CORPORATION OF MADRAS Vs. RATANLAL FOMRA

JUDGEMENT

(1.) These two suits arise out of a contract between the Corporation of Madras, who is the plaintiff in C.S. No. 48 of 1967 and a partnership firm by name Fomra Brothers, who is the defendant in that suit, for the supply of certain types of high tension power cables by the firm to the Corporation. C.S. No. 48 of 1967 has been filed by the Corporation of Madras for the recovery of a sum of Rs. 1,40,625 with subsequent interest towards damages on the ground that the defendant committed breach of contract in its failure to supply the power cables contracted for and that the Corporation was forced to make purchases from open market in which they had to pay more than the price settled between the parties in respect of the same type of cables. The other suit namely, C.S. No. 33 of 1968 is one filed by the above said partnership firm, namely, Fomra Brothers against the Corporation of Madras for the recovery of a sum of Rs. 16,432.98 with interest of Rs. 1,297.02 totalling Rs. 17,730 towards the value of cables already supplied by the firm to the Corporation. It is common case that out of the contracted quantity of power cables only a small portion was supplied by the firm to the Corporation and the value of those supplies came to Rs. 16,432.98. This amount had been withheld by the Corporation, though it was due to the firm, on the ground that the same was liable to be set off towards the damages suffered by the Corporation owing to the firm's failure to supply the major part of the contracted quantity of power cables.

(2.) The plaintiff invited tenders for the supply of power cables of the specified type and the defendant filed a tender. It was duly accepted by the plaintiff by its communication dated 4th November, 1963. Later, a formal contract was executed between the parties and that is dated 6th June, 1964. It is common ground that the defendant supplied only 7,220 metres of a particular type of power cable and failed to supply the balance. There had been correspondence between the parties and the defendant had been asking for time on the ground that its principals namely, a company called Power Cables which is a manufacturing company at Bombay, had not made the supplies. By a letter dated 6th January, 1965, the plaintiff notified that if the defendant failed to supply' the quantity within seven days from the date of receipt of that letter, the contract would be terminated and purchase at the risk of the defendant as per Clause 4 of the terms of the contract would be made, and that the penal provisions of the contract would be enforced. The defendant by their letter dated 11th January, 1965 requested further ex-tension of time, but the plaintiff refused further extension. It is, therefore, the case of the plaintiff that the defendant committed breach of the contract. Then the plaintiff purchased the power cables of the type required in the open market from various concerns such as Messrs. Galada Enterprise, M/s. S.G. Electricals and M/s. Crompton Engineering Company (P) Limited. The total price paid by the plaintiff for these purchases in the open market was Rs. 4,52,544 as per the case of the plaintiff. It is its further case that the cost of the cables at the contract rate came to only Rs. 3,11,919. Therefore, the plaintiff says that it had suffered damages to the extent of Rs. 1,40,625.

(3.) The defendant in its written statement has refuted the claim of the plaintiff and mainly contended that the defendant was not liable to be sued by the plaintiff because it acted only as the agent of the manufacturing company, namely, the Power Cables (P) Limited, Bombay who were termed and disclosed to the plaintiff as principals of the defendant in respect of the tender made by the defendant. It is pointed out that in the tender itself it was specifically stated that orders for the goods must be placed by the plaintiff with the said company and that payments were to be made by the plaintiff direct to that company. It is its further case that the period of delivery mentioned in the contract was only tentative and subject to force majeure conditions including shortage of raw materials, breakdown in machinery, labour strikes and also availability of electrical energy. It is further stated that as per the terms of the tender the defendant was liable to supply the goods only after the said goods were supplied by the Power Cables Private Limited, and if due to any reason whatsoever the Power Cables Private Limited, failed, to supply the said goods to the defendant, the defendant was not liable to supply the same to the plaintiff. In the view that I am taking regarding the question whether suit by, the plaintiff is maintainable against the defendant it having acted as the agent of disclosed principal namely, Power Cables Private Limited, I think it is not necessary to elaborate the other defences taken by the defendant. Suffice it to mention the issues set for trial. They are :