Mitter, J. - (1.) This is an appeal by certificate from a judgment and decree of the Kerala High Court dismissing the plaintiff-appellant's suit for damages claimed on the basis of a breach of contract and allowing, in modification of the decree of the trial Court, a decree for a sum of Rs. 10,750 only with interest at 3%' p. m. from the date of institution of the suit. The trial Court had awarded the plaintiff a decree for Rs. 80,745-62 which was inclusive of Rs. 69.995-62 by way Of damages, Rs. 10,000/- representing the amount deposited by the plaintiff in terms of the contract sued upon and Rs. 750/- as interest on the said deposit amount The trial Court also awarded interest at 6% p. a. on the sum of Rs. 10,000/- from the date of the decree.
(2.) The facts and circumstances leading to the institution of the suit are as follows. The appellant entered into a sales agency agreement with the Travancore Cochin State on May 11, 1950 the material clauses whereof were as follows:- 1. The agents are given the sole distributorship of the products of the Travancore Plywood Industries including plywood tea chest panels, battons, plywood commercial sheets etc. 2. The agency is to be for a period of one year in the first instance with an option to the agents to continue for a like period or for such further period not exceeding four years to be notified to the Government 3 and 4. ********** 5. The agents to be entitled to a commission of 5% on sales up to Rs. 5 lakhs and 71/2% on sales over and above the said figure. 6. The commission is to be payable on all supplies made against orders placed by the agents with the Travancore Plywood Industries (a State venture) either within die agency or outside the agency area. 7 and 8. ********** 9. The quality of the articles supplied shall conform to standards prescribed by the Forest Research Institute, Dehra Dun.... The Travancore Plywood Industries shall be solely responsible for the quality of the supplies. 10. Claims for shortages replacements for defective manufacture or defective cutting or difference in size or for supplies not conforming to the specifications in any other manner whatsoever are to be met by the Travancore Plywood Industries at their own cost and expense. The agents shall be kept fully indemnified against all claims arising from any of the above defects or for cancellation of contracts by buyers on grounds of defective supplies. 11. The agents to deposit with the Government as security for the due fulfilment of this contract a sum of Rs. 10,000/- in the shape of Government bonds and interest on the bonds to be paid to the agents. 12. The agents guarantee a minimum annual sale of Rs. 5 lakhs worth of the products of the Travancore Plywood Industries. If at the end of the twelve months from the date of the commencement of this contract, the actual value of the goods sold on which the agents are . . .eligible for commission as per clause 5 is found to be less than Rs. 5 lakhs due to default on the part of the agents, then damages computed on the basis and in the proportion of Rs. 2,000/ for every lakh of rupees worth of goods by which the actual sales for that year fall short of the guaranteed annual sale of Rs. 5 lakhs shall be paid by the agents to the Government. The Travancore Plywood Industries shall not however, be liable to pay damages if the full quantity indented for could not be supplied for want of stock. 13. On breach by the agents of all or any of the terms and condition herein contained it shall be open for the Government to terminate this contract forthwith without prejudice to the rights of either party accrued before the date of such termination."
(3.) By mutual agreement the date of commencement of the agreement was changed from 11th May 1950 to Ist November, 1950 and the agency was to be for five years. The sales for the year ending 31st October, 1951 were worth Rs. 5,09.789-5-4; the corresponding figure for the year 1st November 1951 to 31st October, 1952 was Rs. 6,73,831-8-3 but in the third year ending on 31st October, 1953 the net sales came to no more than Rs. 3,35,196/-. On December 10, 1953 the Government of Travancore Cochin cancelled the agreement on the ground of failure of the plaintiff to secure orders for the minimum sum of Rs. 5 Lakhs during the year ending 31st October, 1953. They also claimed damages on the basis of Clause (12) of the agreement. The plaintiff was equally prompt in serving a notice under Section 80 of the Code of Civil Procedure of their intended suit against the Government on 15th December, 1953. They filed the suit on 24th January, 1955.;