P. M. Naina Mohammed Rowther v. Kapporchand Jain — 1987 DIGILAW 406 (MAD)

JUDGMENT V. Ratnam, J. 1. The plaintiff in O.S. No. 160 of 1976, District Munsif Court, Kuzhithalai, who succeeded in part before the trial Court and lost before the lower appellate Court, is the appellant in this second appeal. The appellant instituted the suit for the recovery of a sum of Rs. 3,088, comprised of a sum of Rs. 2,000 deposited by him and Rs. 1,088 towards loss of profits under the following circumstances. 2. On 28.1.1976, a contract was entered into between the appellant and the respondent through the second defendant in the suit for the purchase of white jawar from the respondent at Rs. 115.50 per bag of 100 kgs. A sum of Rs. 2,000 was paid by the appellant to the respondent's deposit. On arrival of the goods in Tiruchi, the appellant was informed of the same and he ascertained the condition and quality of the jawar with some members of the Chamber of Commerce at Manaparai, when it was found that the jawar actually consigned was inferior in variety and not white jawar contracted to be supplied and mixed with chaff, etc. A certificate regarding the quality and the condition of the jawar was also claimed by the appellant to have been issued by the Chamber of Commerce, Manaparai. Realising that the quality of the jawar supplied did not conform to the quality agreed to be supplied, the appellant appears to have requested the 2nd defendant to sell the goods at Rs. 100 per bag; but the 2nd defendant was not agreeable for this course. Subsequently, on 10.3.1976, the 2nd defendant sent a telegram to the appellant saying that the jawar had been sold at Rs. 96 per bag at Trichi. According to the case of the appellant, the respondent committed breach of contract in supplying inferior quality goods and not what was agreed to be supplied, though the appellant was ready and willing to take delivery of the jawar conforming to the quality agreed to be supplied. A notice was also issued by the appellant on 29.6.1976, charging the respondent with breach of contract and claiming damages. Since that was repudiated by the respondent, the appellant instituted the suit for recovery of Rs. 3,088 as stated above. 3. A notice was also issued by the appellant on 29.6.1976, charging the respondent with breach of contract and claiming damages. Since that was repudiated by the respondent, the appellant instituted the suit for recovery of Rs. 3,088 as stated above. 3. In the written statement filed by the respondent, it was contended that the contract was entered into on 28.1.1976, according to which, against the presentation of the railway receipt and the hundi through Bank, payment should be made and delivery of goods should be taken and in accordance with that, the goods were dispatched on 4.2.1976 to the appellant and the appellant was also informed of the same on 5.2.1976. The further case of the respondent was that the appellant did not pay and take delivery of the railway receipt with a view to get the goods cleared. However, on 21.2.1976, the appellant gave a telegram praying for ten days time; but, did not take delivery and the appellant had committed breach of the contract and therefore, not entitled to the relief of refund of deposit amount. The respondent claimed that he had sustained damages to the tune of Rs. 6,710 and after adjusting the sum of Rs. 2,000 paid by the appellant, the appellant had to pay the respondent a sum of Rs. 4,710 in respect of which, the respondent reserved his right to file a separate suit. Maintaining that the quality of goods dispatched was according to the terms of the contract and stating that the appellant had repudiated the contract in view of the falling market and that the Court had no jurisdiction to entertain the suit, the respondent prayed for the dismissal of the suit. In a separate written statement, filed by the 2nd defendant, it disclaimed liability even on the terms of the contract and charged the appellant with having committed breach of the contract. 4. Before the trial Court, on behalf of the appellant, Exs. A1 to A5 were marked and P.Ws. l and 2 were examined, while, on behalf of the respondent, Exs. B1 to B2 were filed and D.W.1 gave evidence. 4. Before the trial Court, on behalf of the appellant, Exs. A1 to A5 were marked and P.Ws. l and 2 were examined, while, on behalf of the respondent, Exs. B1 to B2 were filed and D.W.1 gave evidence. On a consideration of the oral as well as the documentary evidence, the learned District Munsif found that the goods dispatched by the respondent did not correspond with the description in the contract and therefore, the appellant was justified in rejecting the goods and the appellant, though not entitled to recover damages, could at least recover the sum of Rs. 2,000 deposited by him with the respondent. In view of the conclusions so arrived at, the trial Court granted a decree in favour of the appellant for the recovery of a sum of Rs. 2,000 from the respondent with interest at 6 per cent per annum from 5.7.1976 till the date of realisation. Aggrieved by this, the respondent preferred an appeal in A.S. No. 237 of 1978 before the Sub-Court, Trichi. The learned Subordinate Judge, however, did not agree with the finding of the trial Court that the respondent committed breach of contract, but instead found that the appellant had committed breach of contract and in that view, allowed the appeal and dismissed the suit instituted by the appellant. It is the correctness of this that is challenged in this second appeal. 5. Thus, the question that arises for consideration in this second appeal is, whether the appellant is not entitled to the refund of Rs. 2,000 admittedly paid by him, on the date on which the contract was entered into with the respondent. Under the terms of the contract, which could be gleaned from Ex. A1, dated 28.1.1976, the appellant had agreed to purchase one broad gauge wagon full of jawar white in bags of 100 Kgs. each at Rs. 115.50 per bag. A sum of Rs. 2,000 had been deposited by the appellant even according to the terms of Ex. A1. There is no term or stipulation in Ex. A1 to the effect that the amount of Rs. 2,000 referred to as deposit therein is liable to be forfeited. Plainly therefore on the terms of Ex. A1, the deposit of Rs. 2,000 admittedly made by the appellant could not be forfeited. Whether the appellant is not otherwise entitled to a refund of the deposit amount may now be considered. A1 to the effect that the amount of Rs. 2,000 referred to as deposit therein is liable to be forfeited. Plainly therefore on the terms of Ex. A1, the deposit of Rs. 2,000 admittedly made by the appellant could not be forfeited. Whether the appellant is not otherwise entitled to a refund of the deposit amount may now be considered. Even on the finding of the lower appellate Court that the appellant had committed breach of the contract, it does not automatically follow that the respondent is entitled to forfeit the deposit of Rs. 2,000 made by the appellant. Unambiguously, the deposit had been made for the due performance of the contract and there is no stipulation that it is forfeitable. Even in a case where the deposit made is forfeitable in case of breach of the contract, Courts have to adjudge the reasonable compensation to which a party may be entitled in the circumstances of the case, though the determination of such reasonable compensation can be made either in a suit by the purchaser or even the vendor. Vide Meenakshinadha Deikshtar v. Murugesa Nadar and Anr. (1969)1 M.L.J. 474 . Before the respondent can be allowed to interdict the claim of the appellant for refund of the deposit, he has to plead and prove damages suffered upon which the Court will adjudicate the reasonable compensation to which the respondent may be entitled and deduct the same and thereafter award a decree for the balance. The absence of any provision relating to the forfeiture of the deposit in Ex. A1, has already been referred to. Further, it is seen even from the stand taken by the respondent in Ex. B2, that he is ready to deduct the sum of Rs. 2,000 and this shows that even according to the respondent, the deposit made by the appellant is refundable and thus adjustable deposit and not a wholly forfeitable deposit. The only evidence adduced on behalf of the respondent is that of D.W.1 and there is nothing helpful in his evidence regarding the damages sustained by the respondent. No doubt, learned Counsel for the respondent attempted to argue that the appellant had been informed under Ex. A4 that the jawar consigned pursuant to the contract entered into with the appellant had been sold at the rate of Rs. 96 per bag and the rate according to Ex. A1, (sic) Rs. No doubt, learned Counsel for the respondent attempted to argue that the appellant had been informed under Ex. A4 that the jawar consigned pursuant to the contract entered into with the appellant had been sold at the rate of Rs. 96 per bag and the rate according to Ex. A1, (sic) Rs. 115.50 per bag and that would afford a basis for holding that the respondent had sustained damages in excess of Rs. 2,000. Likewise, reliance was also placed upon the statement made by the appellant in the plaint that he had requested the 2nd defendant in the suit to sell the jawar at Rs. 100 per bag to contend that the amount deposited by the appellant was not refundable, owing to the damages sustained by the respondent. However, it is not possible in the absence of clear and cogent evidence regarding the sustaining of damages by the respondent to hold that the respondent had actually sustained damages. It was the duty of the respondent to mitigate the damages and a reading of the plaint shows that even according to the appellant, jawar consigned could have been sold at Rs. 100 per bag, while it had been actually sold according to the respondent only at Rs. 96 per bag. Indeed, the evidence of D.W.1 refers only to the price during the months of January and February, 1976 and does not refer to the price in March, 1976, when the jawar consigned is stated to have been sold. It is further seen from Ex. B2, that the respondent had merely arrived at the damages based on the difference between the price mentioned in the bill Ex. A2 and the proceeds of the sale without any reference whatever to the market value as on the date of sale. Indeed, the records do not clearly establish even the date of sale, though an intimation appears to have been sent to the appellant that jawar consigned had been sold. In the absence therefore of evidence with reference to the date of sale and the market rate on the date and the substaining of damages, if any, by the respondent, the claim of the respondent that he is entitled to adjust the sum of Rs. 2,000 as against the amount refundable to the appellant is clearly unsustainable. In the absence therefore of evidence with reference to the date of sale and the market rate on the date and the substaining of damages, if any, by the respondent, the claim of the respondent that he is entitled to adjust the sum of Rs. 2,000 as against the amount refundable to the appellant is clearly unsustainable. Thus, even on the finding of the Court below that the appellant had committed breach of contract, when no attempt has been made by the respondent to prove damages sustained by him by reason of the default of the appellant, the conclusion of the lower appellate Court that the appellant is not entitled to a refund of the deposit amount is erroneous. Under those circumstances, the second appeal is allowed, the judgment and decree of the lower appellate Court are set aside and those of the trial Court will stand restored, with costs throughout.