WASOO ENTERPRISER Vs. J J OIL MILLS BHAVNAGAR
LAWS(GJH)-1966-7-8
HIGH COURT OF GUJARAT
Decided on July 26,1966

WASOO ENTERPRISER Appellant
VERSUS
J.J.OIL MILLS,BHAVNAGAR Respondents

JUDGEMENT

P.N.BHAGWATI - (1.) This is an appeal against a decree passed by the Civil Judge Senior Bhavnagar directing defendants Nos. 1 3 and 4 to pay to the plaintiffs Rs. 12 879 as and by way of damages for breach of contract dated 14th August 1951 alleged to have been committed by them. The plaintiffs are a partnership firm and they carry on business of manufacture and sale of groundnut oil in Bhavnagar. The first defendants are also a partnership firm of which the original defendant No. 2 and defendant No. 3 were at the material time partners. The fourth defendants are a Limited Company carrying on business in Hongkong. On or about 14th August 1954 as a result of negotiations which took place between Messrs. D.N. Marshall & Company acting as broker for the plaintiffs on the one hand and the first defendants on the other a contract was entered into between the plaintiffs and the first defendants for sale of 50 tonnes of groundnut oil packed in sound secondhand 40/45 gallon drums at the price of *129/10/-per ton of 2240 lbs. C. & F. Hongkong on the terms and conditions recorded in a contract note bearing No. 320 dated 14th August 1954 executed by and between the plaintiffs and the first defendants. The contract contained the following term as regards shipment and it is on this term that the entire controversy between the parties has centered in this appeal: Shipment :- To Hongkong during August 1954 per s.s. Hakuyo Maru on sellers export licence guaranteed in band. The price of *129/10/- per ton C. & F. Hongkong was inclusive of all duties and/or taxes variations in duties and/or taxes being on the account of the plaintiffs and this price was to be paid by the first defendants to the plaintiffs by opening an irrevocable letter of credit in favour of the plaintiffs at Bhavnagar providing for payment against full set of documents. The contract stipulated that the first defendants should establish the letter of credit and send cable confirmation direct to the plaintiffs at Bhavnagar from Hongkong. The brokerage of half per cent payable to Messrs. D. N. Marshall and Company in respect of the contract was payable by the plaintiffs. Pursuant to the contract the first defendants got a letter of credit opened by the fourth defendants through the Hongkong and Shanghai Banking Corporation and the letter of credit was received by the plaintiffs on 18th August 1954. The letter of credit contained a stipulation that the shipment must be effected not later than 31st August 1954 and it was valid for negotiation on or before 16th September 1954 On or about 22nd August 1954 however the plaintiffs learnt that S. S. Hakuyo Maru was detained in Bombay owing to inability to get berth in time and it was therefore likely to be delayed in reaching Bhavnagar. The plaintiffs therefore by their letter dated 22nd August 1954 Exhibit 58 pointed out these facts to Messrs. D. N. Marshall and Company and added by way of caution that they had sold the goods by the name of the steamer suggesting that they would be entitled to ship the goods whenever the steamer arrived irrespective whether the ship ment was made in August or not After about four days the plaintiffs received a little more definite information showing that it was very doubtful whether S. S. Hakuyo Maru would be able to reach Bhavnagar in the month of August and they therefore addressed another letter dated 26 August 1954 Exhibit 62 to Messrs. D. N. Marshall and Company pointing out that: The other shippers who have their booking on this steamer are sticking to the same steamers name irrespective of her giving August shipment. However the steamer-s Agents are trying to get the steamer at Bhavnagar on 31st August but it is not in their hands. Therefore we shall thank you to inform buyers accordingly; and specially please inform M/s. Wasoo Enterprises to amend Letter of Credit as they have stated in their Letter of Credit that The shipment must be effected not later than 31st August 1954 by S. S. Hakuyo Maru should be deleted and only the shipment by S. S. Hakuyo Maru may please be mentioned. It appears that pursuant to this letter Messrs. D. N. Marshall and Company requested the first defendanfs to extend the time of shipment by one week or so and get the necessary amendment effected in the letter of credit and the first defendants acceded to this request and got the letter of credit amended extending the time of shipment upto 10th September 1954 The time for negotiation of the documents under the letter of credit remained the same namely 15 September 1954. This amendment in the letter of credit was received by the plaintiffs by a letter of the Bank dated 3rd September 1954 Exhibit 13. But by the time this amend. ment was received further information came to the plaintiffs that due to heavy rains in Bombay S. S. Hakuyo Maru was further delayed and she would not be able to come to Bhavnagar upto 10th or 11th September and the plaintiffs therefore addressed a letter dated 5th September 1954 Exhibit 14 to Messrs. D.N. Marshall and Company asking them to request the first defendants to amend the letter of credit by extending the date of shipment from 10th September 1954 to 15th September 1954 and the time for negotiation from 15th September 1954 to 25th September 1954 The plaintiffs also addressed a letter dated 7th September 1954 Exhibit 15 directly to the first defendants pointing out that the extension of the time of shipment upto 10th September 1954 was not sufficient as S. S. Hakuyo Maru was delayed at Bombay and was expected at Bhavnagar after 10th September 1954 and requested the first defendants therefore to amend the letter of credit by providing merely for shipment by S. S. Hakuyo Maru without any limit of time for shipment and extending the time for negotiation from 15th September 1954 to 25th September 1954 A similar request was repeated by the plaintiff in a letter addressed by them to Messrs. D. N. Marshall and Company on 7th September 1954 Exhibit 16. There was no reply either from the first defendants or Messrs. D.N. Marshall and Company to these communications of the plaintiffs and the plaintiffs therefore sent a telegram Ex. 17 both to the first defendants and Messrs. D. N. Marshall and Company on 9th Sept. 1954 requesting for the necessary amendment in the letter of credit immediately as S. S. Hakuyo Maru was arriving in Bhavnagar about 16th September 1954. The plaintiffs followed up the telegram by two letters addressed on the same day one Exhibit 18 to Messrs. D. N. Marshall and Company and the other Exhibit 19 to the first defendants. In the letter Exhibit 18 the plaintiffs requested Messrs. D. N. Marshall and Company to get the letter of credit amended by extending the time of shipment from 10th September 1954 to 20th September 1954 and the time for negotiation from 15th September 1954 to 25th September 1954 as S. S. Hakuyo Maru was due to arrive in Bhavnagar on or about 16th September 1954 and the same request was repeated by the plaintiffs to the first defendants in the letter Exhibit 19. After these letters were addressed by the plaintiffs to the first defendants and Messrs. D. N. Marshall and Company a telegram was received by the plaintiffs from Messrs. D. N. Marshall and Company on the same day that is 9 September 1954 in the evening intimating to them that the first defendants were refusing to amend the letter of credit unless the plaintiffs agreed to pass on to them the full amount of reduction in duty which had taken place in the meantime. The plaintiffs therefore sent a telegram Exhibit 21 to Messrs. D. N. Marshall and Company at 9.15 A.M. on 10th September 1954 pointing out that under the terms of the contract the benefit of the reduction in duty was to go to the plaintiffs and that the first defendants must therefore amend the letter of credit without demanding the benefit of such reduction and if the first defendants failed to amend the letter of credit within 48 hours the plaintiffs would proceed to sell the goods on account and at the risk and costs of the first defendants. The plaintiffs also addressed a telegram Exhibit 23 simultaneously in the same terms to the first defendants giving an ultimatum to the first defendants that if they failed to carry out the amendment in the letter of credit within 48 hours the plaintiffs would sell the goods on account and at the risk and costs of the first defendants. These two telegrams were followed by two letters being (1) Ex. 22 addressed to Messrs. D. N. Marshall and Company and (2) Ex. 24 addressed to the first defendants and the letters were in the same terms as the telegrams. In the meantime on receipt of the plaintiffs letter dated 7th September 1954 Exhibit 15 the first defendants contacted the fourth defendants to whom they had agreed to sell the goods and requested them to amend the Setter of credit by extending the time of shipment from 10th September 1954 to 15th September 1954 but the fourth defendants were not agreeable to do so and the first defendants therefore in their turn declined to extend the time of shipment and informed the plaintiffs by their letter dated 9th September 1954 Exhibit 25 that the fourth defendants had not thought it fit to extend the shipment date in view of the fact that they had already extended the shipment date once before. This letter was received by the plaintiffs on 10th September 1954 and the plaintiffs therefore immediately replied to this letter by their letter dated 10th September 1954 Exhibit 26 in which they pointed out as under:- We....gave to inform you that whether your Hongkong Associates agree to extend the shipment date or do not agree we have nothing to do. We hold you responsible as you entered into contract with us. You are aware that the steamer is delayed. We have sold the goods by the name of the vessel......Please note that if we do not get definite reply or the letter of credit amended in the time mentioned in our to-days morning telegram we shall hold you responsible for any loss damages The first defendants on receiving the plaintiffs telegrams Exhibits 17 and 23 replied to the same by a telegram Exhibit 27 dispatched by them to the plaintiffs at 2.00 P.M. on the same day that is 10th September 1954 and in this telegram they pointed out to the plaintiffs that the contract specifically provided for August shipment and that the plaintiffs were therefore not entitled to take any action against the first defendants for not amending the letter of credit and that on the contrary they were entitled to make a claim against the plaintiffs for the failure of the plaintiffs to effect shipment in time. To this telegram a rejoinder was sent by the plaintiffs by a telegram Exhibit 28 addressed on the same day in which the plaintiffs took up the stand that the clear understanding between the parties was that the goods should be shipped by a specifically named steamer namely S. S. Hakuyo Maru and that since the steamer was delayed the first defendants were bound to extend the letter of credit. This stand was repeated by the plaintiffs in their letter dated 10th September 1954 Exhibit 29 addressed to the first defendants while the first defendants in their letter dated 10th September 1954 Ex. 30 adhered to the view that the shipment provided in the contract being August shipment the first defendants were not bound to extend the letter of credit. The first defendants also addressed another letter dated 10th September 1954 Exhibit 31 to the plaintiffs in which after reciting the telegrams exchanged between the parties they pointed out that it was not possible for them to extend the time of shipment any further and they accordingly asked the plaintiffs to treat the contract as null and void. The plaintiffs on receipt of this letter from the first defendants treated the contract as broken by the first defendants and made a claim for damages against the first defendants and on the first defendants refusing to pay the same the plaintiffs filed the present suit to recover a sum of Rs. 13 4 as and by way of damages for breach of the contract committed by the first defendants. The plaintiffs impleaded in the suit defendants Nos. 2 and 3 as partners of the first defendants and they also joined the fourth defendants on the allegation that in the matter of the contract the first defendants had acted as agents of the fourth defendants and that the fourth defendants were also liable to pay damages to the plaintiffs.
(2.) The defendants in their written statement took up various contentions of which there were three of a preliminary nature and they were: (1) that the Court had no jurisdiction to entertain the suit; (2) that there was no cause of action for the suit; and (3) that the plaintiffs firm was not registered. On merits the defendants disputed the plaintiffs allegation that defendants No. 1 had acted as agents of defendants No. 4 in respect of the contract and they alleged that the contract was between the plaintiffs and the first defendants as principal to principal and the fourth defendants had nothing to do with the same. The defendants also contended that the time of shipment mentioned in the contract namely shipment during August 1954 was of the essence of the contract and was in fact a condition of the contract and the plaintiffs were not entitled to insist that the first defendants should take delivery of the goods even if they were shipped after 31st August 1954. The defendants stated that it was no doubt true that pursuant to the request of the plaintiffs they extended the time of shipment upto 10th September 1954 and the plaintiffs could have therefore effected shipment by that date but the plaintiffs failed to do so and the first defendants were thereafter not bound to extend the time of shipment or to amend the letter of credit providing for such extended time and the first defendants were therefore not guilty of breach of the contract when they refused to amend the letter of credit and treated the contract as at an end by their letter dated 10tb September 1954 Exhibit 31.
(3.) On these pleadings various issues were raised by the trial Court of which the first three issues embodied the preliminary contentions; the fourth issue raised the question whether the first defendant was acting as the agent of defendants No. 4; issues Nos. 5 and 6 related to the merits of the controversy namely whether the defendants had committed a breach of the contract and whether there was an agreement to ship the goods on a particular date and the seventh issue dealt with the question of damages to which the plaintiffs may be held entitled. Now when the matter reached hearing before the lower Court a rather curious procedure was followed and the learned advocate appearing on behalf of the defendants was responsible for the same. He made an application to the trial Court for hearing issues Nos. 5 and 6 which related to the main controversy between the parties as preliminary issues and the trial Court strangely enough acceded to that request. It appears that some evidence was led on these two issues and the trial Court thereafter delivered a judgment dated 10th February 1958 which we must confess is even stranger than the decision to hear these two issues as preliminary issues. The trial Court decided the fifth issue in favour of the plaintiffs by holding that the defendants had committed a breach of the contract but so far as the sixth issue in regard to the time of shipment being of the essence of the contract was concerned the trial Court reserved the decision of that issue. We must frankly confess our inability to perceive how the trial Court could give a finding on the issue as to breach of the contract without considering the question whether the time of shipment was of the essence of the contract or not. But that is how the case progressed before the trial Court and after this judgment was delivered the other issues were tried by the trial Court. Evidence of both parties was led and the trial Court by a further judgment dated 29th September 1959 found that time was not of the essence of the contract and that the first defendants were guilty of breach of the contract inasmuch as they repudiated the contract on 10th September 1954 by their letter Exhibit 31. So far as the fourth issue relating to agency was concerned the trial Court found that the first defendants were acting as agents of the fourth defendants and that the fourth defendants were also therefore liable for breach of the contract. The preliminary contentions embodied in the first three issues were decided in favour of the plaintiffs and since the plaintiffs succeeded on merits the plaintiffs were held entitled to claim damages in the sum of Rs. 2 879 from the defendants. During the pendency of the suit however defendant No. 2 died and his heirs were not brought on record and a decree for Rs. 12 879 was therefore passed by the trial Court only against defendants Nos. 1 3 and 4 and that is the decree from which the present appeal is preferred.;


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