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1994 DIGILAW 222 (BOM)

National Small Industries Corporation Ltd. . v. Ramchandra Raghunath Joshi

1994-06-14

D.R.DHANUKA

body1994
JUDGMENT - D.R. DHANUKA, J.:--This appeal is preferred by the original defendants against decree passed on 30th September 1977, by the Bombay City Civil Court at Bombay in Suit No. 4001 of 1965. By the said decree, the trial Court directed the defendants to pay to the plaintiff a sum of Rs. 12,435/- with interest to the plaintiff as and by way of damages at the rate of six per cent per annum from the date of filing of the suit till the date of realisation of the decreetal amount and cost of the suit. The parties to this appeal are hereinafter referred to as the defendants and the plaintiffs for sake of convenience. The material facts having bearing on subject matter of this appeal are briefly summarised hereinafter. 2. On 28th February, 1964, the defendants asked for quotations from the plaintiff for supply of one 3 Roller Pulverising Bill with companies accessories. On 24th February, the plaintiff offered to sell to the defendants from ready stock the said pulverising Mill, Indian make "Master" Brand complete with accessories from ready stock for sum of Rs. 65,770/- per unit. The plaintiff addressed the said letter dated 24th February, 1964 to the Deputy Manager (Hire Purchase) of the National Small Industries Corporation Limited. The plaintiff stated in the said letter as under:- "The terms of payment:- It is agreed that you will pay us full value of the machine within 15 days from the date of receipt by you of your delivery challans duly signed by the person or firm authorised by you to take delivery of the machine on your behalf, such challans and bills on our printed forms to be sent to you directly by us for collection". On 8th May, 1964, the head office of the defendants forwarded their written order to the plaintiff for supply of the said machine for price of our 65,770/-. It was inter alia stated in the said Order as under :- "Name and address of the consignee may please be obtained from our branch office Bombay". By letter dated 12th May, 1964, the plaintiff acknowledged receipt of the said order dated 8th May, 1964. By the said letter the plaintiff conveyed their acceptance of the said order. It was inter alia stated in the said Order as under :- "Name and address of the consignee may please be obtained from our branch office Bombay". By letter dated 12th May, 1964, the plaintiff acknowledged receipt of the said order dated 8th May, 1964. By the said letter the plaintiff conveyed their acceptance of the said order. It appears that on or about 12th May, 1964, a concluded contract was arrived at between the plaintiff and the defendants where under the plaintiff agreed to supply the said machine to such consignee as may be authorised by the defendants on the footing that the defendants shall be liable to pay agreed price thereof to the plaintiffs. 3. It appears that at or about the same time the defendants in their turn were negotiating for supply of the abovereferred machine agreed to be purchased by the defendants to the plaintiff to a third party by name Hohmco Lime Products on Hire Purchase basis. For sake of convenience M/s. Hohmco Lime Products is hereinafter referred to as "the said third party". By letter dated 12th June, 1964, the defendants informed the said third party that the suppliers i.e. plaintiff was pressing the defendants for delivery instruction and the said third party should complete the formalities presumably in respect of intended hire purchase transaction between the defendants and the said third party. A copy of the said letter dated 12th June, 1964 was endorsed by the defendants to the plaintiff. By letter dated 22nd June, 1964 Master Engineering Works the supplier of which Ramchandra Raghunath Joshi was the sole proprietor at the material time promptly addressed a letter to the defendants clearly stating there in that their contract was with the defendants and the plaintiff was not concerned with the abovereferred third party. The defendants did not controvert this assertion of the plaintiff by addressing any letter. It was no where stated in the correspondence that the defendants were entering into the suit transaction merely as an agent for a third party. By letter dated 17th June 1964, addressed to the defendants, a copy endorsed to the plaintiff, the above referred third party expressed its disinclination to finalise the intended transaction between the said third party and the defendants. By letter dated 17th June 1964, addressed to the defendants, a copy endorsed to the plaintiff, the above referred third party expressed its disinclination to finalise the intended transaction between the said third party and the defendants. By letter dated 27th June, 1964 addressed by the said third party to the defendants with copy endorsed to the plaintiff, the said third party reiterated its earlier stand. By letter dated 16th September, 1964, addressed to the defendants, the plaintiff made a serious grievance against the defendants in view of the fact that the defendants were delaying in respect of their obligation to take delivery of the said machine promptly. It was stated in the said letter that if the defendants did not take delivery of the said machine within two weeks from receipt of the said letter, the plaintiff would be compelled to sell the machine to some other party and recover the amount of loss suffered from the defendants. The plaintiff once against sent a reminder letter to the defendants in this behalf by their letter dated 12th October, 1964. By this letter the plaintiff requested the defendants to take delivery of the said machine atleast by 30th October, 1964. It appears that at one stage the plaintiffs were contemplating to take some action against the defendants as well as the above referred third party for recovery of damages for the loss likely to be suffered by the plaintiff if the delivery of the said machine was not taken by the defendants even though the privity of contract was between the plaintiff and defendants only. By letter dated 18th November, 1964, addressed by the third party to the plaintiffs the said third party purported to record that according to the information available to the defendants the suit machine was already sold out. By the said letter the said third party requested the plaintiff not to make any claim for losses which may be made if the delivery of the said machine was not taken. The assumption made by the third party in the said letter were all wrong. By letter dated 21st November, 1964, the plaintiff once again informed the said third party as there was no contract pertaining to the suit machine between the plaintiff and the said third party, the plaintiff was not obliged to reply to the said letter dated 18th November, 1964. By letter dated 21st November, 1964, the plaintiff once again informed the said third party as there was no contract pertaining to the suit machine between the plaintiff and the said third party, the plaintiff was not obliged to reply to the said letter dated 18th November, 1964. Correspondence went on between the plaintiffs and the defendants. By letter dated 11th December, 1964, the defendants made a show of inquiry from the plaintiff as to whether the said machine was ready for despatch. The plaintiff was always keen to deliver the said machine to the defendants. The plaintiff went on pressing the defendants for taking of delivery of the said machine. The defendants failed and neglected to take delivery of the said machine. The defendants did not respond presumably because the negotiation between the defendants and the above referred third party were not finalised. Ultimately on 8th March, 1965, the defendants addressed a letter to the plaintiffs stating therein as under:- "We have been informed by our Bombay office that the machine covered under our above supply order has been sold out by you to some other customer. In view of the above we are treating our above supply order as cancelled. Kindly confirm." "The inconvenience caused to you in this behalf is regretted." By the said letter the defendants conveyed their definite decision not to accept the delivery of the said machine. The defendants thus repudiated the suit contract and committed the breach thereof. By letter dated 12th April, 1965, addressed to the defendants the plaintiffs informed the defendants that the allegations made by the defendants that the suit machine was already sold out were not correct. By the said letter the plaintiff also infomed the defendants that the defendants were liable to pay damages to the plaintiffs a a sum of Rs. 8,550.50. 4. On or about 21st May, 1965, the plaintiff sold the suit machine to another party i.e. M/s. Deepak Pulverises vide invoices of the plaintiff bearing No. 69/65 and 70/65 dated 21st May, 1965. 5. On or about 22nd July, 1965, the plaintiff filed the abovereferred suit being suit No.40 of 1965 seeking to recover a sum of Rs. 12,435/-as and by way of damages from the defendants i.e. Rs. 7,635/- on account of damages for the breach of contract committed by the defendants computed on the footing of resale. 5. On or about 22nd July, 1965, the plaintiff filed the abovereferred suit being suit No.40 of 1965 seeking to recover a sum of Rs. 12,435/-as and by way of damages from the defendants i.e. Rs. 7,635/- on account of damages for the breach of contract committed by the defendants computed on the footing of resale. In the plaint the plaintiff contended that on resale of the said machine, the plaintiff was able to realise only a sum of Rs. 58,135/- whereas the contract price was Rs. 65,770/-. The plaintiff also claimed storage charges for storing the said machine in their workshop at Rs. 400/- per month for the period 12th May, 1964 to 21st May, 1965 aggregating to Rs. 4800/- in all. 6. The defendants filed the written statement in the suit raising various contentions as indicated therein. 7. The learned trial Judge framed several issues at the trial of the suit as listed in para 4 of its judgment. 8. The oral evidence led on behalf of plaintiff consist of testimony of Ramchandra Raghunath Joshi, the sole proprietor of the Master Engineering Works. The oral evidence led on behalf of the defendants consist of testimony of Manohar Govind, Assistant Manager of the defendants Corporation. Both parties also led documentary evidence. 9. The learned Counsel for the appellants submitted that the defendants had entered into the suit transaction as agents for a disclosed principal i.e. M/s. Hohmco Lime Products and the plaintiff could not therefore, sue the defendants personally for recovery of damages or storage charges from the defendants. The learned Counsel for the appellants submitted that there was no concluded contract between the plaintiff and the defendants. The learned Counsel submitted that it was within the knowledge of the plaintiff that the suit machine was intended to be supplied to the above referred third party and the plaintiff ought to have made their claim for damages for the loss suffered, if any, against the said third party i.e. M/s. Hohmco Lime Products and not against the defendants. All these contentions shall have to be considered together. The learned Counsel for the appellants relied on letter dated 24th February, 1964, addressed by the plaintiffs to the Deputy Manager (Hire Purchase) as a background material in support of the above referred principal contention. All these contentions shall have to be considered together. The learned Counsel for the appellants relied on letter dated 24th February, 1964, addressed by the plaintiffs to the Deputy Manager (Hire Purchase) as a background material in support of the above referred principal contention. The learned Counsel submitted that right from the beginning it was known to the plaintiff that the suit machinery was intended to be delivered to a third party duly authorised by the defendants. In my opinion the above referred letter dated 24th February, 1964 militates against the abovereferred contention urged on behalf of the appellants. The said letter clearly states that the defendants will be liable to pay the price of the suit machinery to the plaintiff. Merely because of the delivery of the suit machine was intended to be effected to third party as may be authorised by the defendants, it does not follow that privity of contract was not between the plaintiff and the defendants. No where it is stated in the correspondence exchanged between the parties that the defendants were entering the suit transaction in their capacity as agent for the third party. The correspondence between the parties as well as written order placed by the defendants with the plaintifs for supply of the said machine clearly shows that the suit transaction was between the plaintiffs and the defendants as principal to principal basis. The learned Counsel for the appellant relied on the text of Order dated 8th May, 1964 in support of his contention. The said Order undoubtedly states that name and address of the consignee may be obtained from the branch office of the defendants. The text of the said order militates against the abovereferred contentions of the defendants. On acceptance of the said order by the plaintiff, a concluded contract was arrived at between the parties. The privity of contract was between the plaintiffs and the defendants as evidenced by letter dated 24th February, 1964, Order dated 8th May, 1964 and letter of acceptance dated 14th May, 1964. It is of considerable significance that at the first available opportunity the plaintiff contended by their letter dated 22nd June, 1964 addressed to the defendants that their contract was with the defendants and the plaintiff looked to the defendants for fulfilment thereof. It is true that the plaintiff addressed same letters to the abovereferred third party also. It is of considerable significance that at the first available opportunity the plaintiff contended by their letter dated 22nd June, 1964 addressed to the defendants that their contract was with the defendants and the plaintiff looked to the defendants for fulfilment thereof. It is true that the plaintiff addressed same letters to the abovereferred third party also. It is, however, clear from letter dated 21st November, 1964, addressed by the plaintiff to the said third party that the plaintiff was very firm in his stand at all times that the suit contract was between the plaintiff and the defendants only and there was not contract between the plaintiff and the said third party. The stand of the plaintiff on this aspect was consistent throughout. I have, therefore, no hesitation in rejecting the abovereferred submissions urged by the learned Counsel for the appellants. I am not prepared to hold that the said order dated 8th May, 1964 was placed by the defendants for and on behalf the said third party. The suit transaction was between the plaintiff and the defendants on principal to principal basis. The defendants in their turn were negotiating to supply the said machine to the abovereferred third party on hire Purchase basis with which transaction the plaintiffs were concerned. It is possible that the said machine was intended to be supplied by the defendants to the abovereferred third party. That however, makes no difference. 10. It is obvious from the summary of the correspondence set out in the earlier part of this judgment that the plaintiff had agreed to supply the said machine to the defendants from ready stock and the plaintiff was very keen to comply with their part of the obligation under the suit contract. The plaintiff repeatedly called upon the defendant to take delivery of the said machine. It was not a term of the contract between the plaintiffs and the defendants that the defendants would take delivery of the said machine only if the proposed transaction between the defendants and the abovereferred third party was concluded. It was for the defendants to take delivery of the said machine from the plaintiff or authorise a consignee i.e. a third party to take such delivery. The plaintiffs were to receive the agreed price of the said machine from the defendants and not the third party. It was for the defendants to take delivery of the said machine from the plaintiff or authorise a consignee i.e. a third party to take such delivery. The plaintiffs were to receive the agreed price of the said machine from the defendants and not the third party. Having regard to the totality of correspondence between the parties and the oral testimony of the witnesses examined on both sides I have no hesitation in holding that the defendants committed breach of the suit contraction 8th March, 1965 by wrongful repudiation thereof. By the said letter dated 8th March, 1965, the defendants unilaterally cancelled the suit contract. The plaintiff protested against the said unilateral cancellation of the suit contract as obvious from letter dated 12th February 1965 addressed by the plaintiff to the defendants. It is not possible to hold that the plaintiff has committed breach of suit contract or that the defendants has not committed the breach of suit contract. 11. The learned Counsel for the appellants rightly submitted that property in the goods had not passed in favour of the buyer at any point of time and the plaintiff was, therefore, not entitled to claim damages from the defendants on the footing of resale. The learned Counsel for the appellant invited attention of the Court to the judgment of the Honble Supreme Court in the case of (P.S.N.S. Ambalavana Chettiar Co. Ltd. Anr. v. Express Newspapers Ltd. Bombay)1, reported in A.I.R. 1968 S.C. 741. In this case Bachawat, J., speaking for the Bench of the Honble Supreme Court held that in such a situation the seller could claim damages from the buyer on the footing of the difference between the contract price and the market price on the date of the breach and not on the footing of resale as such. The learned Counsel for the respondent invited the attention of the Court to the Division Bench Judgment of High Court of Delhi in the case of (M/s. Ram Saran Das Raja Ram anr. v. Lala Ram Chandar) 2, reported in A.I.R. 1968 Delhi 233. In this case it was held by the Court that the price obtained as a result of re-sale could be taken into consideration as indicated in the market value of the goods on the date of the breach alongwith other relevant evidence on record. v. Lala Ram Chandar) 2, reported in A.I.R. 1968 Delhi 233. In this case it was held by the Court that the price obtained as a result of re-sale could be taken into consideration as indicated in the market value of the goods on the date of the breach alongwith other relevant evidence on record. The Division Bench of the High Court of Delhi thus held that while computing damages on the footing of difference between contract price and the market price on the date of the breach, the price actually realised on the date of re-sale could be considered as a relevant material for assessing the quantum of damages. I respectfully agree with the view taken by High Court of Delhi in the abovereferred case. Both the learned Counsel are right in their respective submissions. I hold that on the above referred aspects. I hold that the plaintiffs are not entitled to recover the amount of damages claimed from the defendants on the footing of re-sale as such within the contemplation of section 54(2) of Sale of Goods Act, 1930 but the re-sale price of goods of Rs. 58,135/- can be taken into consideration as one of the relevant material for assessing the damages on the footing of difference between the contract. price and the market price on the date of breach. There was no other material on record to prove the market price of the contract goods on the date of the breach. In this sense the argument urged on behalf of the appellants is too theoritical and is of no practical consequence for purpose of deciding this appeal. 12. The learned Counsel for the appellant submitted that the appellants has not properly proved the quantum of damages. The learned Counsel for the appellants has submitted that the plaintiff ought to have examined the purchaser of the goods or led better evidence to prove the market price on the date of breach. I have carefully gone throught the entire evidence of both the witnesses with the help of learned Counsel for the appellant. Ramchandra Raghunath Joshi interms stated in his evidence that he had sold the suit machine in May, 1965 vide voucher dated 21st May, 1965, marked as Exhibit "R". There was no cross-examination at all on this aspect of the testimony of Ramchandra Raghunath Joshi. Ramchandra Raghunath Joshi interms stated in his evidence that he had sold the suit machine in May, 1965 vide voucher dated 21st May, 1965, marked as Exhibit "R". There was no cross-examination at all on this aspect of the testimony of Ramchandra Raghunath Joshi. No rebuttal evidence was led on behalf of defendants worth its name. Even today the defendants are unable to inform the Court as to what exactly was the market price of the suit machine on the date of breach of the suit contract. I, therefore, concur with the finding of the learned trial Judge that the plaintiff is entitled to recover damages from the defendants for breach of the suit contract in sum of Rs. 7635/-. In absence of any other relevant evidence, price realised on re-sale was rightly taken as indicative of difference of market price of the suit machine on the date of breach of contract. The claim for damages for breach of the suit contract was held proved. I agree with the findings of the trial Court on each of the issues framed at the trial of the suit. It cannot be forgotten that the suit machine was sold by the plaintiff on or about 21st May, 1965 whereas the breach of contract was committed by the defendants on 8th March, 1965. In the relm of theory, it is possible to visualise that there could be a change between the market price on the date of breach of contract and the date of re-sale of the said machine. It was for the defendants to lead proper evidence in this behalf or to ask relevant question to the witness examined on behalf of the plaintiff in cross-examination and show that the market price had undergone a change during the integgerum. If the defendants would have challenged the evidence of the plaintiff on this aspect of the case, the plaintiff could be expected to lead further evidence to prove the quantum of damages. In absence of any effective challenge to the testimony of witnesses examined on behalf of the plaintiffs,I hold that the plaintiffs have duly proved the suit claim and the trial Court has rightly decreed the suit. I confirm the findings of the trial Court. 13. Section 54(2) of the Sale of Goods Act cannot be invoked where the property on the goods has not passed to the buyer. I confirm the findings of the trial Court. 13. Section 54(2) of the Sale of Goods Act cannot be invoked where the property on the goods has not passed to the buyer. Novertheless price realised on re-sale can be taken into consideration alongwith other evidence on record, if any, for purpose of assessing damages on the footing of difference between contract price and the market price and the price realised on re-sale need not be ignored altogether. In a given situation, price realised on re-sale may be the only available evidence to prove the market price on the date of breach as the suit goods may have no regular market. It all depends upon facts of each case. Proof of quantum of damages need not be rendered with mathematical certainty. 14. Section 44 of the Sale of Goods Act, 1930 reads as under :- "When the seller is ready and willing to deliver the goods and requests the buyer to take delivery, and the buyer does not within a reasonable time after such request take delivery of the goods, he is liable to the seller for any loss occasioned by his neglect or refusal to take delivery, and also for a reasonable charge for the care and custody of the goods; Provided that nothing in this section shall affect the rights of the seller where the neglect or refusal of the buyer to take delivery amounts to a repudiation of the contract." 15. Having regard to the breach of contract committed by the defendants and willingness of the plaintiff to deliver the said suit machine from ready stock at all time, I uphold the finding of the trial Court also in respect of claim made by the plaintiff for recovery of storage charges in sum of Rs. 4,800/- also. I have gone through the entire evidence led at the trial of the suit with assistance of the learned Counsel. I find no merit in the challenge of the appellant to the finding of the trial Court on this aspect of the appeal as well. In my opinion the evidence of witness Ramchandra Raghunath Joshi led on behalf of the plaintiffs is quite satisfactory. I accept the said evidence and uphold the finding of the trial Court. 16. In the result the appeal fails. The appeal is dismissed with costs. 17. In my opinion the evidence of witness Ramchandra Raghunath Joshi led on behalf of the plaintiffs is quite satisfactory. I accept the said evidence and uphold the finding of the trial Court. 16. In the result the appeal fails. The appeal is dismissed with costs. 17. The Bombay City Civil Court at Bombay is directed to pay the amount deposited by the defendants in the trial Court to the plaintiff to the extent of decretal claim expeditiously. If there is a deficit the plaintiff shall be entitled to recover the balance of the amount from the defendants in execution of the decree unless the defendants pay balance of the amount to the plaintiff. It is hereby clarified that the plaintiff shall be entitled to payment of interest on sum of Rs. 12,435/- at the rate of six percent per annum form the date of filing of the suit till actual payment or realisation even though the abovereferred amount appears to have been deposited by the defendants in the trial Court. On the application of the defendants the plaintiff was precluded from withdrawing the said amount unless the plaintiff furnished security. The learned Counsel for the appellants states that the plaintiff was unable to furnish security. Mere deposit of the said amount from defendants could not be considered payment to the plaintiff. In such a situation, interest does not stop running. Deposit of the said amount in the trial Court was not "unconditional". I am clarifying this aspect in order to avoid any controversy between the parties in future. 18. The trial Court is directed to release the said amount to the plaintiff decree holder expeditiously on the basis of ordinary copy of this Order authenticated by the Shirastedar of this Court. 19. The Registrar, High Court, Appellate Side is directed to return the record of the trial Court expeditiously alongwith ordinary copy of this order. 20. The learned Counsel for the appellants makes an application for continuation of status quo as of today for a period of 8 weeks from today. The application made by the learned Counsel for the appellants is refused as in my opinion there is no justice in the case of the appellants whatsoever. 21. Issue of certified copy is expedited. Appeal fails.