INDORE UNITED MALWA MILLS, INDORE v. BASANTILAL SURESH KUMAR, UJJAIN
1964-03-21
S.B.SEN, V.R.NEWASKAR
body1964
DigiLaw.ai
JUDGMENT V.R. Newaskar, J. This appeal arises out of a suit filed by the Indore Malwa United Mills Ltd., Indore against the firm of Basantilal Sureshkumar of Sarafa Ujjain for the recovery of Rs. 16,125 as damages for breach of contract committed by the Defendant. The suit was dismissed by the trial Court. This is a Plaintiff's appeal. Plaintiff-Company's case is that the Defendant had entered into a contract on 2-7-1952 for sale of 250 bales of 'Rui' by sample at the rate of Rs. 451 for Khandi, of F. 0. R, Indore ready delivery. The Defendant sent the sample of the contracted goods through the broker Zabarmal to Plaintiff's cotton selector Shree Deshmukh which was approved and it was agreed that the Defendant would deliver the goods as per that sample. Zabarmal executed a Chithi in his capacity as the Defendant's broker. The goods in bulk was to be examined the next day i.e. on 3-7-1952. Accordingly Plaintiff's Assistant cotton-selector Ahmadbhai went to Ujjain for selecting and examining the goods in bulk. He was accompanied by the Defendant's broker Zabarmal. According to the Plaintiff the bales shown to Ahmadbhai bore running numbers 1 to 200 and press running numbers 1006 to 1255. He approved the goods thus shown to him. Zabarmal and Defendant's man Sagarmal then disclosed that the goods had been pledged with the Central Bank and that the delivery would be effected after redeeming the pledged goods from the bank. The Plaintiff waited accordingly. Then on 7-7-1952 the Plaintiff by a letter called upon the Defendant to expedite delivery of contracted goods. A copy whereof this letter was also sent to Zabarmal. The latter wrote back, after contracting the Defendant, on 11-7-1932 informing that Basantilalji of Defendant's firm had gone to Bombay and that the goods would be delivered on his return. This letter reached the Plaintiff on the 15th of July 1952. As the Plaintiff was in need of goods it pressed for delivery of goods through Zabarmal and on 14-7-1952 it sent a telegram. On 15-7-1952 the Defendant-firm sent a reply by means of a telegram which was vague and evasive suggesting misunderstanding on the part of the Plaintiff. The Plaintiff not following the implications of such a reply called upon the Defendant to be plain and precise and clear off the misunderstanding suggested by the Defendant. This was not done.
On 15-7-1952 the Defendant-firm sent a reply by means of a telegram which was vague and evasive suggesting misunderstanding on the part of the Plaintiff. The Plaintiff not following the implications of such a reply called upon the Defendant to be plain and precise and clear off the misunderstanding suggested by the Defendant. This was not done. The Plaintiff on these facts alleged breach of contract by the Defendant on 15-7-1952. The Plaintiff later came to learn that the Defendant-firm had sold away the contracted goods to a third party at a profit. The rate of Rui on 15-7-1952 was, it was said, at Rs. 580 per Khandi. The Plaintiff therefore claimed damages on that basis amounting to Rs. 16,125, each bale weigh half a Khnadi. The Defendant denied existence of the contract alleged by the plain-tiff. According to him, Zabarmal had no authority to enter into any contract on his behalf. The contract, even if proved, contravened the provisions of the Cotton Control Order, 1950, then in force which prohibited contracts for the purchase of Rui or taking delivery thereof in the absence of allotment by distribution committee appointed under the slid Order and was therefore void. The Defendant also denied that he had broken the contract on 15-7-1952 or on any other date affording to the Plaintiff any cause of action. The rate of 'Rui' being Rs. 580 on 15-7-1952 was denied and consequently the extent of damages claimed. The jurisdiction of Indore Court to try the suit was also challenged. On the basis of these pleadings the trial Court framed issues bearing on the questions as to the existence of contract between the parties for the sale by the Defendant of 250 bales of Rui at Rs 451 per Khandi on 2-7-1952 through Zabarmal, Zabarmal being a mercantile agent or broker figuring in the transaction on Defendant's behalf, the breach of the aforesaid contract by the Defendant by failing or neglecting to give delivery, the rate of Rui prevailing on the date of breach and the legal validity of the contract in question having regard to the provisions of the Cotton Control Order and jurisdiction of Indore Court to try the present suit.
The trial Court found that the Defendant had entered into a contract for the sale of contracted goods through Zabarmal Dalai who was a mercantile agent of the Defendant and that in case it was valid he was bound by it. It also found that the Defendant had committed breach of that contract by failing or neglecting to give delivery. The date of breach was held to be 20th of July 1952. The Plaintiff however was held not to have proved the rate of 'Rui' prevailing on the aforesaid and consequently it was not possible to ascertain the damages sustained by it. The Court also held that as per provisions of the Cotton Control Order prior allotment of goods by the Textile Commissioner was necessary. This was not secured by the parties. The contract therefore contravened the provisions of the Cotton Control Order. On these findings the trial Court dismissed the suit. This is a Plaintiff's appeal. As the trial Court had found the existence of contract and its breach by the Defendant proved, the only points canvassed on behalf of the Plaintiff in this appeal were- (1) As regards the legal validity of the contract in question. (2) The proper date on which the breach occurred and the rate prevailing then. On behalf of the Respondent the trial Court's finding regarding the existence of contract in question and its breach by the Defendant were challenged. All these questions therefore have to be considered. In considering the questions as to the existence of the contract, the position of Zabarmal vis a-vis the Defendant will also have to be considered. First question I would consider is as to the legal validity of the contract in question. The trial Court grants that the defence as to this is contained in Para. 15 of the written statement dated 16-6-1955.
First question I would consider is as to the legal validity of the contract in question. The trial Court grants that the defence as to this is contained in Para. 15 of the written statement dated 16-6-1955. The contention there raised is that 'even if it be assumed that the contract in question had in fact been entered into between the parties to the present action at the material time when the contract was alleged to have taken place it was incompetent for the (textile) Mills to enter into a contract for the purchase of Rui and to take delivery thereof unless the bales sought to be purchased had been allotted by the Distribution Committee (which is not done in this case) and that consequently the contract would be void and illegal. It is thus clear that the illegality relied upon is as to absence of allotment order by the Distribution Committee. The learned Judge however considering this contention held that the contract in question contravened Clauses 4 and 5 of the Cotton Control Order, 1950, which appears in the Notification issued by the Ministry of Industry and Supply No. S. Rule 0. No. 594/13-9-1950. He further holds that an allotment order from the Distribution Committee was necessary before the Plaintiff could be given delivery of the goods. The latter view is based on the requirement of Clause 14 B (2) (b) of the Cotton Control Order, 1950, as amended by the subsequent Notification No. S. Rule 0. 1593, dated 16-10-1951. As regards the invalidity based on Clauses 4 and 5 of the Cotton Control Order, the learned Judge should not have considered this ground as it had not been raised in the pleadings. The ground based on Clauses 4 and 5 will involve an assumption that the Cotton Control Order, 1950, excluded genuine transactions of purchases by the Mills of Cotton required for their day to day need. There is no justification for making any assumption, of that character.
The ground based on Clauses 4 and 5 will involve an assumption that the Cotton Control Order, 1950, excluded genuine transactions of purchases by the Mills of Cotton required for their day to day need. There is no justification for making any assumption, of that character. In fact by Notification No. S. Rule 1793 dated 21 111931 read with Notification No. S.R. Order 1967 dated 7-12-1951 the Textile Commissioner in exercise of his power under Clause 6 of the Order aforesaid excluded, subject to restrictions and conditions mentioned in the notification (I) ready contracts and delivery contracts meaning Forward Contracts for cotton full pressed, half pressed or loose of specific description and specific delivery at specific price, delivery orders etc. in respect of which are not transferable to third parties relating to cotton produced during the season 1951-52 in the Madhya Bharat area, from the operation of Clause 4 of the said Order. Clause 2(1) (b) of the Notification No. S.R. Order 1793 dated 21-11-1951 which is relied upon on behalf of the Defendant has no application as it laid down an exception with reference to contract of sale by a manufacturer. This was a contract of the description which is excluded by the above Notification from the operation of Clause 4. Now on a review of the subsequent provisions it seems that Clause 7 (1) of the order which deals with the case of a manufacturer empowered the; Textile Commissioner to specify the maximum quantity of any description of Cotton which a manufacturer, such as a textile Mills, might buy during a specified period or within a specified area or which any time such manufacturer might have in his possession. Sub-clause (2) of Clause 7 then prohibited a manufacturer to buy or to have in his possession any quantity in excess of the quantity thus specified. Clause 8 empowered the Textile Commissioner to direct sale of any quantity possessed by a manufacturer if such quantity, in the opinion of the Textile Commissioner, was in excess of the quantity reasonably required by the said manufacturer. Clause 9 prohibited generally any person from purchasing, selling, storing or carrying on business in cotton or from holding cotton in hypothecation or against a pledge except under and in accordance with the conditions of a license. But a manufacturer is specifically excluded from the operation of this provision.
Clause 9 prohibited generally any person from purchasing, selling, storing or carrying on business in cotton or from holding cotton in hypothecation or against a pledge except under and in accordance with the conditions of a license. But a manufacturer is specifically excluded from the operation of this provision. Powers were conferred by Clauses 14, 17, 18, 19 and 20 upon the Textile Commissioner to carry out the purpose of the Order. Clause 14-A which is inserted in the Order by a later Notification No. S. Rule 0. 1593 dated 16-10-1951 published in the Gazette of India Extraordinary of that date provided that when the Textile Commissioner in exercise of his power under Clause 7 (1) had specified the maximum quantity of cotton of any description which a manufacturer might buy, the said manufacturer was required to make an application to the Textile Commissioner for allotment of such cotton or any portion thereof and on receipt of such application the Textile Commissioner was empowered to make an allotment. Clause 14-B provided for appointment of a Distribution Committee with the previous sanction of the Central Government with a view to secure proper distribution of cotton amongst the manufacturers. When such committee was then appointed for any area no manufacturer could acquire cotton grown in that area except in pursuance of an allotment made in accordance with the provisions of Clause 14-A. The Distribution Committee thus appointed could exercise functions of the Textile Commissioner under Clause 14-A. There is no allegation by the Defendant that the Textile Commissioner had specified the maximum quantity of cotton of any description which the Plaintiff in this case could buy or have in its possession. The contention raised by the Defendant is that the Plaintiff had not secured allotment of cotton, for which contract in question had been made, from the Distribution Committee. This indicates that the objection is for contravention of Clause 14-B and not 14-A. This will involve two factual assumptions, namely, that- (1) The cotton sought to be acquired was the cotton grown in that area. (2) That the Textile Commissioner had fixed the maximum quantity of cotton of particular description or of any description to be acquired by the Plaintiff-Mills.
(2) That the Textile Commissioner had fixed the maximum quantity of cotton of particular description or of any description to be acquired by the Plaintiff-Mills. There are no allegations much less proof about the facts that the cotton which the Plaintiff had bought was the one grown in the Madhya Bharat area and that the Textile Commissioner had fixed the maximum quantity which the Plaintiff might buy. Therefore although there are materials on record to indicate that a Distribution Committee for the State of Madhya Bharat had been appointed by Notification No. S. Rule 0. 1842 dated 23-11-1951 it does not follow that the contract in question contravened Clause 14-B of the above referred Order. Mr. Chitale for the Appellant sought to put forward another argument that the contract in question did not contravene Clause 14-B since what was prohibited by that Clause was the acquisition and not entering into contract. Had the Defendant agreed to give delivery, the Plaintiff would have secured an order for its allotment from the Distribution Committee. There is force in this contention since the word acquires according to Oxford English Dictionary means 'come into possession of. Since the Defendant had denied the existence of the contract before the stage of coming into possession of the contracted goods could not arrive, it cannot be said that the Plaintiff had committed breach of Clause 14-B of the Cotton Control Order, 1950. Thus since the Defendant had not raised defense regarding contravention of Clauses 4 and 5 and also because Clause 4 was inapplicable to the contract by reason of Notification No. S. Rule 0. 1793 dated 21-11-1951 read with Notification No. 1967 dated 7-11-1951, the Court below was not justified in holding the contract in suit to be bad for their contravention. Secondly since the Defendant had not alleged and proved that the cotton contracted to be purchased was the one grown in that area namely Madhya Bharat and that the Textile Commissioner had specified the maximum quantity which the Plaintiff could buy during a specific period or within a specified area there was no good reason to assume contravention of Clause 14-B. There was also no contravention of the last mentioned Clause because the Plaintiff had not acquired the cotton since the Defendant had denied the existence of contract before the stage of delivery of possession could reach.
The trial Court's finding that the contract was invalid in law and void u/s 23 of the Contract Act is therefore untenable. The second question to be considered is as to the propriety of the trial Court's finding that the Plaintiff had contracted to purchase 250 bales of 'Rui' through the broker Zabarmal at Rs. 451 per Khandi. First point to be considered with reference to this is whether Zabarmal had authority to enter into contract with the Plaintiff so as to bind the Defendant. Certain facts having a bearing on this question are beyond dispute. Basantilal, the proprietor of Basantilal Sureshkumar, admits that the bales in question had been lying in the Kalyanmal Jinning Press since about 2 to 3 months prior to 3-7-1952. It is also admitted by him that he had prior to 2-7-1952 asked brokers to bring offers from purchasers and Zabarmal might be one of such brokers. He further admits that he had provided the brokers with a sample of the goods proposed to be sold. With reference to Zabarmal however he modified his statement in the cross-examination. He stated therein that he had not asked Zabarmal to bring offers. All that he had said to him was that he had to sell the bales in question and that he should let him know if there was any purchaser. Zabarmal, according to him, might have taken a sample of the goods. It is not disputed by Basantilal that the transactions of 'Rui' took place then through brokers. A broker, according to him brought offers on the basis of sample given to him, and if the offer is then accepted through the broker such acceptance is conveyed through the broker either orally or in writing. He admitted that he entered into transaction of 'Rui' to the tune of 'lacs' in the year 1951-52. He also admitted that no authority in writing used to be given to the brokers engaged for the sale of goods. He was questioned whether when he accepted the offer and conveyed that acceptance no the broker it was competent for the broker or not to sign the contract with the other contracting party. He expressed want of knowledge about this.
He was questioned whether when he accepted the offer and conveyed that acceptance no the broker it was competent for the broker or not to sign the contract with the other contracting party. He expressed want of knowledge about this. Moreover, Absinthial, who used to deal in lacs in Rui and knew Zabarmal Dalai for the last 20 or 25 years, does not deny that he might have entered into transaction of Rui through him. He also knew that he was a standing broker for J.C. Mills. Next circumstance of importance is about Zabarmal having signed the Contract Note Ex. P /2. This is proved by Shri Deshmukh, the Chief Cotton Selector of the Mills. Mr. Deshmukh says that Zabarmal put his signature upon Ex. P/2 on behalf of Basantilal Sareshehandra. The sale was by sample. Apart from the contract note, transaction is entered in the 'Rui Kharedi Register'(Register regarding purchase of Rui) of 2-7-1952 setting out the material details. This is Ex. P/3. The register is one kept regularly in the course of business. After this Mr. Deshmukh sent Assistant Cotton Selector Ahmadbhai to Ujjain to examine whether the bulk was as per sample. On 3rd Ahmadbhai goes to Ujjain accompanied by Zabarmal. Defendant's brother Sagarmal admits the fact that Ahmadbhai had come with Zabarmal and that as the goods had been pledged with the Bank he had called Bank's employee to show the goods to Ahmadbhai. He further says that on Plaintiff's return from Bombay he had told him about Ahmadbhai having examined the goods Zabarmal is dead. The Plaintiff therefore could not get his version as to the contract having been made by him on behalf of and under the instruction of the Defendant. This takes us to the period subsequent to the approval of the contracted goods by Ahmadbhai on behalf of the Plaintiff. Ahmadbhai says that on approving the goods as being in accordance with the sample ha called upon Sagarmal to weigh. He at first agreed but later he left the place and on return said that this could not be done as the Bank was not prepared to release the goods without Basantilal's signature. Zabarmal then had a talk with Seagram and Zabarmal then told Ahmadbhai that he would call him after 2 or 4 days. There was no move on behalf of the vendor for delivery of goods for a few days.
Zabarmal then had a talk with Seagram and Zabarmal then told Ahmadbhai that he would call him after 2 or 4 days. There was no move on behalf of the vendor for delivery of goods for a few days. The Plaintiff thereupon wrote on 7-7-1952 to the Defendant and also to Zabarmal about the delay. Zabarmal by his letter dated 11-7-1952 (Ex. P/5) informed the Plaintiff that Basantilal would come upto 15th and that the goods would be weighed thereafter. Before this letter reached the Plaintiff, another letter was sent by the General Manager of the Mills to Zabarmal dated 12-7-1952 seeking explanation for the delay (Ex. P/6). On 14-7-1952 a telegram was sent by the Plaintiff asking when the contracted 250 bales of cotton would be delivered (Ex. P/7). On 14th or 15-7-1952 Basantilal came back from Bombay. It was then that he sent a reply in a cryptic way saying 'Regret you have misunderstood'. On the same day Plaintiff sent another telegram complaining cryptic and vague character of Defendant's telegram and giving details of the transaction entered into by Zabarmal on Defendant's behalf. It was admitted by Basantilal that in his absence his brother Sagarmal used to give replies to business letters received during his absence. This clearly indicated that he was in touch with the business of the Defendant. Still in spite of letters sent to Zabarmal no reply was sent by Sagarmal denying existence of the contract. It was only when Basantilal returned after striking a favourable deal at Bombay with M/s Chunnilal Pran. Jeevandas of Bombay at Rs. 550 per Khandi some time before 15th, that a vague reply was sent. When the Plaintiff gave details by telegram Ex. P/9 the Defendant kept mum and did not reply. The Plaintiff sent another telegram through Shri Chitale Advocate giving further details as to approval of goods and numbers which the contracted goods bore on 18-7-1952. The telegram also was not replied too. The explanation given by Basantilal for this inaction was that he had by then come to Indore and had learnt everything in the Textile Department and he had been authorized by the Textile Commissioner to dispatch goods to Bombay. This cannot be a satisfactory explanation for his failure to deny the existence of contract or Zabarmal's want of authority to deal on his behalf.
This cannot be a satisfactory explanation for his failure to deny the existence of contract or Zabarmal's want of authority to deal on his behalf. It is thus clear from array of facts that the Defendant's contention that there was no contract made by the Defendant to sell 250 bales of 'Rui' to the Plaintiff at Rs. 451 per Khandi ready delivery is untenable. The Defendant's instruction to Zabarmal to find a purchaser for 250 bales, after supplying him the sample of goods, Zabarmal's talk with Mr. Deshmukh, his approval of the sample, fixing of prioe and execution of the contract-note, sending of Assistant Cotton Selector Ahmadbhai for approval of the goods in bulk being as per sample, contract with Sagarmal, calling of Bank's employee for showing goods, Ahmad-bhai's approval and Zabarmal's assurance after a talk with Sagarmal that the delivery would be given on Basantilal's return from Bombay a few days later and subsequent complaints of the Plaintiff by letters to the Defendant and Zabarmal and Zabarmal's replies and Defendant's silence after giving a vague reply all go to establish that the Plaintiff's story of existence of contract through Zabarmal Dalai is correct. There are two points which are sought to be pressed on Defendant's behalf. They are that the version of Shri Deshmukh, that Zabarmal after showing the sample to him and securing offer at Rs. 451went to Ujjain, got the assent of the Defendant at the station, returned back and communicated the acceptance to him the same evening is improbable. In the cross-examination of Mr. Deshmukh on this point there is an assumption that Zabarmal had gone to Ujjain by train. There is no justification for this. As Zabarmal could go by a bus which hardly took an hour and a half at the most and take back the same mode of transport while returning. There may also be want of precision on the part of Mr. Deshmukh as to time. But from this it cannot follow that the entire transaction recorded in the regular register of the Mills and in support of which there is so much material supported by the conduct of the persons involved, is a fabrication. The second point pressed was that the contract-note bore the signature of Zabarmal only on the original and not on the carbon copy.
The second point pressed was that the contract-note bore the signature of Zabarmal only on the original and not on the carbon copy. Although the trial Court appeared to be impressed by this circumstance, I do not think there is much force in this. Zabarmal's signature on the original is enough. Whether it would appear on the carbon copy would depend upon the manner in which the original and copies are arranged at the time of taking his signature. If the original note is written out and thereafter after removing the carbon the original is given for signature there would be no impression of carbon. From the absence of signature on the carbon copy it cannot necessarily follow that Zebra's signature had been taken later on. Had that been so why should Ahmadbhai have gone to approve the goods and why should Plaintiff go on complaining from 7th to 18th about non-delivery. Both these contentions are therefore without force and the trial Court's finding about the existence of contract and its binding character due to Zabarmal being expressly authorised to enter into it on Defendant's behalf is correct. It therefore follows that the Defendant had committed breach of contract by denying the existence of it. The trial Court's finding on this point is correct. Next thing to be considered is what is the date of breach and what should be taken to be the rate prevailing on such date. According to the Plaintiff the Defendant committed breach when in reply to Plaintiff's telegram dated 15-7-1952 the Defendant repudiated the contract by alleging some misunderstanding about the matter by means of a telegram of the game date. The rate of Rui, according to the Plaintiff, on that day was Rs. 580 per Khandi. According to the finding of the trial Court although initially delivery of goods was to be given within 2 or 3 days alter Ahmadbhai had examined the goods on 3-7-1952 yet, according to it- 'the Plaintiff was by his own letters extending time', the last telegram dated 18-7-1952 extending time for delivery of the goods being by two days i. e. upto 20-7-1952. Thus according to the trial Court the date of breach was on 20-7-1952. But the Plaintiff, had not proved the rate prevailing on the last mentioned date and therefore according to it the damages could not be ascertained.
Thus according to the trial Court the date of breach was on 20-7-1952. But the Plaintiff, had not proved the rate prevailing on the last mentioned date and therefore according to it the damages could not be ascertained. First thing to be considered is whether the Court below was right in holding that the time for performance had been extended upto 20-7-1952. Now Section 63 of the Contract Act provides that every promises may dispense with or remit wholly or in part, the performance of the promise made to him or may extend the time for such performance. Such extension of time has to be by mutual consent. A party cannot unilaterally and without the consent of the other extend the time for performance of a contract. Extension of time can be granted only at the request of a promisor addressed to the promises. Mere forbearance to sue or to give notice of recession does not amount to extension of time, vide Muthaya v. Lakku Reddiar ILR 37 Mad 412, Asmat Ullah v. Bihari Lal and Sons AIR 1923 Lah. 117 and Anandram Mangturam Vs. Bholaram Tanumal, . Applying this principle to the circumstances of the present case it is clear that although actual date of delivery was not fixed by the contract, the contract being for sale of ready goods, the delivery was to be a short time after the goods had been examined in bulk and approved i. e., within 2 or 3 days of 3-7-1952 i. e. by 6th of July 1952 or thereabout. On 7th the Plaintiff wrote asking Zabarmal to give delivery. This letter reached him before 11th and he wrote back on that day requesting for time til) Basantilal returns from Bombay. This reply reached the Plaintiff by 15th. On that day they sent telegram asking for delivery as Basantilal had returned. It was on that day that the Defendant repudiated the contract alleging some misunderstanding on the part of the Plaintiff. It therefore seems that the time of delivery had been extended by mutual understanding as a result of correspondence till 15-7-1952 when the breach occurred. This was therefore the date of breach. Next question is what was the rate of Rui on 15-7-1952. Plaintiff's witness Mr. Deshmukh stated in his examination-in-chief that the rate of Rui on 15-7-1952 was Rs. 580 per Khandi Indore delivery.
This was therefore the date of breach. Next question is what was the rate of Rui on 15-7-1952. Plaintiff's witness Mr. Deshmukh stated in his examination-in-chief that the rate of Rui on 15-7-1952 was Rs. 580 per Khandi Indore delivery. In his cross-examination he stated that the Plaintiff had claimed damages on the basis of Rs. 580 per Khandi as being the rate on 15-7-1952 because Zabarmal had told him orally that the Rui in question had been sold at Rs. 575 per Khandi. He stated that for sending Rui from Ujjain or Indore to Bombay costs of carriage amount to Rs. 25 per Khandi. He disclaimed knowledge that custom duty used to be charged at Rs. 25 per Khandi then. Plaintiff examined Jafarmal, Munim of Chunnilal Onkarmal, for proving rate of Rui. According to this witness Rui was sold by their firm on 16-7-1952 at 31-4-0, 32-8-0 and 31-8-0 per Kachha Maund. He stated that 19 Kachha Maunds made one Khandi. He disclosed in his cross-examination that because of different qualities of Rui sold, the rates varied. He admitted that on 14-7-1952 sale of Rui at Rs. 25.8-0 and 26-8-0 had been recorded and the rate on 9-7-1952 was Rs. 27-12-0 and 26-0-0 per Maund. According to him costs of sending Rui to Bombay comes to Rs. 30 or 35 per Khandi. The third witness examined by the Plaintiff on this point was Bhagirath Chhotmal, Munim of the firm of Ramgopal Kanhaiyalal. According to him their firm had sold 105 bales of Rui to Rallis India on 16-7-1952 at Rs. 585 per Khandi. The goods was of Ujjain. He was unable to say when the contract for the sale of 105 bales of Rui had taken place. He admitted that there were no deliveries in his firm between 25-6-1952 to 17-7-1952. Neither the Plaintiff nor the Defendant gave any further evidence on this point. As regards the statement of Mr. Deshmukh it is not based on any record of actual transaction and on the basis of alleged statement of Zabarmal which is hardly any evidence. The statement of Bhagirath Chhotmal about the rate is based on an alleged single transaction with Rallis India. The fact that his firm had no occasion to give deliveries from 25-6-1952 to 16-7-1952 i. e. for more than three weeks indicates that the transactions of this firm were few.
The statement of Bhagirath Chhotmal about the rate is based on an alleged single transaction with Rallis India. The fact that his firm had no occasion to give deliveries from 25-6-1952 to 16-7-1952 i. e. for more than three weeks indicates that the transactions of this firm were few. As regards Jafarmal of the firm of Chhunilal Onkarmal, his firm had sold Rui on 16-7-1952 at Rs. 31-4-0, 31-8-0 and 32-8-0 per Kachha Maund. But in his cross-examination it was elicited on behalf of the Defendant that on 14-7-1952 his firm had a transaction of Rui at the rates Rs. 25-8-0 and 26-8-0 per Maund. But he says nothing about the quality of that Rui. Basantilal admitted that he sold the very same Rui at Bombay at Rs. 550 per Khandi F.O. R. Bombay. This is further corroborated by the letter sent by Defendant's broker or Adatia Chhunilal Pran Jeevandas and Company dated 10-7.1952 informing the Defendant the sale of 361 bales of Rui at Rs. 550 per Khandi. According to Jafarmal costs of carriage to Bombay inclusive of customs came to Rs. 35 per Maund. Deducting from the aforesaid rate of Rs. 550, Rs. 35 the rate at Indore of this Rui would be Rs. 515 per Khandi. It does appear that after 2-7-1952 the rate of Rui was increasing and it continued to increase even upto 16-7-1952 as it appears from the statement of Plaintiff's witness Jafarmal. Since the burden was upon the Plaintiff to establish by appropriate evidence what was this increase for a similar quality of Rui in the absence of clear evidence to that effect indicating the rate to be higher than Rs. 515, the Plaintiff can be awarded damages at least at that rate. The Plaintiff's claim for damages is therefore entitled to succeed to the extent of Rs. 8000 being the difference between Rs. 515 and 451 namely Rs. 64 multiplied by 125 Khandi being the weight of 250 bales of Rui sold. The appeal preferred by the Plaintiff is allowed and Plaintiff's claim is decreed to this extent with protanto costs. S.B. Sen, J. I have had the advantage of reading the judgment of my learned brother. I agree with him that the decree should be passed. I also agree with him on all other points but I arrive at the same conclusion on grounds slightly different.
S.B. Sen, J. I have had the advantage of reading the judgment of my learned brother. I agree with him that the decree should be passed. I also agree with him on all other points but I arrive at the same conclusion on grounds slightly different. On the question of legality of the contract and its binding nature I am of the view that the control Order or the notifications issued under the same will not come in the way of this claim for damages for breach of contract. On the question of quantum of damages and the date on which the breach of contract took place I entirely agree with the conclusions and reasons of my learned brother. As I do not fully agree with the reasons given by my brother on the question of the contract vis-a-via the notifications I am adding my own reasons. I also agree that the Plaintiff's claim for damages is entitled to succeed to the extent of Rs. 8,000. I need not repeat the other reasons given by my learned brother with which I entirely agree. The Defendant has pleaded in paragraph 15 on the question of illegality of contract as follows. On the alleged date of contract, as per Textile Department Regulations in force on that day, without the allotment by the Cotton Distribution Committee the Mill-owners could not enter into a contract nor could intake the delivery of the same. Under those circumstances it is not probable that such a contract was made with the Defendant. Assuming that the contract as alleged took place, the same was against the Regulations and notifications in force and therefore cannot be said to be legal and it is therefore void. It is clear what the Defendant means is that in view of the Regulations of the Textile Department being in force under which without the allotment of the Cotton Distribution Committee nobody could enter into a contract or take delivery of the goods, Defendant normally would not have entered into such a contract. It further on says assuming such a contract as alleged was made it was against the Regulations and notifications in force then and therefore cannot be said to be legal and is therefore void. The reference to the Cotton Committee is only to show that the Defendant would not have entered into such a contract.
It further on says assuming such a contract as alleged was made it was against the Regulations and notifications in force then and therefore cannot be said to be legal and is therefore void. The reference to the Cotton Committee is only to show that the Defendant would not have entered into such a contract. His main plea is that it is against the Regulations and notifications in force then. It is true that he has not mentioned the particular Regulations and notifications. Plaintiff could have asked for a clarification of the same. It has understood this pleading and therefore his reply was a denial that the Mill could not have purchased cotton or take delivery of the same without the allotment of the Distribution Committee. The Plaintiff has denied in the rejoinder that there was any bar under any law. The Plaintiff further on says if there is any such rules or Regulations they are not valid under law nor binding. Not only this, before the trial Court the point of controversy was made clear. In the judgment of the learned trial Judge there is a discussion on Notification No. S.R. Order 594 dated 13-9-50, a copy of which was filed before the trial Court. I do not think it was fatal not to mention in the pleadings that there is contravention of clauses 4 and 5 of the Cotton Control Order of 1950. The Defendant has not only mentioned Regulations of the Cotton Textile Department, he has filed a copy of the notification. Non-mention of the particular section cannot be said to be fatal. In fact even if a wrong section was mentioned it would also not be fatal. Moreover looking to the notifications of the Cotton Control Order it is difficult to particularize one section. It is the overall effect of all the clauses of this Control Order that will have to be referred to. One section bars, other section gives exceptions to which there are provisos. Therefore I do not think that the Defendant can be deprived of this plea simply because he has not mentioned that the contract was against clauses 4 and 5 of the Control Order. Not only mention was made in the same paragraph of the Regulations of the Textile Department but a copy of the notification was also filed.
Therefore I do not think that the Defendant can be deprived of this plea simply because he has not mentioned that the contract was against clauses 4 and 5 of the Control Order. Not only mention was made in the same paragraph of the Regulations of the Textile Department but a copy of the notification was also filed. Clause 4 of the Order prohibits a contract unless it is excluded from operation under Clause 6. Clause 4 reads as follows: Except in the cases excluded from the operation of this clause under Clause 6, no person shall enter into (a) any contract; or (b) any option in cotton. Clause 5 further describes its effect and says: All contracts and options in cotton entered into or made after the commencement of this order in contravention of Clause 4 shall be void. Therefore there cannot be any doubt that unless this contract is excluded from the operation of Clause 4, the contract would be void. The Plaintiff in his rejoinder dated 19-8-55 has simply denied this position and said that if there are Regulations they are not valid in law or binding on them. The Plaintiff has not pleaded any exemption. However several Notifications were shown viz. S. Rule 0. 1793 dated 21-11-51, S.R.O. 1840 dated 23-11-51, S.R. Order 19b7 dated 7-12-51. All these notifications are in exercise of the powers conferred on the Textile Commissioner under Clause 6 of the Cotton Control Order of 1950. The main order is S. Rule 0. 1793 dated 21-11-51 and subsequent notification under S. Rule 0. 1940 extended the applicability of the exemptions to several places, and under S. Rule 0. 1793 dated 21-11-51 and 1967 dated 7-12-61 they were extended to M.B. area. In short therefore we may refer to the Notification S. Rule 0. 1793 under which Clause 4 is not operative on ready contracts and delivery contract that is to say forward contracts in cotton fully pressed or half pressed or loose of specific description and for specific delivery at specified price, delivery orders, railway receipts or bills of lading in respect of which are not transferable to third parties. This exemption however is subject to certain restrictions and conditions specified in paragraph two.
This exemption however is subject to certain restrictions and conditions specified in paragraph two. The Clause 2 reads as follows: 2 (1) Nothing in this permission shall apply in relation to- (a) any contract for the sale or purchase of any cotton wherein the price stipulated is less than the minimum price or more than the maximum price according to the notification of the Textile Commissioner No. S.R. Order 1618 dated 20-10-51 as applicable to the subject-matter of the contract having regard to the place of delivery, (b) any contract of sale by a manufacturer except under and in accordance with the forms of a special permission granted by the Textile Commissioner or the Director (Cotton). The contract in question was entered into on 2-7-52. The exemption as we have already seen does not apply for sale or purchase of any cotton when the price stipulated is less than the minimum price. S. Rule 0. 1618 dated 20-10-51 gives the price. It has not been alleged nor shown that in the contract that was entered into the sale price did not come within the notification S. Rule 0. 1618 dated 20-10-51 as amended from time to time. By saying that it is against the rules the Defendant cannot succeed without prevailing rate on that date. According to the Textile Commissioner's notification as we have noticed that price varies from time to time and according to price notifications are also altered. I have therefore no hesitation in accepting the position that there has been an exemption u/s 6 of the particular type of contract entered into between the parties in this case. So far as the contravention of Clause 14 is concerned the provision is that after Distribution Committee has been appointed, no manufacturer shall acquire cotton grown in that area except in pursuance of an allotment made in accordance with the provisions made in Clause 14 (a). Now under Clause 14 (a) the Textile Commissioner in exercise of the powers conferred upon him by Sub-clause (1) to Clause 7 has to specify the maximum quantity of any description of cotton which a manufacturer may buy.
Now under Clause 14 (a) the Textile Commissioner in exercise of the powers conferred upon him by Sub-clause (1) to Clause 7 has to specify the maximum quantity of any description of cotton which a manufacturer may buy. The manufacturer may make an application to the Textile Commissioner for an allotment of such cotton or any portion thereof and on receiving such an application the Textile Commissioner may make an allotment to the manufacturer of the specific quantity of the required cotton to be acquired from the specific licensees at specified prices and within a specified time. It is true that all these permissions were not obtained. No allotment was received from the Cotton Distribution Committee. But I do not think that it is necessary that such an allotment order should be a condition precedent to the entering into contract. It is only at the time of execution of the contract that such an allotment order is necessary. It is also logical. Unless one knows what would be the quantity coming under the contract and what would be the price and at what place and within what specific time the goods are to be supplied, neither the Textile Commissioner nor the Distribution Committee can give an allotment order. After the refusal of the Defendant for not honoring the contract it was not necessary for the Plaintiff to obtain all the permissions and sanctions required under the Cotton Control Order. Clause 14 (b) bans acquisition. To enter into a contract is not to acquire. It is at the time of execution of the contract that something is acquired. Contract may mean acquisition of a right to acquire goods. It is definitely different from acquisition of goods. What is prohibited is acquisition of goods and not right to acquire goods. It is after this right to acquire is obtained from the promises that permission, allotment order are necessary, one cannot obtain both the things simultaneously. The manufacturer cannot apply for permission unless he has got the contract ready. We have noticed that under Clause 5 it has been specifically stated that all the contracts and options in cotton entered into in contravention of Clause 4 are void. There is no such provision in this Order for not following Clause 14 (a) or 14 (b), that is having a contract in contravention of clauses 14 (a) and 14 (b).
We have noticed that under Clause 5 it has been specifically stated that all the contracts and options in cotton entered into in contravention of Clause 4 are void. There is no such provision in this Order for not following Clause 14 (a) or 14 (b), that is having a contract in contravention of clauses 14 (a) and 14 (b). The operation of clauses 14 (a) and 14 (b) comes subsequent to the entering into contract with all those details regarding the quality of cotton, the place and time of delivery, as all these things have to be mentioned in an application to the Commissioner for permission or order of allotment because the order of the Textile Commissioner or the Cotton Distribution Committee should be specific on this point. Entering into a contract is a first step before acquisition and it is only after entering into a contract that one can obtain permission for acquisition. If the contract is not to be honoured one need not take any trouble of getting an order of allotment required under Clause 14 (a) or (b) of the Cotton Control Order of 1950.