MUTTHAYA MANIAGARAN Vs. LEKKU REDDIAR

JUDGEMENT

(1.) The question raised on this petition is as to the date with, reference to which damages should he assessed in an action for breach of contract. The facts are these. On the 12th of May 1909; the plaintiffs and the defendant entered into a contract for the delivery by the defendant of 6 candies of cotton at an agreed rate within 60 days of the date of the contract. The defendant failed to deliver within the 60 days which expired on or about the 12th of July. On the 4th of September the plaintiffs wrote a letter to the defendant in which they referred to the agreement and intimated that if the defendant failed to deliver the cotton within one week after the date of the letter he would be liable for the lows that might befall the plaintiffs according to the market rate at the date of the letter. The defendant took no notice of this letter. On the 3rd October the plaintiffs wrote to the defendant another letter in which they referred to their previous communication and gave notice to the defendant that as ho had failed to deliver the cotton after the notice given, he was liable to the plaintiffs on the footing of the market rate at the date of this second letter and they demanded payment on that footing. They then sued the defendant. The Subordinate Judge by way of damages gave the plaintiffs the difference between the market rate prevailing in October, that is at the time the second notice was given, and the contract rate.

(2.) I am unable to agree with the Subordinate Judge that the plaintiffs are entitled to damages on this footing. The Judge refers to Section 63 of the Contract Act which empowers a promisee to extend the time for the performance of the promise. Of course it would have been open to the parties to extend the time by agreement, but there is no evidence of any consent by the defendant to any extension of the time and this is not a case in which it can be said that silence gives consent. In my opinion, it is clear that Section 63 does not entitle a promisee, for his own purposes and without the consent of the promisor to extend the time for performance which had been agreed to by the parties to the contract. The view of the learned Subordinate Judge was that at the time the suit was instituted the contract of May the 12th was a subsisting contract. In support of this view Mr. Seshagiri Ayyar relied strongly on the terms of Section 55 of the Contract Act. He contended that under that section the contract was voidable at the option of the promisee that is the plaintiffs, and as they had not avoided the contract, they were entitled to treat it as a subsisting contract at the date of the institution of the suit.

(3.) Now, in my opinion, Section 55 entitles a party to a contract where time (as in this case) is of the essence of the contract, to say if he is sued upon the contract: "Time is of the essence of this contract, you have failed to comply with the stipulation as to time, I repudiate the contract." It does not enable the promisee to say: "I elect to keep alive this broken contract in the hopes that I may hereafter recover heavier damages for the breach of the contract than I should be entitled to recover at the time of the breach of the contract." Mr. Seshagiri Ayyar contended that the only way by which a promisor who had broken his stipulation as to time could protect himself if the promisee did not avoid the contract would be to give notice that the contract was at an end. It seems altogether unreasonable to place any such obligation on a promisee when ex-concensus the contract has been broken with reference to a matter which goes to the root of the contract. The object of Section 55 is to protect the promisee and is analagous to Section 39, as shown by the illustration to Section 39. This illustration is the statement of a case in which the promisee would be at liberty to put an end to the contract; so, under Section 55, where a stipulation entered into by the promisor as to time, which is of the essence of the contract, is broken, the promisee is entitled to repudiate or put an end to, or avoid the contract. No doubt Section 55 deals with the effect of a breach of a stipulation which is of the essence of the contract and does not deal with the question of damages; but the plaintiffs would only be entitled to damages on the footing of the market rate in October on the assumption that the contract was a subsisting contract in October. The contract in this case was broken in July and, in my opinion, came to an end in July and there is no evidence of any agreement to extend by the parties.