V R MOHANAKRISHNAN Vs. CHIMANLAL DESAI AND CO

JUDGEMENT

(1.) The appellant is the plaintiff in a suit in the City Civil Court Madras for recovery of Rs. 11080/- as damages for alleged breach of contract. The case of the appellant was that he entered into two contracts with the defendant-firm (Chimanlal Desai and Co.) for the supply of 500 and 1000 fan belts for Mack Trucks under indent orders Nos. 5039 and 5052 dated 18-4-1949 and 7-51949. It is not in dispute between the parties that, with regard to indent No. 5052, the fan belts, 1000 in number, were supplied to the plaintiff-appellant about the end of July, 1949. But the suit was with regard to the alleged failure of the defendant-firm to supply the 500 fan belts covered by indent NO. 5039. The defendant-firm contended that the contract was really between the plaintiff and Messrs. Thermoid Company, Trenton N. J. U.S.A., and that they merely acted as the agents of the plaintiff with reference to the suit transactions. They further explained that the goods in question arrived in Madras by S. S. Exchange in or about the middle of July, 1949, as anticipated. But unforeseen difficulties were experienced in clearing the goods from the Customs Authorities at the Madras Port Trust. The aforesaid Authorities wrongly decided that the import licence of the defendant-firm (No. 31744/U.S.A./D.C.C) did not permit them to import the suit goods which were accordingly confiscated under the Sea Customs Act, delivery being permitted only upon payment of a heavy penalty. The defendant- firm appealed to the Chief Controller of Imports, New Delhi, and, though that authority took the favorable and correct view, further difficulties were experienced, as the Collector of Customs had no power under the Sea Customs Act to review his own order. The matter had to be thus placed before the Central Board of Revenue, and they passed an order as late as 14-1-1951 allowing the defendant firm to clear the goods, upon which the firm promptly cleared the goods through their agents, Messrs. Thomas Cook and Sons. But, in the meantime, the plaintiff had rushed into court with this action, which, according to the defendant-firm, was unsustainable upon both grounds that the defendant-firm were not personally liable upon the contract, and that there was really no breach of contract, as the delay had been occasioned by causes totally beyond control. It was the plaintiff who failed and neglected to take delivery of the goods, which were still remaining in the hands of the defendant-firm at the time of suit.

(2.) After relevant issues had been framed in the suit, the suit was tried upon the merits, and the learned Assistant City Civil Judge came to the conclusion that the defendants were the accredited agents of a merchant resident abroad, and hence that they were liable to be sued under Section 230(1) of the Contract Act. He also came to the conclusion that the principle of frustration did not apply, and that, though time was not the essence of the contract upon the original terms, still it was made essential by plaintiff's letter dated 21-8-1950 (Ex. A.31), wherein plaintiff specified that, if the goods were not delivered within a week, legal proceedings would be instituted. Hence, he concluded that the defendant-firm did commit breach of the contract. After these findings, the learned Judge proceeded to dismiss the suit, upon the admittedly extraordinary and unsatisfactory ground that no materials had been placed before him by the plaintiff, for ascertaining market price of the suit goods on the date of the breach, so that the quantum of damages could not be determined. The learned Judge states: "In the aforesaid circumstances, I hold that no materials have been placed before the Court by the plaintiff for ascertaining the market price of the suit goods on the date of breach. So, I hold that the plaintiff has failed to prove the market price, and he is therefore not entitled to claim any amount by way of damages for breach of contract:.

(3.) Learned counsel for the defendant-firm (Mr. V. Thiagarajan) submits that he is entitled to support the decree of the lower Court, not necessarily upon the halting conclusion of the trial Court that, upon the materials, it was unable to fix the quantum of damages for a breach of contract it had determined, but by canvassing the findings upon the other two vital issues, with regard to which, according to him, the lower court was palpably in error. This he is admittedly permitted to do, and the appeal has really resolved itself into an analysis of the arguments upon this aspect. For, it is needless for us to observe that, if we accept the findings of the lower court upon the two vital issues, the dismissal of the entire suit upon the ground that the materials were not sufficient for ascertainment of damages, would be clearly unsustainable. We would have no alternative but to allow the appeal, and either to remand the suit for fixing of the quantum of damages to the extent permitted by the record and the findings, or to permit both parties to adduce evidence upon this matter. The arguments of learned counsel for the defendant-firm may be clearly and tersely summarised as follows:(1) The contract was, both essentially and in form, between the foreign merchant (Messrs. Thermoid Company) and the plaintiff. The offer was to the merchant resident abroad, the acceptance was by him, and the contract was between these two principals, as juridical entities. The defendant-firm throughout acted as an agency for establishing the necessary contacts, and Sec 230(1) of the Contract Act has no application at all in this case. (2) In any event, and even assuming that the defendant-firm entered into the contract on behalf of a foreign principal, and could thus be sued upon by the application of the principle of Sec. 230(1) of the Contract Act, the terms of the contract explicitly exonerate the defendants. The delay occurred owing to causes beyond the control of the defendant-firm, time was not the essence of the contract, and such delay was protected by the specific terms of the contract. Since no breach of contract really occurred, the defendant-firm could not be liable for damages at all.