Supreme Court: In an appeal filed by the appellant against the judgment and decree dated 21-2-1947 of the Allahabad High Court (‘the High Court’), whereby it was held that the respondents were not guilty of breach of contract and the appellant was not entitled to recover damages from the respondents, the five-judges bench of Patanjali Shastri, C.J., and B.K. Mukherjea, S.R. Das, Ghulam Hasan and N.H. Bhagwati*, JJ., stated that no evidence was led by the appellant to show that he was ready and willing to perform his part of the first contract and it was abundantly clear from the documents on the record that beyond supplying the total quantity of 89,835 maunds 13 seers at the said various stations, the appellant was not in a position to supply any further sugarcane under the first contract.
Regarding the second contract, the Supreme Court observed that the position was still worse for the appellant. The figures in statement of supplies clearly showed that far from the respondents being guilty of a breach of the contract, the appellant failed and neglected to perform his part and was not ready and willing and able to fulfil his obligations thereunder. The Supreme Court stated that the appellant failed to prove that he was ready and willing to perform his part of both the contracts or that the respondents committed a breach. Therefore, the Supreme Court held that the finding reached by the High Court in this behalf was quite correct and it confirmed the same.
Background
The appellant, an engineer and a government contractor, entered into two agreements with Kesar Sugar Mills Ltd-the respondent, dated 7-7-1933 and 15-8-1933 respectively agreeing to supply to the respondents 3 lakh and 4 lakh maunds of sugarcane respectively for the season of 1933-1934.
The first of these contracts was a commission agency contract and the second was a contract as between principal and principal. Under the first contract, the appellant undertook to supply to the respondents 3 lakh maunds pucca of sugarcane of good Coimbatore quality at the rate of Rs. 32 per hundred maunds pucca at Saithal and Bijauria Stations of R.K. Railway during a period beginning from the time of the starting of the factory till 30-4-1934 or till such later date as might be fixed by the respondents. The second contract was almost in the same terms as the first, except that the relationship between the parties thereunder was between principal and principal.
The respondent alleged that the appellant had committed a breach of contracts and claimed to recover from the appellant a sum of Rs. 12, 677/5/6 as and by way of damages. The appellant on the other hand, contended that the respondent had committed a breach of two contracts since the demands made by the respondent upon him were most inadequate and with great interruptions. Thus, the appellant claimed from the respondent’s damages which he assessed at Rs. 20,557/10. The parties failed to arrive at a final adjustment of accounts, even though the sugarcane season came to an end and the respondent’s factory stopped working after 07-01-1940.
The High Court reversed the finding of the Trial Court and held that the respondents were not guilty of breach of contract and thus the appellant was not entitled to recover damages from the respondents. Therefore, the appellant filed the present appeal.
Analysis, Law, and Decision
The Supreme Court observed that in the correspondence which took place between the parties after January 1934, no communication was addressed by the appellant to the respondents complaining about the respondents’ not taking delivery of the sugarcane even though the appellant was ready and willing to supply the same. The Supreme stated that the respondents had in fact increased the rate for the purchase by Rs. 3 per 100 maunds and asked the appellants to purchase the sugarcane even at Rs. 35 per 100 maunds.
The Supreme Court further stated that the crushing season was advancing, the respondents’ factory was taking in larger and larger quantities of sugarcane, and the respondents were anxious to procure as much of sugarcane from the appellant as they possibly could. However, the appellant was in financial difficulties and had run to the end of his resources. The appellant pressed the respondents to advance him at least Rs 10,000 to finance his purchase operations. Since, the respondents did not accede to those requests, the appellant could not supply any further quantities of sugarcane under the first contract. The Supreme Court stated that no evidence was led by the appellant to show that he was ready and willing to perform his part of the first contract and it was abundantly clear from the documents on the record that beyond supplying the total quantity of 89,835 maunds 13 seers at the said various stations, the appellant was not in a position to supply any further sugarcane under the first contract.
Regarding the second contract, the Supreme Court observed that the position was still worse for the appellant. The Supreme Court stated that as shown by the statement of supplies filed by the respondents, the supplies of the sugarcane at the factory dwindled after the end of March 1934 and the aggregate quantity supplied by the appellant to the respondents in the month of April 1934 aggregated to the very small quantity of 9193 maunds. The Supreme Court stated that these figures clearly showed that far from the respondents being guilty of a breach of the contract the appellant failed and neglected to perform his part and was not ready and willing and able to fulfil his obligations thereunder. Therefore, the Supreme Court opined that the appellant failed to prove that he was ready and willing to perform his part of both the contracts or that the respondents committed a breach. The finding reached by the High Court in this behalf was therefore quite correct and the Supreme Court confirmed the same.
The Supreme Court stated that the respondents themselves for some reason best known to themselves, gave up claim for damages for breach of the said contracts by the appellant and mere sought to recover the sum of Rs. 6655/3/3 inclusive of the interest up to the date of the suit. If the accounts had been properly adjusted between the parties as they should have been, the property of the appellant would have been released from the mortgage and he would have obtained from the respondents at least the sum of Rs. 4447/9/3 which was ultimately decreed by the High Court in his favour. However, the appellant unfortunately pitted against a corporation, and it was because of a protracted and a ruinous litigation that he ultimately obtained the decree passed by the High Court in his favour which had the effect of giving him his just dues and releasing his property from the mortgage. Thus, the Supreme Court stated that in all the circumstance of the case it will be but just and proper that even though the respondents succeed in this appeal, they should be deprived of their costs of this appeal. Therefore, the Supreme Court while dismissing this appeal, ordered that each party should bear and pay his own costs of this appeal.
[Ram Chandra Sharma v. Kesar Sugar Mills Ltd., (1953) 2 SCC 52, decided on 18-05-1953]
*Judgement authored by: Justice N.H. Bhagwati
Advocates who appeared in this case :
For the Appellant: S.K. Dar, Senior Advocate (Pt. Nanank Chand, Advocate, with him);
For the Respondent: M.C. Setalvad, Attorney General of India (Baleshwari Prasad, Advocate, with him).
*Note: Damages for breach of contract
Section 73 of the Contract Act, 1872 provides for compensation for loss or damage caused by breach of contract. It states that when a contract has been broken, the party who suffers by such breach was entitled to receive compensation for any loss or damage caused to him, from the party who has broken the contract. Such loss or damage must be naturally arisen in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. However, such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach. The provision also deals with compensation for failure to discharge obligation resembling those created by contract.
