SHAH, - (1.) THE Judgment of the court was delivered by
(2.) BIKHRAJ Jaipuria-hereinafter called the appellant- is the sole proprietor of a grocery business conducted in the name and style of 'Rajaram Vijai Kumar' in the town of Arrah in the State of Bihar. In the months of July and August, 1943, the, Divisional Superintendent, East Indian Railway under three '-'purchase orders' agreed to buy and the appellant agreed to sell certain quantities of food grains for the employees of the East Indian Railway. The following table sets out the purchase prices, the commodities, the dates of 115 JUDGEMENT_113_AIR(SC)_1962Html1.htm Purchase orders Nos. 69 and 76 were signed by S.C. Ribbins, Personal Assistant to the Division at Superintendent and purchase order No. 106 was signed by the Divisional Superintendent. Under the purchase orders delivery of grains was to commence within seven days' of acceptance and was to' be completed within one month. The appellant delivered diverse quantities of foodgrains from time to time but was unable fully to perform the contracts within, the period stipulated. Between July.), 20, 1943 and 4/08/1943, he supplied 3465 maunds of rice and between 1/09/1943 and Sep 19/09/1943 he supplied 1152 maunds 35 seers of wheat. In exercise of the powers conferred by cl.(b) of Sub-r. (2) of r.81 of the Defence of India Rules, the government of Bihar by notification No. 12691-P.C. dated 16/09/1943 directed that commodities named in column I of the schedule shall not, from and including 20/09/1943 and until further notice, be sold at any primary source of supply or by the proprietor, manager or employee of any mill in the Province of Bihar at prices exceeding those specified in the second column of the schedule. The controlled rat-. of rice (medium) was Rs. 18.00 per standard maund, of wheat (red) Rs. 17.00, of wheat (white) Rs. 18.00 and of gram Rs. 12-8-0. The Sub-Divisional Magistrate, District Arrah issued on 21/09/1943, a price-list of controlled articles fixing the same prices as were fixed for wheat, rice and gram by the notification issued by the government of Bihar. By cl. (2) of the notification, a warning was issued that in the event of the dealers selling controlled articles at rates exceeding those fixed or withholding stocks of such articles from sale, 'they will be liable to prosecution under r.81 (1) of the Defence of India Rules.' By a telegraphic communication dated 28/09/1943, the Divisional Superintendent informed the appellant that under the purchase orders, foodgrains tendered for delivery will not, unless despatched before 1/10/1943, be accepted, and barring a consignment of 637 maunds 20 seers accepted on 7/10/1943, the Railway Administration declined to accept, delivery of food grains offered to be supplied by the appellant after 1/10/1943. The appellant served a notice upon the Divisional Superintendent coraplaining of breach of contract and sold between February la and February 23, 1944 the balance of foodgrains under the purchase orders which were lying either at the various railway stations or in his own godowns. The appellant then called upon the Railway Administration to pay the difference between the price realised by sale and the contract price and failing to obtain satisfaction, commenced an action (Suit No. 359/48A) in the court of the First Additional Subordinate Judge, Patna for a decree for Rs. 2,89,995-15-3 against the Dominion of India. The appellant claimed Rs. 2,32,665-12-0 being the difference between the contract price and the price realised, Rs. 42,709-10-3 as interest and Rs. 14,620-9-0 as freight, wharf. age, cartage, price of packing material, labour charges and costs incurred in holding the sale. The appellant submitted that under the terms of the purchase orders, supply was to commence within seven days of the date of receipt of the orders and was to be completed within one month, but it was not intended that time should be of the essence of the contract, and in the alternative that the Railway Administration had waived the stipulation as to time in the performance of the contracts and therefore he was entitled, the Railway Administration having committed breach of ,the contracts, to recover as compensation the difference between the contract price and the price for which the grains were sold. The suit was resisted by the Dominion of India contending inter alia that the appellant had no cause of action for the claim in the suit, that the contracts between the appellant and the Divisional Superintendent Dinapur were not valid and binding upon the government of India and that the contracts were liable to be avoided by the government, that time was of the essence of the contracts, that stipulations as to time were not waived, and that no breach of contract was committed by the East Indian Railway Administration and in any event, the appellant had not suffered any loss as a result of such breach. By the written statement, it wag admitted that the East Indian Railway through the Divisional Superintendent, Dinapur had by three orders set out in the plaint agreed to buy and the appellant had agreed to sell the commodities specified therein, but it was denied that the Divisional Superintendent had been ''given complete authority to enter into contracts for the supply of foodgrains.' The trial court held that time was not of the essence of the contracts and even if it was, breach of the stipulation in that behalf was waived. It further held that the plea that the contracts were void because they were not in accordance with the provisions of s. 175 (3) of the government of India Act, 1935, could not be permitted to be urged, no such plea having been raised by the written statement. Holding that the Divisional Superintendent was authorised to enter into the contracts for purchase of foodgrains, and that he had committed breach of contracts the trial Judge awarded to the appellant Rs. 1,29,460-7-0 with interest thereon at the rate of 6% per annum from 1/10/1943, to the date of the institution of the suit and further interest at 6% on judgment. Against that decree, an appeal was preferred by the Union of India to the High court of Judicature at Patna and the appellant filed cross-objections to the decree appealed from. The High court held that time was of the essence of the contracts, but the Railway Administration having a accepted the goods tendered after the expiration of the period prescribed thereby, the stipulation as to time was waived. The High court further held that by the notification under r. 81 of the Defence of India Rules, performance of the contracts had not been rendered illegal but the Divisional Superintendent had no authority to enter into contracts to purchase food grains on behalf of the Railway Administration and that in any event, the contracts not having been expressed to be made by the governor-General and not having been executed on behalf of the governor General by an officer daily appointed in that behalf and in manner prescribed, the contracts were unenforceable. The High court also held that the appellant was not entitled to a decree for compensation because he had failed to prove the ruling market rate on the date of breach viz, 1/10/1943. The High court also observed that the trial court erred in awarding interest prior to the date of the suit and in so holding, relied upon the judgment of the Privy council in Bengal Nagpur Railway Co., Ltd. v. Ruttanji Ramji and others (1).
(3.) IN this appeal by the appellant, two questions fall to be determined, (1) whether relying upon the purchase orders signed by the Divisional Superintendent which were not made and executed in the manner prescribed by s.175 (3) of the, government of INdia Act 1935, the appellant could sue the Dominion of INdia for compensation for breach of contract, and (2) whether the appellant has proved the ruling market rate on 1/10/1943 for the commodities in question. The finding that the Railway Administration had waived the stipulation as to the performance of the contracts within the time prescribed though time was under the agreement of the essence, is not challenged before us on behalf of the Union of India. If the finding as to waiver is correct, manifestly by his telegraphic intimation dated 28/09/1943, that the foodgrains not despatched before 1/10/1943, will not be accepted the Divisional Superintendent committed a breach of the contract. Section 175 (3) of the government of India Act as in force at the material time provided : 'Subject to the provisions of this Act, with respect to the Federal Railway Authority, all contracts made in the exercise of the executive authority of the Federation or of a Province shall be expressed to be made by the governor General, or by the governor of the Province, as the case may be, and all such contracts and all assurances of property made in the exercise of that authority shall be executed on behalf of the governor-General or governor by such persons and in such manner as he may direct or authorise.' ;