Lord Morton of Henryton - (1.)This is an appeal from a decree of the High Court of Judicature at Bombay, dated 4 - 12 - 1944, made in its appellate jurisdiction, setting aside the decree of that Court dated 10 - 4 - 1944, made in its original jurisdiction, and giving judgment for the respondent for rs. 99,043. The history of the case begins with a contract made on 9 - 9 - 1938, between the first appellants of the one part and Francke Werke A.G. of Bremen, Germany, and Hansa (India) Trading Company Limited of Bombay {therein and hereinafter referred to as "the sellers") of the other part. By the contract the first appellants agreed to buy, and the Sellers agreed to sell, certain machinery with all the necessary accessories, as specified in sch. A to the contract, for a complete oil refining and hydrogenating plant.
(2.)The relevant terms of the contract may be summarised as follows: (i) By Cl. 1 it was provided that the delivery by the sellers was to consist of the machinery, etc., specified in sch. A. The sellers were also to supply free of charge complete sets of drawings showing the arrangement in detail of the buildings and execution drawings of foundations. (ii) By cl. 2 the total price for the plant as specified in sch. A was to be 177,500 Reichmarks, delivered c.i.f. Karachi Port. This price was to include all export, packing, forwarding and insurance charges. By subsequent written agreement between the parties, it was agreed that delivery should be c.i.f. Bombay. (iii) Clause 3 contained the terms of payment which was to be made by instalments as follows: (a) 25 per cent. of the total price (i. e. 44,375 Reichmarks) on the signing of the contract. (b) 25 per cent. of the value of each consignment against shipping documents the total being 44,375 Reichmarks. (c) 25 per cent. of the total value of the order after completion of the erection of the whole plant, on the plant being found mechanically satisfactory on trial. (d) 25 per cent. of the total value of the order 4 months after the payment under (c). Payment was to be made in free Reichmarks and the rate of exchange was fixed at 12.40 Reichmarks to the pound sterling. (iv) Clause 6 provided that the sellers should send a qualified erector for the erection of the plant. Clause 7 provided that the sellers should despatch their Chief Chemist to start the plant, prove to the first appellants that the guarantees given by the sellers were satisfied, and train the staff in the handling of the plant. The first appellants were to pay, in respect of the services of the erector and of the Chief Chemist, agreed amounts over and above the price for the plant specified in Cl. 2 of the contract. (v) Clause 9 provided that the sellers were to be responsible for the due fulfilment of all the guarantees of the manufactured articles and the quality of the product as given in Sch. "b" to the contract. (vi) Schedule A set out the specification of the plant. This specification, as subsequently revised by the parties, contained 64 items. Schedule "B" contained guarantees on three matters: (a) That the plant would be supplied complete, except for certain items specified in Sch. C, which though agreed to be necessary to make the plant complete were not to be supplied by the sellers. (b) That, the first appellants having guaranteed that their existing refinery produced 12 tons of refined oil per 24 hours, this refinery together with the plant supplied by the sellers would produce 25 tons of faultless hydrogenated product with an average melting point of 430C. within 24 hours. The raw materials to be used for this purpose were specified in the guarantee. (c) That the hydrogenated product produced in this plant should be of prime white colour and completely tasteless and odourless and should not develop any smell whatsoever even after storing it in sealed containers for 6 months.
(3.)The contract was subsequently varied in certain other respects by correspondence between the parties, but no one of such variations is relevant for the purposes of this appeal.