MUHAMMAD HABIB-ULLAH Vs. BIRD AND COMPANY

JUDGEMENT

(1.) The present appeal arises out of a contract made between the appellant and the respondents by which the appellant was to supply 4,000 sleepers of a special pattern at any station on the Bengal-Nagpur Railway by the 31 of May, 1913. As a condition of the contract, the appellant had to deposit and did deposit Rs. 5,000 with the respondents as security for liquidated damages at a certain rate per foot for all sleepers not delivered on the said 31 of May. The sleepers had to pass inspection. Only 1,746 sleepers were delivered and passed inspection. The time for delivery was extended, but no more deliveries were made and the parties in December, 1913, broke off negotiations. The appellant then raised action asking for (1) the return of the deposit; and (2) damages in respect of his profit on the balance of sleepers not supplied. The respondents counter-claimed for damages in respect of sleepers not delivered.

(2.) The Subordinate Judge held that time was of the essence of the contract as originally made, but that the respondents had by delaying inspection not given the appellant proper opportunity of supplying the whole of the sleepers by the 31 of May; that thereafter both parties were willing and anxious that the contract should go on, time being, he held, under these circumstances no longer of the essence. He further held that when in the mon December, the respondents alleged non- performance, and maintained that they would claim the penalty, that was equivalent to putting an end to the contract on their part, and he gave judgment for a return of the deposit and for damages calculated on the profit which would have accrued in respect of the unsupplied balance. On appeal, this judgment was reversed. The High Court, agreeing with the Subordinate Judge that time was of the essence of the contract as originally made, held that the fault in non-delivery by that date lay with the appellant, who never had 4,000 sleepers ready for delivery by that time, and could not excuse himself because at one particular station of the railway there was no room to lay out 4,00 0 sleepers at one time. They held that the respondents had excused non-delivery at the 31 of May, and had in response to application to that effect by the appellant's agent, allowed the time of delivery to be prorogued until the 30 of November; that non-delivery having been then made the appellant was in breach; that, although the liquidated damages condition could no longer apply, the respondents were entitled to damages for the non-delivered portion on the calculation of the profit which they would have made comparing the price under the principal contract with the Railway Company with the price they had to pay under the contract with the appellant. They accordingly dismissed the appellant's claim for damages, and gave him a decree for the deposit under deduction of the damages due to the respondents as above calculated.

(3.) The view of the evidence which commended itself to the High Court is set out with great minuteness in the judgment of the High Court, and as their Lordships agree with the learned Judges, they do not think it necessary to repeat what is there said. The crucial facts are as follows: (1) Time was of the essence of the original contract; (2) the appellant was in default in not making complete delivery in time i.e., at 31 of May, 1913; (3) the appellant applied for and was granted by the respondents an extension of time until the 30 of November, 1913, for delivery of the balance over the 1,746 sleepers which had been delivered; and (4) delivery of the balance was not made by the respondents on the 30 of November, and they were consequently in default. Their Lordships, however, think it necessary to give their opinion as to the law which applies to the above facts, The first point is settled by the Indian Contract Act, which enacts, Section 55, paragraph 1: When a party to a contract promises to do a contain thing at or before a specified time, or contain thing at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not bean performed, becomes voidable at the option of the promisee, if the intention of the parties was that time would be of the essence of the contract.