SLYTONE ELECTRICALS INDIA Vs. UNION OF INDIA

JUDGEMENT

(1.) MESSRS Skytone Electricals (India) Faridabad, is a partnership firm carrying on business for the manufacture of electrical goods and other allied articles. They entered into a contrect No ES-3/BULK/33/III/Skytone/1026 PAOD, dated January 18, 1973 with the Union of India, respondent No 1, for supply of the following sfores of the value of Rs. 14.75,6191- : - Item No-1: 12 core x 105 sq.m .. 100K.M. Item No. 2 : 9 cors x 1.5 sq.m. . . 13.5 K.M. Item No. .5: 2 core x. 1.5sq.m. .. 50K..M.

(2.) DELIVERY of items I and 5 was to commence after four weeks from the date of the receipt of the order at 50 K.Ms. per month to be completed by May 10. 1973. The stores under G item No. 1 were to be delivered, by June 10, 1973. In exercise of its-right under clause 19(e) of the contract the- respondent increased the quantity under items 2 and 5 from 13.5 and 50 K. Ms. to 13.65 and 62 K.Ms., respectively. The value of stores was, consequently, increase to Rs. 15,24,2911-. Thp petitioner, it is stated supplied 29,932 meters of the first item, 12,919 metres of the second item and 52,373 metres of the fifth item. The remaining supplies were not completed in spite of extension of time. Ultimatelv the agreement was cancelled it the risk and cost of the petitioners vide letter dated April 30, 1976. The respondent thereafter claimed a sum of Rs. 4,78,764 as damages alleged to have been suffered by them on account of the breach of the contract by the petitioners. On the failure of the petitioner to pay the amount the matter was referred to arbitration. The learned arbitrator made and published award on March 31, 1978. The operative part of the award reads as under :

(3.) WHERE a seller fails to deliver the goods the damages are the difference between the. contract price and market price at the date of delivery where there is an available market. Actual purchase of the goods short-supplied or nonsupplied is not necessary. The sum representing the difference between the contract price and the market price at the place and date of delivery would be the loss which naturally arose in the usual course of things in such transactions. Had the seller supplied the goods as agreed then the buyer would have earned pro- fact that the buyer sustained no actual loss from the seller's failure to deliver the goods is no ground for awarding nominal damages to the buyer. The buyer is entitled, as indicated by. Illustration (a) to S. 73, Contract Act, to receive from the seller by way of compensation the sum by which the contract price falls short of the price for which the buyer might have obtained goods of like quality at the time when they ought to have been delivered.