M/S. Endupuni Narasimham v. M/S. Mahadevram Udimiram & Others

S.K Ray, J.:— Plaintiff has appealed from the reversing decision of the A.D.M (J), Berhampur dated 9-8-1969 passed in M.A No. 2/69 (M.A No. 7/68 GDCT) dismissing his suit.

2. He instituted the suit out of which this Second Appeal arises for recovery of damages for breach of contract from the defendant's making them jointly and severally liable for the same. The quantum of damage claimed is in the sum of Rs. 1600/- together with interest at the rate of 6 p.c, p.a pendente lite from the date of the suit till the date of the decree and subsequent interest at the rate of 6 p.c, p.a from the date of the decree till the date of realisation. The defendants are 5 in number. Defendant no. 1 is the partnership firm represented by defendants 2 to 5. According to the plaintiff, the contract with the defendant's firm, came about this way: On 24-10-1965 he made an offer to the defendant's firm to purchase one wagon of 265 bags of ragi at the rate of Rs. 61/- per bag of 83 K. Gs. with new gunny F.O.R (free of railway freight). The defendant was to despatch the goods to Bangalore after loading them in the Railway wagon at Khurda Road Railway Station. The defendants' firm sent a wire to plaintiff accepting the offer and calling upon the latter to pay Rs. 1000/- in advance. This advance amount was paid by adjustment of Rs. 500/- due to the plaintiff from the defendant's firm on a prior account and by paying Rs. 500/- on cash through the State Bank of India Draft dated 27-10-1965, The contract was, therefore, completed on 27-10-1965. Thereafter, the plaintiff made various enquiries from the defendants through phone on 3 occasions i.e 29-10-1965, 3-11-1965 and 8-11-1965 to find out if the goods were despatched and, if not, calling upon the defendants to despatch the same to Bangalore. Before the goods could be despatched, on 9-11-1965 Government of Orissa promulgated an order prohibiting export of ragi from Orissa with effect from the date of promulgation. On completion of the contract with the defendants' firm, the plaintiff had entered into a forward contract with a party at Bangalore to supply ragi at the rate of Rs. 65/- per bag. On account of breach of contract committed by the defendant's firm, his contract with Bangalore party failed and, in consequence, he Suffered a loss of Rs. 4/-. per bag. He has, therefore, claimed a refund of Rs. 1000/- paid as advance and a sum of Rs. 1060/- as loss of profit sustained by him. He, however, has limited his claim to Rs. 1600/- after giving up Rs. 460/-.

3. The defence case is that there was a contract to sell 265 bags of rice at the rate of Rs. 61/- per bag of 83 K. Gs. with new gunny F.O.R but there was no condition stipulating that the. defendant's firm is to despatch the goods to Bangalore. The contractual obligation of the defendants' firm will continue till they loaded the goods in the wagon at Jatni Railway Station. Subsequently the plaintiff intimated the defendants on phone on 29-10-1965 that the goods should not be despatched until the plaintiff's agent came and approved the quality of the goods. The plaintiff delayed in sending his agent and ultimately told him over phone on 8-11-1965 that his man will come on 11-11-1965. The plaintiff did not take any further steps to take delivery of the goods. Thus the contract was failed on account of laches of the plaintiff. They suffered loss to the tune of Rs. 1900/- which represents the difference between the contracted price and the market price at which he was compelled to sell the goods intended to be delivered to the plaintiff in the local market. The defendants have claimed Rs. 1900/- as damages against the plaintiff and have paid Court fee thereon.

4. The trial Court believed the plaintiff's case and held that there was a completed contract between the parties under which the defendant's firm was obliged to send the goods to Bangalore and that he committed breach of contract. On the basis of that finding he decreed the plaintiff's suit and dismissed the cross claim of the defendants.

5. The difference between the parties is whether the contract stipulated that the defendants' firm was under an obligation, in order to fulfil their part of contract, to despatch the goods to Bangalore, as the plaintiff contends, or the defendants' firm was to fulfil their part of contract by loading the goods in the wagon, as is the case of the defendants. The lower appellate Court on an elaborate consideration of the evidence, both documentary and oral, came to the conclusion, (a) that it has not been proved to the hilt that the contract was to the effect that the goods were to be despatched by the defendants to Bangalore, within a week from the date of the contract and (b) that even if such a contract could be spelt out from the evidence and circumstances, there was no satisfactory evidence to the effect that the plaintiff after examining the sample instructed the defendants to despatch the goods before the ban order came, into force, so that, it could be said that the breach was committed by the defendants. On the other hand, the trial Court further said, the evidence tends to show that it was the plaintiff, who committed the breach in not notifying the place to which the goods were to be despatched and, even if the place was already notified earlier at the time of contract, by not instructing the defendants to despatch after examining the sample.

6. It is contended on behalf of the appellant that the defendants having not denied, in their written statement, the specific case of the plaintiff that the contract was that the defendants were to despatch the goods to Bangalore, could not lead evidence on that score, and any evidence adduced in that regard by the defendants is inadmissible. The plaintiff set out his case of the terms of the contract in paragraphs 2(a) and 2(c) of the plaint. These averments of the plaintiff have been denied in paragraphs 5 and 7 of the written statement. The averments of paragraph 7 of the written statement constitute categorical denial of this part of the plaintiff's case. This paragraph is extracted herein below:—

“That the plaintiff has never asked the defendant on phone to despatch the said 265 bags of ragi as alleged in para 2(c) of the plaint and similarly the defendants never assured the plaintiff that he would despatch the said goods to Bangalore as soon as wagon would be available and therefore the contents of para 2(c) of the plaint is stoutly denied by the defendant.”

7. It appears from Ex. G, a reply by the defendant's lawyer to the plaintiff's notice (Ex. 1) that the stand taken by the defendants was that the plaintiff had to lift the goods from the defendants which obviously means that the delivery of the goods was to take effect at Khurda Road Railway Station. In the circumstances, this contention of the plaintiff has no force. The finding of fact, as to the terms of contract, rendered by the lower appellate Court, as indicated above, must be accepted as it has not been shown otherwise to be legally infirm. Plaintiff's suit, therefore, has been rightly dismissed.

8. The next contention of Mr. Sinha is that the decree for damages granted in favour of the defendants under section 54 (2) of the Sales of Goods Act is wrong in law. Section 54(2) of the Sale of Goods Act runs as follows:—

“Where the goods are of a perishable nature, or where the unpaid seller who has exercised his right of lien or stoppage in transit gives notice to the buyer of his intention to re-sell, the unpaid seller may, if the buyer does not within a reasonable time pay or tender the price, re-sell the goods within a reasonable time and recover from the original buyer damages for any loss occasioned by his breach of contract, but the buyer shall not be entitled to any profit which may occur on the re-sale. If such notice is not given, the unpaid seller shall not be entitled to recover such damages and the buyer shall be entitled to the profit, if any, on the re-sale.”

9. In order to apply this provision of law one of the precondition is that the seller must give notice to the buyer of his intention to re-sell and it is admitted that no such notice has been given. Accordingly, section 54(2) is wholly inapplicable and Mr. S.C Roy, the learned counsel for the respondents also fairly concedes to that legal position. There is support for this view in the case of Kanhaiyalal v. Kasturchand . A.I.R 1957 M.B 168.. He, however, contends that the respondents are entitled to damages under sections 44 and 56 of the Sale of Goods Act. Section 44 read thus:—

“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.

10. The opening words of this section “when the seller is ready and willing to deliver the goods and requests the buyer to take delivery” indicate that the seller must be ready and willing to deliver the contracted goods. The contracted goods were 265 bags of ragi. Finding is that the defendants had acquired only 197 bags out of- 265 bags contracted for. That is also defendant's own case in the written statement. In the circumstances, it is impossible to say that the defendants were ready and willing to deliver the goods, which means the entire goods and not a part of the goods. Therefore, in my opinion, section 44 is not applicable. Coming to section 56, it provides that where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may sue him for damages for non-acceptance. For the aforesaid reason that the defendants were not ready with the entire goods contracted for the reciprocal obligation of the plaintiff to accept the goods and to pay for the same did not arise. Therefore the buyer, namely, the plaintiff can be said to have wrongfully neglected or refused to accept and pay for the goods. In my view, the defendants have failed to make out a case for recovery of damages from the plaintiff.

11. Coming to the quantum of damages claimed by the defendants, it must be remembered that the law imposes a duty on the defendants of taking all reasonable steps to mitigate the loss consequent upon the breach and cannot claim as damages any aim which is due to his own neglect. Evidence discloses and, it also likewise has been found, that the plaintiff repudiated the contract by letter Ex. C dated 25-11-1965. It was, therefore, the duty of the defendants to take all reasonable steps to mitigate the loss by reselling in the market at the earliest possible opportunity. Despite such repudiation the defendants went on requesting the plaintiff to lift the stock. Such repeated requests to the plaintiff would not postpone the discharge of the undoubted legal duty cast upon the defendants to dispose of the goods as soon as possible to mitigate the damage sustained. Instead of that, the defendants have sold the goods, as it appears from the Ex. K series, on three dates, i.e 30-1-1966, 12-2-1966 and 24-10-1966. No acceptable evidence has been led as to the market rate prevalent at the time of breach of contract. In absence of such evidence, it is not possible to grant damages. Further, Ex. K series are certain bills. They do not show the market rate at the date of the transactions they represent. They merely show the price paid by the purchasers. Considering every thing the trial Court came to the conclusion that the evidence on behalf of the defendants showed that they sustained no loss. That finding has, apparently, been reached on relevant materials on record and in the correct legal perspective. In the circumstances the lower appellate Court was not justified in reversing the finding and granting damages to the defendants, which is not sustainable in law.

12. To sum up, as found by the lower appellate Court, the plaintiff is entitled to recover Rs. 1000/-, paid by way of advance, from the defendants. The defendants, as held by me, are not entitled to any damage at all. In the circumstances, the plaintiff is to get a decree of Rs. 1000/- against the defendants while the defendants' claim of damages against the plaintiff is negatived.

13. In the result, therefore, this appeal partly succeeds. Plaintiff's suit is decreed in the sum of Rs. 1000/- which has been advanced to the defendants and the defendants' claim for damages is dismissed. The plaintiff will be entitled to interest at 6% p.a on the aforesaid amount from 19-11-1969 when this Second Appeal was filed till realisation. He is disallowed interest for the earlier period i.e from the date of suit till filing of this appeal because it was he who committed breach of contract.

14. The plaintiff is entitled to proportionate costs throught.

15. Appeal allowed in part.

Appeal party allowed.