain that it was on 10th August, 1945. Bell, J., accepted the latter date as the correct one as negotiations between the parties were going on in July in Bombay and they finally broke down only on 10th August, 1945. It should be observed that as the claim for damages relates to six contracts, it should, properly speaking, be necessary to determine with reference to each contract when it was broken; and this is so particularly in this case as the contracts were c.i.f. and in such contracts the purchasers commit breach when the documents are tendered and refused. In this case the documents had been tendered with reference to some of the shipments in May itself, while with reference to the remaining goods, there had been no tender prior to 18th June, 1945. Disputes having arisen between the parties, the defendants were willing to honour the hundies, only if certain demands of theirs were complied with. There was correspondence between the parties and ultimately the defendants sent Exhibit D-12 on 18th June, 1945, finally refusing to retire the drafts. Thereafter, there was no further correspondence. Mr. Disputes having arisen between the parties, the defendants were willing to honour the hundies, only if certain demands of theirs were complied with. There was correspondence between the parties and ultimately the defendants sent Exhibit D-12 on 18th June, 1945, finally refusing to retire the drafts. Thereafter, there was no further correspondence. Mr. K. Narasimha Ayyar, the learned Advocate for the appellants, contends that when once the time for performance has arrived and there is default, the contract must be held to be broken on that date and damages should be assessed on the basis of the market rate on that date and he quoted Mutthava Maniagaran v. Lakku Reddiar1, in support of this position. That is not disputed by the respondents. The appellants accordingly argued that though the correspondence upto 18th June, 1945, might be construed as involving an extension of time for payment of the drafts, in view of the clear refusal contained in Exhibit D-12 dated 18th June, 1945, it must be held that the contracts in respect of which performance had already fallen due were finally broken on that date and as to others, there was an anticipatory breach. The respondents contend that the negotiations did not finally terminate on 18th June, 1945, that after the date of Exhibit D-12, P. Ws. 4 and 5 had been to Bombay, the talks for settlement were going on between them and the defendants and that it was only on 10th August, 1945, that the father of D.W. 6 finally told the plaintiffs that the defendants would not take delivery of the goods. The plaintiffs further state that the father also told them that the goods might be sold in the market and that they would pay the difference. This is denied by D.W. 6 and sounds improbable. This conversation can in no wise be construed as an agreement extending the time for performance. We accordingly accept the contention of the appellants that the contracts were broken on 18th June, 1945. The next point for decision is about the market rate for brass scraps on 18th June, 1945. P.W.11 gave evidence that the price of one cwt. of brass scrap on 12th June, 1945, was Rs. 119-4-0 and that it remained at the same level on 22nd June, 1945. Exhibit D-3 shows that in Bombay the price of one cwt. on 20th June, 1945, was Rs. 124-0-0. P.W.11 gave evidence that the price of one cwt. of brass scrap on 12th June, 1945, was Rs. 119-4-0 and that it remained at the same level on 22nd June, 1945. Exhibit D-3 shows that in Bombay the price of one cwt. on 20th June, 1945, was Rs. 124-0-0. According to Exhibit D-4 the market rate of brass bhangar on 19th June, 1945, was Rs. 123 per cwt. We think that the market rate for brass scrap on 18th June, 1945, may be fixed at Rs. 120 per cwt. On this basis the plaintiffs would be entitled to Rs. 27,920 by way of damages. The plaintiffs also claimed a sum of Rs. 4,000 as damages for loss of goods by theft, while they were stocked in the Bombay wharfage. This is clearly inadmissible and must be disallowed. The plaintiffs paid a sum of Rs. 3,500 as demurrage to the harbour authorities while the defendants were in correspondence with them and this amount is also claimed as part of damages. There is no opposition to this claim and it will be allowed. The plaintiffs also claimed a sum of Rs. 2,155-6-6 as interest on the amounts claimed. But no interest can be allowed on a claim for damages and this item must therefore be disallowed. In the result, the appeal is allowed in part and there will be a decree for Rs. 31,420 in favour of the plaintiffs with interest thereon at six per cent, from the date of the decree, 20th January, 1949. The plaintiffs will also be entitled to proportionate costs both here and in the court below. The costs of the commission at Bombay will be allowed in full in favour of the plaintiffs. The defendants will bear their costs throughout. K.S. ----- Appeal allowed in part.