PIAREMOHAN Vs. THANCHAND
LAWS(RAJ)-1967-4-2
HIGH COURT OF RAJASTHAN
Decided on April 06,1967

PIAREMOHAN Appellant
VERSUS
THANCHAND Respondents

JUDGEMENT

SHINGHAL, J. - (1.) THIS second appeal by the plaintiff arises from the appellat judgment and decree of the Senior Civil Judge, No. 1. Jodhpur, dated July 20, 1 60, in these circumstances.
(2.) THE plaintiff manufactures and suppliess house building material and carries on his business in the name style of "mohan Brothers", in Jodhpur City. He agreed to supply wooden door frames and shutters to the defendant in 1955, when the defendant's house was under construction, at the rate of Rs. 3/4/- per square foot. Later, the parties agreed that the plaintiff may supply only the door frames, and it is not in dispute now that orders for the supply were placed with the plaintiff on July 17, 23, and 30, 1955. THE supply was made and completed before August 3, 1955, on which date the plaintiff sent his bill (Ex. 10) to the defendant for Rs. 1,261/15/6. THE defendant made a payment of Rs. 700/- on August 10, 1955, and this left a balance of Rs. 561/15/6. But he gave a notice (Ex. 5) to the plaintiff on September 24,1955, making it clear that he had paid Rs. 700/- as advance payment, that the frames were worth Rs. 11/- per cubic foot and that the defendant would be entitled to a refund of the excess amount and that he would also be entitled to damages. THE plaintiff, in his turn, sent notice or reply (Ex. 6) on October 3, 1955, justifying his claim for the recovery of the balance of Rs. 561/15/6. In that document he stated, for the first time, that the defendant had agreed to pay according to his (plaintiff's) bill for the door frames, and that the defendant should, therefore pay the outstanding sum of Rs. 561/15/6. Later, the plaintiff amended his original bill (Ex. 10) to include the cost of one more frame and he finally claimed Rs. 1,275/3/3 as the price of 36 frames which had, according to the plaintiff,, been supplied to the defendant. On the balance of Rs. 575/3/3, the plaintiff claimed interest at the rate of 6 per cent per annum, amounting to Rs. 43/4/-, and it was for this total claim of Rs. 618/7/3 that he instituted the present suit on November 14, 1956. The defendant denied that he had agreed to pay for the frames in accordance with the plaintiff's bill, and he also pleaded that he had received 35 frames only. Some other pleas were raised in the written statement. The learned Munsiff who tried the suit, framed the issues on March 4, 1957, and these were amended later, by consent of the parties. The Munsiff reached the conclusion that the defendant had agreed to make payment for the frames according to the plaintiff's bill, and that Rs. 700/-were paid as part payment of the plaintiff's bill Ex. 10. He, however, held that the plaintiff had supplied only 35 frames and was not entitled to recover Rs. 13/13/3. His claim for interest was also rejected, and so the suit was decreed for Rs. 562/- with costs, on December 7, 1959. The defendant preferred an appeal which was heard by the learned Senior Civil Judge. He held that the plaintiff had not succeeded in proving that the defendant had agreed to make payment according to the bill of the plaintiff. He therefore concluded that the plaintiff was only entitled to a reasonable price under section 9 (2) of the Sale of Goods Act as there was no agreement regarding the price between the parties. On the quantum of the price, the learned Judge accepted the defendant's evidence that the Public Works Department, of the State Government, in the Jodhpur District, had fixed the rate of door frames at Rs. 14/1/-per cubic foot, and that the plaintiff was entitled to recover a sum of Rs. 731/8/-at that rate for the supply of 35 frames. But he disagreed with the trial court and held that one more frame had been supplied by the plaintiff and, after adding Rs. 13/3/9 on account of its price, the learned Judge reduced the decretal amount to Rs. 44/11/9. He did not allow the plaintiff's claim for interest, and directed that the defendant would be entitled to his costs in both the courts. It is against that judgment and decree dated July 20, 1961; that the plaintiff has filed this second appeal. The controversy in this Court is confined to the rate of supply of the door frames, and the finding of the learned Judge of the lower appellate court in regard to it has been assailed by the appellant's learned counsel on the ground that the learned Judge failed to take into consideration the fact that the defendant had paid Rs. 700/- in part payment of bill Ex. 10, even though this was an important piece of circumstantial evidence against the defendant. It has therefore been argued that the finding of fact of the lower appellate court has been vitiated, and cannot be held to be binding in this appeal as it has not been based on a consideration of the entire evidence on the record. The learned counsel for the defendant has not challenged this contention and I have therefore heard the learned counsel on the merits of the controversy. It has been strenuously argued by the appellant's learned counsel that there is no reason why the statement of the plaintiff and his son Manmohan Prakash (P. W. 2) that the defendant had agreed to pay for the frames at the rate mentioned by the plaintiff in his bill, should not be accepted, and that the learned Judge of the lower appellate court committed a serious error in taking a contrary view. This raises two questions. Firstly, it has to be examined whether the agreement set up by the plaintiff that the defendant would pay whatever price was claimed by the plaintiff for the frames, would be legal. Secondly, it has to be examined whether any such agreement was at all made by the defendant. So far as the question of the legality of the agreement is concerned, it is apparent that the sort of agreement pleaded by the plaintiff, namely, that the defendant had agreed to pay whatever price was claimed by the plaintiff, would, ordinarily, be void for uncertainty under the Contract Act. Under sec. 29 of that Act, agreements, the meaning of which is not certain, or capable of being made certain, are void. When therefore it is contended by the plaintiff that the parties had not fixed the price of the frames, and when it is pleaded that the defendant had left it entirely to the plaintiff to name the price, it becomes quite apparent that, prima facie, the price was left so uncertain that it was not capable of being made certain. I may in this connection refer to Ramasami vs. Rajagopala (1) which is a Bench decision of the Madras High Court. It was found in that case that the agreement between the parties was to the effect that if the tenant took up the land which had not been assessed, he shall pay whatever rent the landlord should fix. Their Lordships held that such an agreement in the patta was bad for uncertainty. I am in respectful agreement with the view taken by their Lordships. But as I shall show a little later, the present agreement is saved by sec. 9 (2) of the Sale of Goods Act. The other question is whether the plaintiff had succeeded in proving his contention that the defendant had agreed to pay for the frames at the price claimed by him. As has been stated, the plaintiff and his son have no doubt stated that this was so, but it appears to me that an agreement giving so much latitude to the plaintiff would have been made only if the defendant had placed implicit trust and confidence in him. The earlier conduct of the parties shows, however, that there was no such intimacy between them. It has been admitted on the side of the plaintiff that when the defendant wanted to purchase joinery from the plaintiff, he called upon the plintiff to make a written tender of his rates and it cannot therefore be said that the defendant placed such an implicit trust in the plaintiff as to leave the question of price entirely to him. Moreover, when the plaintiff made a tender for Rs. 3/8/- per square foot, the defendant insisted that it should be reduced to Rs. 3/4/-per square foot and he went to the extent of making a correction to that effect in his own handwriting in the tender and initialled the correction. In these facts and circumstances it cannot be held that the defendant reposed such great confidence and trust in the plaintiff as to leave the quantum of the price to his sweet will. It has to be remembered that it is not the case of the plaintiff that the defendant had agreed to leave the price to be fixed by a third party, and his contention that he agreed to leave it entirely at the pleasure of a highly interested party like the plaintiff, does not carry conviction. I have therefore no hesitation in holding that the agreement pleaded by the plaintiff has not been proved. All that can be concluded is that while the parties agreed to make and accept the supply of door frames of the quality and other specifications referred to in the plaint, they did not fix the price by the contract, or agree that the price was to be fixed in an agreed manner at a later date. I Reverting to the question whether such an agreement would be entirely unenforceable for uncertainty of the price, I may refer to paragraph 1370 of Chitty on Contracts, Volume II, 1961 edition, which deals with this aspect of the matter and contains the following observation - "problems such as these depend largely on the way that the court construes the contract in question. But it seems that, if there is nothing that can be regarded as an agreement about the price, this may be evidence that the parties have not in fact completed the making of their contract; if on the other hand it appears that the parties have made a contract the courts will apply section 8 in order to determine the price. " The observation is correct as far as it goes. Speaking generally, it may be said that there can be no contract unless the price is determined by the contract, or is determinable otherwise than by a fresh agreement between the parties, for a mere agreement to agree is not enough. Nevertheless, cases have arisen in which the parties have entered into contracts for the sale of goods and acted on them without deter-mining the price. It was to provide for such cases that the doctrine of implied or reasonable price was developed under the English Law. (sec. 8 (2) of the Sale of Goods Act, 1893) and it now finds a place in sec. 9 (2) of the Indian Sale of Goods Act, 1930. This is on the principle that a purchaser must pay quantum valebant (so much as the goods were worth ). I may as well refer here to Foley vs. Classique Coaches, Limited (2) which also deals with this aspect of the matter. In that case, two agreements were made between the parties. The second agreement, which was described as supplemental to the first, provided that the defendants would purchase from the plaintiff all the petrol required by them for the running of their business "at a price to be agreed by the parties in writing and from time to time. " It was found, on facts, that there was no doubt that the parties intended to make a binding contract and thought that they had done so, even though they left the price undecided. After considering the earlier decisions in May and Butcher vs. The King ( (1934, 2 K B. 17) and Hillas & Co. vs. Arcos (147 L. T. 508), Scrutton L. J. made the following significant observation: "in the present case the parties obviously believed they had a contract and they acted for three years as if they had; they had an arbitration clause which relates to the subject-matter of the agreement as to the supply of petrol, and it seems to me that this arbitration clause applies to any failure to agree as to the price. By analogy to the case of a tied house there is to be implied in this contract a term that the petrol shall be supplied at a reasonable price and shall be of reasonable quality. For this reason I think the Lord Chief Justice was right in holding that there was an effective and enforceable contract, although as to the future no definite price had been agreed with regard to the petrol. " This is no doubt the correct exposition of the law. For, speaking generally, courts of law would like to uphold a contract whenever it is possible to do so, rather than destroy it. The contract in the present case is for the sale of goods, and even though it did not determine the price, it would be enforceable by virtue of sec. 9 of the Sale of Goods Act which reads as follows: "9 (1) The price in a contract of sale maybe fixed by the contract or may be left to be fixed in manner thereby agreed or may be determined by the course of dealing between the parties. (2) Where the price is not determined in accordance with the foregoing provisions, the buyer shall pay the seller a reasonable price. What is a reasonable price is a question of fact dependent on the circumstances of each particular case. " Sub-sec. (1) of sec. 9 thus provides that the price may be ascertained in three ways, (1) it may be fixed by the contract, or (2) it may be left to be fixed in the manner agreed in the contract, or (3) it may be determined by the course of dealing between the parties. As the first two modes would not be applicable to the present case for obvious reasons, the appellant's learned counsel raised an argument that the third mode of fixing the price should be held to be applicable. In other words, the learned counsel tried to argue that the price should be determined by the course of dealing between the parties and, in support of this contention, he submitted that the fact that the defendant made a part payment of Rs. 700/- in respect of the plaintiff's bill Ex. 10, should be sufficient to establish that the defendant had really admitted that the price mentioned in the plaintiff's bill would be accepted by him as the contractual price for the sale of the frames. A perusal of the record shows, however, that no such plea was taken in the plaint, no issue was joined in respect of it and it has not even been stated as a ground in the memorandum of this second appeal. The point is one of fact and cannot therefore be allowed to be raised for the first time at this late stage. The part payment of Rs. 700/- on account of the plaintiff's bill is no doubt relevant as a piece of circumstantial evidence against the defendant. As has been stated, the appellant has made a grievance that it has not been considered by the court of first appeal while considering the plaintiff's plea regarding the price of the goods. I have therefore looked into the merits of the argument, but it is without any substance. The reason is that if the plaintiff wanted to make the alleged part payment a ground lor his contention that the defendant had accepted the price stated in the bill to be the governing price for the supply, it was necessary for the supply, it was necessary for the plaintiff to state that the defendant had accepted the correctness of the bill Ex. 10 and had paid Rs. 700/- in part payment for that reason. But no such plea was taken in the plaint and the plaintiff and his witnesses have also not stated that this was so. It is therefore futile to argue that the part payment would, by itself, be sufficient to prove that the price mentioned in the bill had been accepted by the defendant as the price for the supply of the frames. On a consi-dtration of the entire evidence through which the learned counsel have taken me, I am left in no doubt that the part payment mentioned in receipt Ex. 2/1 had no other meaning than that the bill had not been paid in full, and it cannot be said that the defendant had accepted the correctness of the bill.
(3.) IT would follow therefore that this is a case in which the price was not fixed by the contract, or left to be fixed in a manner thereby agreed, and it cannot also be determined by the course of dealing between the parties. The buyer has therefore to pay the seller "a reasonable price" under the provisions of sub-sec. (2) of sec. 9 of the Sale of Goods Act, which was fully applicable to the present case. This is the subject-matter of issue No. 6 (b) for that issue relates to the question as to what should be the price of the frames according to the market rate? IT does not, in terms, refer to "reasonable price", but a perusal of the impugned judgment of the lower appellate court makes it quite clear that the learned Judge addressed himself to the question of reasonable price while recording his finding on this issue and he was clearly of the opinion that the case was governed by sec. 9 (2) of the Sale of Goods Act. IT may be mentioned that the appellant's learned counsel tried to raise the argument that issue No. 6 (b) did not arise from the pleadings of the parties and should not have been framed by the trial court, but a perusal of the trial court's order sheet dated August 27, 1958 shows that the learned Munsiff had framed that issue with the consent of the parties. What then would be the reasonable price in the present case ? The answer to the question is quite simple. The plaintiff did not lead any evidence to prove the prevailing market rate of such door frames during the relevant period. The defendant, however, examined some witnesses including Ratanlal DW 3. He was a senior draftsman of the Public Works Department of the State Government and was posted at Jodhpur. He produced schedule Ex. DW 3/1 of the Buildings and Road Division, Jodhpur Circle, for the period 1954-1956 and according to that schedule wooden door frames were purchased by the Public Works Department at the rate of Rs. 14/1/- per cubic foot. Ratanlal further stated that it was at that rate that the Public Works Department had actually paid for such frames and that the rates of the Public Works Department were higher than the market rates. He also made it clear that the frames supplied by the plaintiff to the defendant were of the standard design prescribed by the Public Works Department and that there was no speciality about them. There is no reason for disbelieving the statement of Ratanlal. The only criticism that has been levelled against the evidence of this witness is that he had made some corrections in the schedule in his own handwri-ting, and it has therefore been contended that the schedule is not authentic. But as the witness has stated that he had brought the schedule upto date by incorporating the necessary alterations in his own handwriting, and as his testimony in regard to it has not been shaken, I have no hesitation in holding that the witness has proved that the rate for door frames of the type supplied by the plaintiff to the defendant was Rs. 14/1/- per cubic foot in Jodhpur City, according to schedule prescribed by the Pubic Works Department. That this was really so, has been established conclusively by the plaintiff's own admission in the trial court that the rate of the Public Works Department was Rs. 14/- per cubic foot. As the learned Judge of the lower appellate court has calculated the plaintiff's claim at the rate of Rs. 14/1/- per cubic foot, there can be no doubt that he has allowed a reasonable price to the plaintiff. It has been argued, however, that an error of calculation has been made by the learned Judge of the lower appellate court, in asmuch as he calculated the total price to be Rs. 731/8/-, whereas it should be Rs. 734/12/3, for 35 frames. It is admitted that there is this mis-calculation to the extent of Rs. 3/4/3. I would therefore hold that the plaintiff is entitled to recover Rs. 734/12/3 and not Rs. 731/8/ -. In other words, the plaintiff is entitled to a further sum of Rs. 3/4/3 over and above the sum of Rs. 31/8/- allowed by the learned Senior Civil Judge. Then the lower appellate court has allowed Rs. 13/3/9 on account of the price of the remaining one frame which was also found to have been supplied to the defendant. At the rate of Rs. 14/1/- per cubic foot, the amount should have been lesser. It has therefore been argued that when the lower court has accepted the plaintiff's claim regarding the price of the thirty-sixth frame, it should be held that there is an inconsistency in the findings, and so the cost of the other 35 frames should be calculated at the rate allowed for the remaining one frame. But there is no force in this argument as there is no real inconsistency in the findings of the lower appellate court. The learned Judge of that court has been at pains in giving his reasons why the reasonable price should be held to be Rs. 14/1/-per cubic foot, and it appears that it was due to inadvertence that he forgot to calculate and reduce the price of the remaining one frame. As, however, there is no cross-objection in regard to the price of the thirty sixth frame, the plaintiff would be entitled to Rs. 13/3/9 on account of its price, as has been allowed under the impugned judgment of the court below. Lastly it has been argued that the learned Judge has committed an error in dis-allowing the recovery of the sales tax on the supply. The respondent's learned counsel concedes that such a mistake has been made. It is admitted by the learned counsel for the parties that sales-tax was payable at 3 per cent at the relevant time and that the plaintiff is entitled to recover Rs. 22/8/- on that account. There is also no reason why the plaintiff should not be entitled to pendente lite and future interest on the total sum of Rs. 70/8/- at the rate of 6 per cent per annum, until payment. The appeal is therefore allowed to the extent that the decretal amount is raised to Rs. 70/8/-, with pendente lite and future interest at the rate of 6 per cent per annum. Each party will get its costs in proportion to its success or failure, in all the three courts. ;


Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.