MANAGER HARDWARE AND TOOLS LTD Vs. SARU SMELTING PVT LTD
LAWS(ALL)-1983-5-22
HIGH COURT OF ALLAHABAD
Decided on
May 04,1983
MANAGER HARDWARE AND TOOLS LTD
Appellant
VERSUS
SARU SMELTING PVT LTD
Respondents
JUDGEMENT
-
(1.) K. C. Agrawal, J. This is a plaintiff's' appeal against the judgment and decree of the Second Additional Civil Judge, Aligarh, dt. November 25, 1975, dismissing the suit for damages filed on the ground of non-supply of Saru Zamak.
(2.) THE facts, briefly stated, are these. M/s. Anchor Pressings Private Limited (hereinafter referred to as 'the plaintiff'), is a Company carrying on business, inter alia, of manufacture, distribution, and sale of various kinds of locks and other articles, including zinc locks, and in that connection it requires zinc alloy, which is known by the standard name of Zamak. On November 28, 1972, M/s. Saru Smelting Private Limited (hereinafter referred to as 'the defendant'), which is carrying on the business of manufacture; supply and sale of Zamak, offered during the course of a telephonic talk to supply 100 tonnes of Saru Zamak Ingots to the plaintiff. THE defendant's offer was accepted by a letter dt. 5th December, 1972 (Ex. =1) by the plaintiff to the defendant. THE relevant terms and conditions, on which the agreement had been arrived at were: SARU ZAMAK INGOTS - 100 tonnes @ Rs. 6. 85 per Kg. plus 1 U. P. S. Tax. For Meerut Less actual freight and octroi. DELIVERY - tonnes every week from January 1973. DESPATCH - Per Road Transport to Aligarh. PAYMENT - Document to be negotiated through P. N. Bank, Aligarh together with your bill in triplicate. Note : THE Composition Certificate of the ordered alloy should accompany each supply positively and the lead content should in no case exceed. 003%". 3. THE defendant acknowledged the receipt of the said order by means of a letter dt. 8th December, 1972, (Ext. 2) agreeing to supply 100 tonnes Zamak booked by the plaintiff @ Rs. 6. 85 per kilogram F. O. R. THE plaintiff was also informed by this letter that despatches would be made according to Delivery Schedule. In pursuance of the agreement the first week of January 1973 (sic) but it was only after repeated demands by letters and telegrams that 30 tonnes of Zamak were supplied between 28th February, 1973, and 15th March, 1973, in three instalments of 10 tonnes each. THE defendant, thereafter, informed the plaintiff that as the price of Zamak had been raised by the M. M. T. C. , from which purchases used to be made by the defendant, the defendant was not in a position to supply the same at the old rate of Rs. 6. 85 per kg. THE defendant wanted the plaintiff to agree to enhance the rate for the supply to Rs. 7. 50 per kg. THE case of the plaintiff, however, is that at the first instance it refused to enhance the price as agreed to and stated that it had never agreed to any such enhancement and the entire supplies had to be made @ Rs. 6. 85 per kg. , but seeing the urgency of its requirement, the plaintiff, ultimately, agreed on 15th May, 1973, that it would take the balance at Rs. 7. 40 per kg. , THE defendant despatched three more instalments of 10 tonnes each as follows:- 10 tonnes on 18-5-1973 10 tonnes on 9-7-1973 10 tonnes on 11-7-1973 4. Out of the 100 tonnes initially agreed, the total supply made was of 70 tonnes. THE defendant had promised to supply the balance at the rate of Rupees 7. 40 per kg. at the earliest, but it did not do so. THE defendant began to plead that since Zinc had not been received from the M. M. T. C. , the supply could not be made by it. THE defendant asked the plaintiff to wait for the receipt of supply of Zinc by it. Assurances were also given from time to time that immediately on receipt of Zinc, the balance of 30 tonnes of Zamak would be supplied. Ultimately, the plaintiff repudiated the excuse and allegations of the defendant by means of its notice dt. October 9, 1973, and clearly told the defendant that it was no concern of the plaintiff that the defendant had not received the Zinc from M. M. T. C. THE defendant continued making false promises till November 1973, When the plaintiff served a final notice dated 4th November, 1973, giving a period of two weeks to supply the balance quantity of Zamak, which was not done. Upon the supply not being made, the suit was filed for the recovery of Rs. 3,30,000/- as damages on the basis of the cause of action accruing on 21st November, 1973, after the expiry of two weeks of service of notice dated 4th November, 1973. 5. THE suit was contested by the defendant on a number of pleas. THE defendant alleged that the defendant was entitled to enhance the rate of Zamak in the event of M. M. T. C. , claiming higher price for the raw material. In that connection, the defendant asserted that along with the letter dated 5th December, 1972, a copy of order of acknowledgement had been sent to the plaintiff containing the various terms and conditions of sale. Condition No. I of the said order of acknowledgement entitled the defendant to amend the price to cover any increase in the price of raw materials by the M. M. T. C. THE defendant further asserted that it was not possessed of the raw material from which it could manufacture Zamak to be supplied to the plaintiff. THE plaintiff was not entitled to get damages from it. THE plea that the suit was not cognizable at Aligarh had also been raised. According to the defendant, the plaintiff's claim of damages was exaggerated. It was pleaded that as the defendant had expressly intimated to the plaintiff its inability to supply the balance of 30 tonnes of Zamak on 9th Apr. , 1973, the breach, if any, was committed in that month and the plaintiff could get the damages prevailing at the end of Apr. , 1973 and not further. 6. On the pleadings of the parties, the trial Court framed as many as 8 issues. THE trial Court decided all the issues, except Issue No. 7 against the defendant. It found that the defendant had committed breach of the contract by not supplying 30 tonnes of Zamak, which had been agreed to on 5th December, 1972. It held that the original contract between the parties did not stand rescinded or waived by the conduct of the plaintiff, as alleged in paragraph 23 of the written statement. THE further finding given was that there was no agreement between the parties that the delivery of the contracted goods could be linked with the supply of raw materials by the M. M. T. C. , to the defendant. It was not the concern of the plaintiff as to from which source the defendant procured the raw material for the manufacture of contracted quantity of Zamak. It had also been found on the basis of the letter dated 3rd August, 1973 (Ext. 21) sent by the defendant to the plaintiff that the raw material for the manufacture of Zamak was available in the market, and that the defendant could have purchased the same for fulfilling contract. On the question of jurisdiction, the view taken by the trial Court was that Aligarh Court had jurisdiction to entertain the suit, but in its opinion since the plaintiff failed to establish the quantum of damages suffered, the suit was liable to be dismissed. 7. Being aggrieved by the judgment of the trial Court, the plaintiff has filed this appeal. 8. Learned counsel for the plaintiff assailed the finding of the trial Court given on Issue 7. THE defendant's counsel not only supported the finding on the said controversy, but also submitted that the findings on other issues except Issue No. 1 were wrong, erroneous and incorrect. 9. THE dispute between the parties was about the date on which the agreement had been arrived at. THE plaintiff had alleged that the contract came into existence when Vinod Kumar (P. W. 1) accepted the offer of the defendant's Company. THE case of the defendant, however, was that the plaintiff made an offer for the purchase of 100 tonnes of Zamak by its letter dated 5th December, 1972. This offer was accepted by the defendant on 8th December, 1972, by its letter Ext. 2, which had been written by Ramesh Gautam at Meerut on 8th Dec. 1972. THE defendant had asserted that since the letter was posted at Meerut, the concluded contract came into existence there. 10. This controversy has its bearing on Issue No. 1, which was about jurisdiction of the Court, and also Issues 2 and 3, which were about the terms of contract. So far as Issue No. 1 is concerned, it may suffice to mention that the learned Civil Judge had found that the Court at Aligarh had jurisdiction as the completed contract came into existence at Aligarh. This finding of the trial Court was not challenged by the defendant. We are not required, therefore, to deal with the evidence led by the parties on the same. We may point out that Section 21 of the Civil P. C. permits the plea of territorial jurisdiction to be raised in the appeal only when failure of justice to the party, which is raising the point has been established. THE defendant has not brought any thing to our notice to warrant the conclusion in its favour on that ground. On merits also we are of opinion that the Aligarh court had jurisdiction. 11. THE next point which arises in this connection is as to whether along with the order of acknowledgment or acceptance of the offer made by the plaintiff, the defendant had sent certain printed terms and conditions on which the same had been accepted. THE defendant, we have noted above, accepted the offer of the plaintiff by the letter (Ext. 2) dated 8th December, 1972. From the letter of acceptance it was established that the rate and delivery of the agreed quantity of Zamak was agreed between the parties. THE defendant, however, asserted that there was agreement between the parties that the delivery of the agreed quantity of Zamak Ingots by the defendant would be dependent on the availability of raw material from M. M. T. C. and the rates would be altered according to the rise and fall price of raw material by M. M. T. C. On this controversy, the defendant relied on condition No. 1 printed on the back of Ext. A-27. THE relevant portion of the aforesaid condition is as under:- "prices and delivery depend on the timely allocations of raw materials by the Government of India and supplies by the Minerals and Metals Trading Corporation of India. Prices may be amended to cover any increase in raw materials' prices by the Minerals and Metals Trading Corporation. . . . . . " 12. According the defendant, the letter dated 8th December, 1972, had accompanied the paper containing the aforesaid term and condition. THE plaintiff had, on the contrary, asserted that it did not receive any enclosure with the letter dated 8th December, 1972. THE plaintiff asserted that the aforesaid term was not one of the conditions on which the offer made by it to purchase 100 tonnes of Zamak had been accepted. THE trial Court decided this controversy against the defendant finding that the evidence of the defendant did not establish that the rate and delivery of the agreed quantity of Zamak was agreed to be linked by rate and supply of special high grade zinc by M. M. T. C. 13. Before us, the defendant assailed the aforesaid finding and submitted that the evidence brought on record proved to the contrary. Reliance was placed on the statement of N. C. Jain (D. W. 2) who stated that along with the letter dated 8th December, 1972, the terms and conditions had been sent to the plaintiffs. Great emphasis was laid by the defendant's learned counsel that the defendant was conducting its business on modern lines and following the scheduled business practice, it was inconceivable that the same was not adopted in the instant case. On an offer being accepted, the defendant used to prepare a document known to be an order acknowledgement in quintuplicate. This incorporated all the terms and conditions which formed the basis of the contract. Upon the contract finalising, the original copy of the order acknowledgment used to be sent to the purchaser while the second copy was to be sent to the production Department, and the third copy was sent to the Control Department. 14. THE learned counsel contended that the defendant was a big company and had adopted a system for manufacturing Saru Zamak. In every case this system used to be adopted. For that reason, it was impossible to believe that the terms and conditions on which the offer of the plaintiff had been accepted was not sent to it along with the order acknowledgement. THE learned counsel further submitted that, admittedly, the plaintiff used to maintain a register of receipts of all the papers and since that register had not been produced, the presumption in law was that the same had been withheld from the Court. 15. THE plaintiff controverted the defendant's argument and urged that the terms and conditions as contained in the order acknowledgement had not been sent to it. It was submitted on its behalf that all the terms and conditions were contained in the letter dated 8th December, 1972 itself and there were no conditions other than those mentioned in the same. THE plaintiff denied that any enclosure was sent along with the letter dt. 8th Dec. , 1972. THE plaintiff also submitted that at all the relevant times and even much prior to the making of the contract in question, the defendant was holding huge stocks of finished and unfinished goods. 16. We have gone through the evidence of the parties. On the finding we propose to give in this appeal, it is not necessary for us to decide this controversy. THE defendant's case was that under the terms agreed upon, the defendant was entitled to raise the price of Saru Zamak as and when the same was enhanced by M. M. T. C. But, if it is established from the evidence on record that at all the relevant times and even much prior to the making of the contract in question, the defendant was holding huge stocks of finished and unfinished goods, including special high grade zinc, the defendant had no right to demand a higher price. 17. At this place, we may deal with clause 1 of the terms and conditions agreed upon and find out its true scope and meaning. Under this condition, the defendant could raise the price to cover any increase made by the M. M. T. C. Obviously, the intention behind this clause was to protect the defendant against the consequence of possible loss. In other words, under this clause, the defendant could demand higher price when it was required to pay the same for the supplies. which it received after the agreement had been entered into. If the raw material, which is to be supplied to the party, is received at a higher price for being handed over by the defendant to it, this clause may entitle the defendant to charge a higher price. Under this clause, the defendant is entitled to enlargement or addition in value of Saru Zamak to the original price, if it is required to pay by the increase of rates by the M. M. T. C. But, where it has got stocks of raw materials available with it, it will not be entitled to charge higher rates from the customers with whom it had entered into agreements inasmuch as that would not be a case for covering the increase but of profiteering. THE intention is to cover the possible loss which might be suffered by the defendant in case it was compelled to supply Saru Zamak at the old agreed price, although the rate of the same had gone up. This clause does not entitle the defendant to raise the price for earning more amount than what could be done if the supplies were made at the agreed rate. This interpretation of condition No. 1 is supported by the latter clause also. Under that clause, in the event of buying raw materials from other sources than M. M. T. C. , for supply to the party with whom it had entered into the agreement, the defendant could raise the rate for covering the excess price. To it, the coverage would be of the excess price which the defendant has to pay for making the raw materials available by buying the same from other sources. It does not entitle the defendant to raise the price whimsically or arbitrarily or to demand the same from its customers. It is only to this extent that a person entering into a contract may be made liable under this clause, but not for the price which the defendant might like to charge, irrespective of the fact that the goods purchased by it from M. M. T. C. , were not affected by the increase in the price of raw materials by the M. M. T. C. 18. THE rule of construction is to find out the meaning of the document from the language used in the same. Applying that rule, we find that the parties intended to increase the rate or price of zinc only on the same being increased by the M. M. T. C. , which the defendant is required to pay for making the supplies to the plaintiff. It is material in this connection to note down that it does not provide for decreasing the price in the event of the price being charged less than agreed upon. 19. THE parties only intended that in the event of higher price being paid by the defendant for the special high grade zinc to the M. M. T. C. that it would be entitled to enhance it. It may be noted that there is no evidence on record about the price of Saru Zamak being raised in the past by the defendant on the same having been increased by the M. M. T. C. Had the parties intended to give the construction to this clause, the one which had been advanced before us by the defendant, the price must have been increased in the past when the rates were increased by the M. M. T. C. In these circumstances, to us it appears that the intention of the parties was to entitle the defendant to raise the price of Saru Zamak only when supplies of special high grade zince received by it for manufacturing Saru Zamak was raised by the M. M. T. C. and out of that supply, Saru Zamak was manufactured and delivered in terms of the contract. 20. THE next circumstance which may be relevant in interpreting the aforesaid clause is the fact that although according to the defendant the price of special high grade zinc had been raised in February, still the supplies were made to the plaintiff at the old rate. Not only that, the defendant had taken such a stand in paragraph 23 of the written statement, but also Naresh Chandra Jain (D. W. 2), who appeared for it, stated the same. Paper 51-C which is a copy of M. M. T. C. Prices for high grade and special high grade zinc filed by the defendant, also established the same. THE price of special high grade zinc in January 1973, was more than what it was in December 1972, when the contract was entered into. Despite this rise in price in January and February, the defendant charged the agreed rate. If the parties under the contract were bound to pay the increased rate on the same having been raised by the M. M. T. C. , one fails to understand why the higher rate was not charged from the plaintiff on the supplies made to it in the months of January and February, 1973. Not charging of higher price than agreed upon, is indicative of the fact that the parties did not intend to raise the same on the rate of the zinc being increased by the M. M. T. C. 21. Another circumstance to be noted in this connection is that, admittedly, a dispute had arisen between the parties in April 1973 with regard to the price at which supplies had to be made. Later, the price was raised from Rs. 6. 85 to Rs. 7. 40 per Kg. This was noted in Ext. A-26 by the defendant. THE recitation was: "for balance quantity 70 tonnes the rate will be Rs. 7. 40 per Kg. 8-4-1973. " 22. This would indicate that the balance supplies were agreed to be made by the defendant at Rs. 7. 40 per Kg. irrespective of the rate at which the supplies were received by the defendant from M. M. T. C. Admittedly, the prices of M. M. T. C. were on a higher trend. If the parties had already entered into a contract entitling the defendant to raise the price, as was argued before us, there was no occasion for the defendant not to supply the balance quantity at the rate of Rs. 7. 40 per kilogram. This recitation defeats the argument of the defendant that it was entitled to charge higher amount on the price going up. THE entire balance quantity of 30 tonnes had to be supplied by the defendant @ Rupees 7. 40 per kilogram irrespective of the price being raised by the M. M. T. C. This would lead us to the conclusion that the interpretation put by the defendant on Clause 1 was incorrect and that it was not entitled to demand higher rate merely on the increase of price by the M. M. T. C. on future allocations or supplies. 23. Naresh Chandra Jain (D. W. 2) has made a vague statement on this controversy. He said: "in case we have raw material of any order, we may or may not increase the rate of supply of Zamak. " This is not in consonance with condition 1 of the order acknowledgement. It is impossible to believe that if the terms and conditions of the agreement had the meaning assigned by the defendant it would not increase the rate despite the price going up. THE statement only shows that condition No. 1 did not have that intention behind it. 24. In view of what we have said above, we need not discuss the evidence relied upon by the counsel for the parties in support of their respective contentions on this controversy as to whether the order of acknowledgement containing the terms and conditions had been sent by the defendant to the plaintiff. We have noted above that the trial Court recorded the finding in favour of the plaintiff on this controversy. 25. THE other questions raised in the written statement of the defendant were about recession, novation and frustration of the contract. THEse have been dealt with by the learned Civil Judge under Issues Nos. 4, 5 and 8 and on these issues the findings recorded are against the defendant. THEse findings were not challenged before us. On the materials produced, we are of opinion that the learned Civil Judge was right in deciding them against the defendant. On 5th April, 1973, when the parties entered into the agreement for supply of the balance of 70 tonnes of zinc at the higher rate of Rs. 7. 40, than what had been agreed upon in the original agreement dated 8-12-1972, the parties did not substitute the original contract. Only one of the terms had been modified, and in respect of all other matters the agreement had remained the same. THE question of novation arises only when the parties to a contract agree to substitute new contract for it, or to rescind or alter it. This has not happened in the present case. THE original contract had not been altered or rescinded. 26. So far as the question of frustration is concerned, it may be said that only when a contract becomes impossible of performance or unlawful, that this may apply. In the instant case, neither of the two contingencies had come into existence. We will show from the discussion to follow that the defendant had ample material in its possession and that supplies of Saru Zamak could be made to the plaintiff from the same. We, accordingly, find that the trial Court was right in deciding this issue against the defendant. 27. THE next controversy, which according to us is the main one, whether the defendant had special high grade zinc available with it from which it could manufacture Saru Zamak and supply the same to the plaintiff. In this connection the defendant took inconsistent pleas in its written statement. At one place the defendant alleged that as the supply of zinc by the M. M. T. C. , had stopped, the defendant could not make the supplies to the plaintiff. At another place, the plea taken was that Saru Zamak could not be manufactured by the defendant on account of special high grade zinc being not available with it. THE Court below after discussing the evidence found that delivery of Saru Zamak to the plaintiff by the defendant was not linked with the supply of raw material by the M. M. T. C. We are in agreement with its finding. In a number of letters, which had been exchanged between the parties, there is no indication that the defendant would supply the agreed quantity of zinc only on the receipt of raw material from M. M. T. C THE defendant could not escape the liability of delivery of goods agreed to be supplied to the plaintiff on the pretext of fresh allotment of special high grade zinc not having been made by the M. M. T. C. From the Chart, which we will give later, it would be found that the defendant had goods in its possession, and that it deliberately not make did Saru Zamak available to the plaintiff. By not doing so, it committed breach of the contract. 28. Before us, the learned counsel appearing for the defendant contended that supply of Saru Zamak was not made by the defendant to the plaintiff on account of the price of special high grade zinc going up and the plaintiff having not agreed to pay the same. In the written statement, the case taken by the defendant was different. In paragraph 11 of written statement, the defendant asserted that since no zinc had been received from M. M. T. C. , Saru Zamak had not been manufactured for supplying to the plaintiff. In paragraphs 13, 26 and 28, the plea for not supplying Saru Zamak is the same, as stated in paragraph 11. What was said in paragraphs 27 and 28 was that all stocks of special high grade zinc required for manufacture of Saru Zamak ingots had been exhausted and the defendant was experiencing inability to supply any more goods. 29. Naresh Chandra Jain (D. W. 2) in his statement also gave similar version. He denied the suggestion put to him in the cross-examination that the breach of the contract had been committed by the defendant with a view to get the rate of Saru Zamak increased. THE explanation offered by him was that special high grade zinc was not available. He admitted that the defendant used to enter in the register the entire quantity of zinc received after purchase. This register used to be known as Raw Material Stock Register. He further admitted that the quantity consumed in manufacturing various items was entered in the consumption register. THE defendant has not produced these documents. THE suggestion of the learned counsel for the plaintiff was that these documents were deliberately withheld from the Court lest the same would have demonstrated that the defendant had fresh special high grade zinc available with it and despite the same, Saru Zamak was not supplied to the plaintiff by the defendant. THE non- supply obviously was with the intention to earn more profit by selling the same in the market at the higher price which had an increasing trend. THE suggestion of the learned counsel for the plaintiff appears to be well founded. By making a reference to the statement of Naresh Chandra Jain (D. W. 2), where he asserted that he did not know about the books and registers which were being maintained in the defendant company, the learned counsel for the defendant submitted that there was no occasion for drawing adverse inferences from the same. We are unable to accept this argument of the defendant's counsel. In the earlier part of his statement he clearly admitted that regular registers were being maintained in the factory showing the receipt and consumption. It is impossible to believe that the defendant would carry on the business at such a large scale without maintaining proper registers. Truth had slipped out from Naresh Chandra Jain when he admitted the presence of these documents in the factory. Later, when he denied the same, he simply wanted to wriggle out of the admission. 30. THE only question that remains to be examined is about the availability of special high grade zinc with the defendant on the relevant dates. In that connection, we may refer to some of the documents filed by the defendant itself to show that the defendant had zinc available with it. THE first thing to be referred to is Ext. A-35, a statement showing zinc receipt in Store from 1-10-1972 to 31-12-1973. THE relevant portion of this statement is extracted below : THE supplies made work out from Items 2 to 20 as follows : THE defendant had available roughly. THE defendent had available roughly. 144 tonnes. Supplies made up to 15-3-1973, roughly. tonnes Balance60 tonnes roughly. On 28-3-1973, vide Item 21 of despatch register, they supplied. 2 tonnes Balance58 tonnes roughly as on 30-3-1973. 31. THE despatch Register Ext. A-36, would further show that 84-181-400 gms. had been supplied up to 15th March, 1973. After deducting this supply as well as 2 other tonnes, which had been despatched on 28th March, 1973, the balance at hand by the defendant was 58 tonnes roughly. This is demonstrated from the Chart given below. THE supplies made work out from Items 2 to 20 as follows : 32. THE defendant had up to 15th March, 1973, supplied to the plaintiff the total quantity of 30 tonnes. By telegram dt. 20th March, 1973, it started demanding increased rate of Rs. 7. 60 per Kg. on 1-4-1973, the demand was reduced to Rs. 7. 50 per Kilogram. Ultimately, the agreement arrived at was for supplying the balance @ Rs. 7. 40 per Kilogram. 33. As shown above, 58 tonnes were in possession of the defendant, but it forced the plaintiff to increase the rate to Rs. 7. 40 per kg. Ext. A-35, which is a letter dated 23-3-1973, showed that the defendant was to receive 56 tonnes more from the M. M. T. C. , which it obtained on 25-6-1973 as a result whereof, the actual position of the special high grade Sale note No. and date Date of Receipt Quantity of SHG Zinc. Ton. Kilo. Gms. 1. 2n/124/72/2/8/1972 10-11-1972 -133-800 gms. 24-11-1972 -195-600 gms. 2. 2n/127/72/7/8/1972 9/30-11-1972 62-872-300 gms. 8-12 -1972 -993-200 gms. Total 135-194-900 gms. Ext. A-26 is a copy of "register despatch position". On 7th Dec. , 1972, vide Ext. A-36, the supply position was as under: Note 1. First Item was a supply of 10,897. 400 gms. leaving a balance as follows : Total 135-194-900 gms. Supplied on 7-12-1972, 10,897-400 gms. Balance 124-297-500 gms. Taking the expected supply on 8th Dec. , 1972, the total quantity which was available with the defendant was : Expected supply vide-297. 500 gms. Item 3 Col 2.-993-000 gms. Total 144-290-500 gms. Roughly 144 tonnes as on 8-12-1972, the date on which the defendant accepted the plaintiff's offer. zinc between 16-4-1973 and 11-7-1973, when the last supply was made to the plaintiff, vide Item 29 of Ext. A-36, was as follows: Stock position brought forward 58 tonnes On 25-6-1973 vide sale note dt. 23-3-1973 Ext. A-35 at p. 347 defendant received 56 tonnes (roughly) at prices for March quarter 58 tonnes vide paper 51c at p. 353 when rate was Rs. 6. 29 per kg. 56 tonnes 114 tonnes 34. From Ext. A-36 it would appear that the defendant had 114 tonnes on 11-7-1973, out of which the total supplies made by it were of 51 tonnes. THE balance in hand was 63 tonnes. THEreafter, in between 12-7-1973 and 12-11-1973, the defendant supplied 5 tonnes roughly, vide Items 31 to 40 of Ext. A-36. After deducting 5 tonnes, the defendant had 58 tomes in hand. 35. From the above Charts it is demonstrated that at all relevant times, the defendant had sufficient quantity of special high grade zinc in its possession and the agreement entered into between the parties could be honoured, but it was not done. It is established that the defendant committed breach of the contract by not doing so. 36. Learned counsel for the defendant contended that the defendant was not only manufacturing Saru Zamak but also various other items and, therefore it was not possible to hold on the basis of the papers filed in the suit that the defendant had raw materials available with it. We are unable to accept this submission. THE papers from which the aforesaid figures have been arrived at and which, in fact, had not been disputed, go against his contention. If the defendant had any other paper in its possession showing consumption of raw materials, the same should have been filed by the defendant to prove it. THE Court below rightly drew the presumption against the defendant. 37. THE only point on which the suit of the plaintiff had been dismissed by the Trial Court was that, the plaintiff could not prove the damages which it suffered on account of non-supply of Saru Zamak on 9th October, 1973, when the breach, according to its finding, took place. On this question of breach, there was a conflict between the plaintiff and the defendant. THE plaintiff alleged that the breach took place in Nov. 1973, whereas the defendant's case was that the breach, if any, occurred in August, 1973. On the basis of the breach in November, 1973, the plaintiff claimed Rs. 3,33,000/- as damages. THE damages had been claimed @ Rs. 11. 10 per kg. being the difference between the contracted rate of Rs. 7. 40 and Rs. 18. 50, the market rate on the unsupplied 30 tonnes of Zamak. 38. In its reply dated 21st November, 1973, (Ext. 10), the defendant asserted, that if it was held liable to pay damages, the same had to be calculated on the basis of the price prevailing on 3rd August, 1973, when the plaintiff had been informed that the defendant was not in a position to supply Zamak ingots. Later on, in the written statement, the defendant took a different stand. We had been taken through various letters exchanged between the parties on this controversy. Sri. V. K. Gupta learned Counsel appearing for the plaintiff, referred us to the letters which had been received by the plaintiff from time to time assuring that supply of Saru Zamak would be made to the plaintiff on the raw materials being available. He submitted that as the plaintiff had bona fide believed the defendant's representation, the breach took place on 4th November, 1973, when the final notice (Ext. 15) repudiating the contract was given by the plaintiff to the defendant. We have gone through the letters exchanged between the parties and the evidence led on the controversy. On the facts and circumstances of the present case, we find that the breach of contract should be held to have been committed by the defendant in August 1973 when total inability of supplying Saru Zamak had been unequivocally communicated to the plaintiff. THE defendant had stated clearly that as no quantity of Zinc was expected to be received from M. M. T. C. for about 6 or 8 months, the delivery of the balance quantity of Zamak would be delayed accordingly. If despite this clear communication, the plaintiff kept on waiting for the supplies to receive, the date of breach could not be extended beyond the date on which this letter was received by the plaintiff. THE plaintiff was not concerned whether the defendant had received the zinc from the M. M. T. C. after August 1973. Since the plaintiff had the final reply from the defendant that the supply could not be made for 6 or 8 months, the contract should, in law, be held to have been repudiated on that date. 39. Whether a breach of contract amounts to repudiation is, "a serious matter not to be lightly found or inferred. " What has to be established is that the defaulting party has made his intention clear beyond reasonable doubt no longer to perform his side of the bargain. Proof of such an intention requires an investigation inter alia of the nature of the contract, the attending circumstances, of the motive which prompted the breach. " (Cheshire, Eight Edition, page 565 ). 40. On the facts and in the circumstances, to us it appears that no doubt could be left in the mind of any body after this letter that the breach had been committed by the defendant, and that being so, the contract should be deemed to have been repudiated by the defendant. 41. Coming to the question of damages, we are of opinion that the plaintiff was entitled to get the difference between the contract price and the market price prevalent on the date on which the breach was committed. THE law laid down in this regard is : "the market value is taken because it is presumed to be the true value of the goods to the purchaser. In the case of non-delivery where the purchaser does not get the goods he purchased, it is presumed that these would be worth to him, if he had them, what they would fetch in the open market, and that, if he wanted to get others in their stead, he could obtain them in that market at that price. " (see Wertheim v. Chicoutimi Pulp Co, 1911 AC 301 ). 42. THE actual sum, therefore, to be awarded to the party, which has suffered on account of the breach of the contract by was of damages depends upon the difference between the market and the contract prices on the day the breach took place. In the instant case, the defendant in its letter dated 3rd August, 1973, admitted that the market rate was Rs. 11/- per. kg. THE difference between the contracted price and the market price would be Rs. 3. 60 per Kilo- gram (Rs. 11/- minus Rs. 7,40, = Rs. 3. 60 ). THE total amount would come to Rupees 1,08,000/ -. 43. THE Court below refused to grant the decree in favour of the plaintiff on the erroneous ground that as tile plaintiff had not proved the market rate on the date on which the breach of contract was committed, the suit could not be decreed. Although we do not agree with the trial Court that the breach occurred in October, 1973, but we shall point out that the admitted position between the parties was that the rate of special high grade zinc in the market in August 1973, was Rs. 11/- per kilogram, and that it had a rising tendency. This was admitted by the defendant. On this evidence, the Trial Court should have decreed the claim of the plaintiff. THE law does not require the plaintiff to prove with exact precision the damages suffered by him. Determination of the quantum is no doubt a matter of difficulty. THE Courts in some cases have held that in practice evidence led to prove it may also be taken into account to find the same. THE law does not require the plaintiff to prove the amount claimed by him with mathematical accuracy. That could not be a reason for depriving the plaintiff of compensation. THE settled position in law is that a buyer can claim damages on the basis of difference between the contract price and the market price prevalent on the date of breach of the contract. That being so, the suit of the plaintiff for the recovery of damages is liable to be decreed. 44. In the result the appeal succeeds and is partly allowed. THE judgment and decree of the Court below is set aside, and the suit is decreed for the recovery of Rs. 1,08,000/- as damages with interest @ 6% per annum to be payable from the date of filing of the suit till payment. THE plaintiff will be entitled to get costs of both the Courts on the amount decreed by us, whereas costs of the balance will be borne by the parties themselves. Appeal partly allowed. .;
(2.) THE facts, briefly stated, are these. M/s. Anchor Pressings Private Limited (hereinafter referred to as 'the plaintiff'), is a Company carrying on business, inter alia, of manufacture, distribution, and sale of various kinds of locks and other articles, including zinc locks, and in that connection it requires zinc alloy, which is known by the standard name of Zamak. On November 28, 1972, M/s. Saru Smelting Private Limited (hereinafter referred to as 'the defendant'), which is carrying on the business of manufacture; supply and sale of Zamak, offered during the course of a telephonic talk to supply 100 tonnes of Saru Zamak Ingots to the plaintiff. THE defendant's offer was accepted by a letter dt. 5th December, 1972 (Ex. =1) by the plaintiff to the defendant. THE relevant terms and conditions, on which the agreement had been arrived at were: SARU ZAMAK INGOTS - 100 tonnes @ Rs. 6. 85 per Kg. plus 1 U. P. S. Tax. For Meerut Less actual freight and octroi. DELIVERY - tonnes every week from January 1973. DESPATCH - Per Road Transport to Aligarh. PAYMENT - Document to be negotiated through P. N. Bank, Aligarh together with your bill in triplicate. Note : THE Composition Certificate of the ordered alloy should accompany each supply positively and the lead content should in no case exceed. 003%". 3. THE defendant acknowledged the receipt of the said order by means of a letter dt. 8th December, 1972, (Ext. 2) agreeing to supply 100 tonnes Zamak booked by the plaintiff @ Rs. 6. 85 per kilogram F. O. R. THE plaintiff was also informed by this letter that despatches would be made according to Delivery Schedule. In pursuance of the agreement the first week of January 1973 (sic) but it was only after repeated demands by letters and telegrams that 30 tonnes of Zamak were supplied between 28th February, 1973, and 15th March, 1973, in three instalments of 10 tonnes each. THE defendant, thereafter, informed the plaintiff that as the price of Zamak had been raised by the M. M. T. C. , from which purchases used to be made by the defendant, the defendant was not in a position to supply the same at the old rate of Rs. 6. 85 per kg. THE defendant wanted the plaintiff to agree to enhance the rate for the supply to Rs. 7. 50 per kg. THE case of the plaintiff, however, is that at the first instance it refused to enhance the price as agreed to and stated that it had never agreed to any such enhancement and the entire supplies had to be made @ Rs. 6. 85 per kg. , but seeing the urgency of its requirement, the plaintiff, ultimately, agreed on 15th May, 1973, that it would take the balance at Rs. 7. 40 per kg. , THE defendant despatched three more instalments of 10 tonnes each as follows:- 10 tonnes on 18-5-1973 10 tonnes on 9-7-1973 10 tonnes on 11-7-1973 4. Out of the 100 tonnes initially agreed, the total supply made was of 70 tonnes. THE defendant had promised to supply the balance at the rate of Rupees 7. 40 per kg. at the earliest, but it did not do so. THE defendant began to plead that since Zinc had not been received from the M. M. T. C. , the supply could not be made by it. THE defendant asked the plaintiff to wait for the receipt of supply of Zinc by it. Assurances were also given from time to time that immediately on receipt of Zinc, the balance of 30 tonnes of Zamak would be supplied. Ultimately, the plaintiff repudiated the excuse and allegations of the defendant by means of its notice dt. October 9, 1973, and clearly told the defendant that it was no concern of the plaintiff that the defendant had not received the Zinc from M. M. T. C. THE defendant continued making false promises till November 1973, When the plaintiff served a final notice dated 4th November, 1973, giving a period of two weeks to supply the balance quantity of Zamak, which was not done. Upon the supply not being made, the suit was filed for the recovery of Rs. 3,30,000/- as damages on the basis of the cause of action accruing on 21st November, 1973, after the expiry of two weeks of service of notice dated 4th November, 1973. 5. THE suit was contested by the defendant on a number of pleas. THE defendant alleged that the defendant was entitled to enhance the rate of Zamak in the event of M. M. T. C. , claiming higher price for the raw material. In that connection, the defendant asserted that along with the letter dated 5th December, 1972, a copy of order of acknowledgement had been sent to the plaintiff containing the various terms and conditions of sale. Condition No. I of the said order of acknowledgement entitled the defendant to amend the price to cover any increase in the price of raw materials by the M. M. T. C. THE defendant further asserted that it was not possessed of the raw material from which it could manufacture Zamak to be supplied to the plaintiff. THE plaintiff was not entitled to get damages from it. THE plea that the suit was not cognizable at Aligarh had also been raised. According to the defendant, the plaintiff's claim of damages was exaggerated. It was pleaded that as the defendant had expressly intimated to the plaintiff its inability to supply the balance of 30 tonnes of Zamak on 9th Apr. , 1973, the breach, if any, was committed in that month and the plaintiff could get the damages prevailing at the end of Apr. , 1973 and not further. 6. On the pleadings of the parties, the trial Court framed as many as 8 issues. THE trial Court decided all the issues, except Issue No. 7 against the defendant. It found that the defendant had committed breach of the contract by not supplying 30 tonnes of Zamak, which had been agreed to on 5th December, 1972. It held that the original contract between the parties did not stand rescinded or waived by the conduct of the plaintiff, as alleged in paragraph 23 of the written statement. THE further finding given was that there was no agreement between the parties that the delivery of the contracted goods could be linked with the supply of raw materials by the M. M. T. C. , to the defendant. It was not the concern of the plaintiff as to from which source the defendant procured the raw material for the manufacture of contracted quantity of Zamak. It had also been found on the basis of the letter dated 3rd August, 1973 (Ext. 21) sent by the defendant to the plaintiff that the raw material for the manufacture of Zamak was available in the market, and that the defendant could have purchased the same for fulfilling contract. On the question of jurisdiction, the view taken by the trial Court was that Aligarh Court had jurisdiction to entertain the suit, but in its opinion since the plaintiff failed to establish the quantum of damages suffered, the suit was liable to be dismissed. 7. Being aggrieved by the judgment of the trial Court, the plaintiff has filed this appeal. 8. Learned counsel for the plaintiff assailed the finding of the trial Court given on Issue 7. THE defendant's counsel not only supported the finding on the said controversy, but also submitted that the findings on other issues except Issue No. 1 were wrong, erroneous and incorrect. 9. THE dispute between the parties was about the date on which the agreement had been arrived at. THE plaintiff had alleged that the contract came into existence when Vinod Kumar (P. W. 1) accepted the offer of the defendant's Company. THE case of the defendant, however, was that the plaintiff made an offer for the purchase of 100 tonnes of Zamak by its letter dated 5th December, 1972. This offer was accepted by the defendant on 8th December, 1972, by its letter Ext. 2, which had been written by Ramesh Gautam at Meerut on 8th Dec. 1972. THE defendant had asserted that since the letter was posted at Meerut, the concluded contract came into existence there. 10. This controversy has its bearing on Issue No. 1, which was about jurisdiction of the Court, and also Issues 2 and 3, which were about the terms of contract. So far as Issue No. 1 is concerned, it may suffice to mention that the learned Civil Judge had found that the Court at Aligarh had jurisdiction as the completed contract came into existence at Aligarh. This finding of the trial Court was not challenged by the defendant. We are not required, therefore, to deal with the evidence led by the parties on the same. We may point out that Section 21 of the Civil P. C. permits the plea of territorial jurisdiction to be raised in the appeal only when failure of justice to the party, which is raising the point has been established. THE defendant has not brought any thing to our notice to warrant the conclusion in its favour on that ground. On merits also we are of opinion that the Aligarh court had jurisdiction. 11. THE next point which arises in this connection is as to whether along with the order of acknowledgment or acceptance of the offer made by the plaintiff, the defendant had sent certain printed terms and conditions on which the same had been accepted. THE defendant, we have noted above, accepted the offer of the plaintiff by the letter (Ext. 2) dated 8th December, 1972. From the letter of acceptance it was established that the rate and delivery of the agreed quantity of Zamak was agreed between the parties. THE defendant, however, asserted that there was agreement between the parties that the delivery of the agreed quantity of Zamak Ingots by the defendant would be dependent on the availability of raw material from M. M. T. C. and the rates would be altered according to the rise and fall price of raw material by M. M. T. C. On this controversy, the defendant relied on condition No. 1 printed on the back of Ext. A-27. THE relevant portion of the aforesaid condition is as under:- "prices and delivery depend on the timely allocations of raw materials by the Government of India and supplies by the Minerals and Metals Trading Corporation of India. Prices may be amended to cover any increase in raw materials' prices by the Minerals and Metals Trading Corporation. . . . . . " 12. According the defendant, the letter dated 8th December, 1972, had accompanied the paper containing the aforesaid term and condition. THE plaintiff had, on the contrary, asserted that it did not receive any enclosure with the letter dated 8th December, 1972. THE plaintiff asserted that the aforesaid term was not one of the conditions on which the offer made by it to purchase 100 tonnes of Zamak had been accepted. THE trial Court decided this controversy against the defendant finding that the evidence of the defendant did not establish that the rate and delivery of the agreed quantity of Zamak was agreed to be linked by rate and supply of special high grade zinc by M. M. T. C. 13. Before us, the defendant assailed the aforesaid finding and submitted that the evidence brought on record proved to the contrary. Reliance was placed on the statement of N. C. Jain (D. W. 2) who stated that along with the letter dated 8th December, 1972, the terms and conditions had been sent to the plaintiffs. Great emphasis was laid by the defendant's learned counsel that the defendant was conducting its business on modern lines and following the scheduled business practice, it was inconceivable that the same was not adopted in the instant case. On an offer being accepted, the defendant used to prepare a document known to be an order acknowledgement in quintuplicate. This incorporated all the terms and conditions which formed the basis of the contract. Upon the contract finalising, the original copy of the order acknowledgment used to be sent to the purchaser while the second copy was to be sent to the production Department, and the third copy was sent to the Control Department. 14. THE learned counsel contended that the defendant was a big company and had adopted a system for manufacturing Saru Zamak. In every case this system used to be adopted. For that reason, it was impossible to believe that the terms and conditions on which the offer of the plaintiff had been accepted was not sent to it along with the order acknowledgement. THE learned counsel further submitted that, admittedly, the plaintiff used to maintain a register of receipts of all the papers and since that register had not been produced, the presumption in law was that the same had been withheld from the Court. 15. THE plaintiff controverted the defendant's argument and urged that the terms and conditions as contained in the order acknowledgement had not been sent to it. It was submitted on its behalf that all the terms and conditions were contained in the letter dated 8th December, 1972 itself and there were no conditions other than those mentioned in the same. THE plaintiff denied that any enclosure was sent along with the letter dt. 8th Dec. , 1972. THE plaintiff also submitted that at all the relevant times and even much prior to the making of the contract in question, the defendant was holding huge stocks of finished and unfinished goods. 16. We have gone through the evidence of the parties. On the finding we propose to give in this appeal, it is not necessary for us to decide this controversy. THE defendant's case was that under the terms agreed upon, the defendant was entitled to raise the price of Saru Zamak as and when the same was enhanced by M. M. T. C. But, if it is established from the evidence on record that at all the relevant times and even much prior to the making of the contract in question, the defendant was holding huge stocks of finished and unfinished goods, including special high grade zinc, the defendant had no right to demand a higher price. 17. At this place, we may deal with clause 1 of the terms and conditions agreed upon and find out its true scope and meaning. Under this condition, the defendant could raise the price to cover any increase made by the M. M. T. C. Obviously, the intention behind this clause was to protect the defendant against the consequence of possible loss. In other words, under this clause, the defendant could demand higher price when it was required to pay the same for the supplies. which it received after the agreement had been entered into. If the raw material, which is to be supplied to the party, is received at a higher price for being handed over by the defendant to it, this clause may entitle the defendant to charge a higher price. Under this clause, the defendant is entitled to enlargement or addition in value of Saru Zamak to the original price, if it is required to pay by the increase of rates by the M. M. T. C. But, where it has got stocks of raw materials available with it, it will not be entitled to charge higher rates from the customers with whom it had entered into agreements inasmuch as that would not be a case for covering the increase but of profiteering. THE intention is to cover the possible loss which might be suffered by the defendant in case it was compelled to supply Saru Zamak at the old agreed price, although the rate of the same had gone up. This clause does not entitle the defendant to raise the price for earning more amount than what could be done if the supplies were made at the agreed rate. This interpretation of condition No. 1 is supported by the latter clause also. Under that clause, in the event of buying raw materials from other sources than M. M. T. C. , for supply to the party with whom it had entered into the agreement, the defendant could raise the rate for covering the excess price. To it, the coverage would be of the excess price which the defendant has to pay for making the raw materials available by buying the same from other sources. It does not entitle the defendant to raise the price whimsically or arbitrarily or to demand the same from its customers. It is only to this extent that a person entering into a contract may be made liable under this clause, but not for the price which the defendant might like to charge, irrespective of the fact that the goods purchased by it from M. M. T. C. , were not affected by the increase in the price of raw materials by the M. M. T. C. 18. THE rule of construction is to find out the meaning of the document from the language used in the same. Applying that rule, we find that the parties intended to increase the rate or price of zinc only on the same being increased by the M. M. T. C. , which the defendant is required to pay for making the supplies to the plaintiff. It is material in this connection to note down that it does not provide for decreasing the price in the event of the price being charged less than agreed upon. 19. THE parties only intended that in the event of higher price being paid by the defendant for the special high grade zinc to the M. M. T. C. that it would be entitled to enhance it. It may be noted that there is no evidence on record about the price of Saru Zamak being raised in the past by the defendant on the same having been increased by the M. M. T. C. Had the parties intended to give the construction to this clause, the one which had been advanced before us by the defendant, the price must have been increased in the past when the rates were increased by the M. M. T. C. In these circumstances, to us it appears that the intention of the parties was to entitle the defendant to raise the price of Saru Zamak only when supplies of special high grade zince received by it for manufacturing Saru Zamak was raised by the M. M. T. C. and out of that supply, Saru Zamak was manufactured and delivered in terms of the contract. 20. THE next circumstance which may be relevant in interpreting the aforesaid clause is the fact that although according to the defendant the price of special high grade zinc had been raised in February, still the supplies were made to the plaintiff at the old rate. Not only that, the defendant had taken such a stand in paragraph 23 of the written statement, but also Naresh Chandra Jain (D. W. 2), who appeared for it, stated the same. Paper 51-C which is a copy of M. M. T. C. Prices for high grade and special high grade zinc filed by the defendant, also established the same. THE price of special high grade zinc in January 1973, was more than what it was in December 1972, when the contract was entered into. Despite this rise in price in January and February, the defendant charged the agreed rate. If the parties under the contract were bound to pay the increased rate on the same having been raised by the M. M. T. C. , one fails to understand why the higher rate was not charged from the plaintiff on the supplies made to it in the months of January and February, 1973. Not charging of higher price than agreed upon, is indicative of the fact that the parties did not intend to raise the same on the rate of the zinc being increased by the M. M. T. C. 21. Another circumstance to be noted in this connection is that, admittedly, a dispute had arisen between the parties in April 1973 with regard to the price at which supplies had to be made. Later, the price was raised from Rs. 6. 85 to Rs. 7. 40 per Kg. This was noted in Ext. A-26 by the defendant. THE recitation was: "for balance quantity 70 tonnes the rate will be Rs. 7. 40 per Kg. 8-4-1973. " 22. This would indicate that the balance supplies were agreed to be made by the defendant at Rs. 7. 40 per Kg. irrespective of the rate at which the supplies were received by the defendant from M. M. T. C. Admittedly, the prices of M. M. T. C. were on a higher trend. If the parties had already entered into a contract entitling the defendant to raise the price, as was argued before us, there was no occasion for the defendant not to supply the balance quantity at the rate of Rs. 7. 40 per kilogram. This recitation defeats the argument of the defendant that it was entitled to charge higher amount on the price going up. THE entire balance quantity of 30 tonnes had to be supplied by the defendant @ Rupees 7. 40 per kilogram irrespective of the price being raised by the M. M. T. C. This would lead us to the conclusion that the interpretation put by the defendant on Clause 1 was incorrect and that it was not entitled to demand higher rate merely on the increase of price by the M. M. T. C. on future allocations or supplies. 23. Naresh Chandra Jain (D. W. 2) has made a vague statement on this controversy. He said: "in case we have raw material of any order, we may or may not increase the rate of supply of Zamak. " This is not in consonance with condition 1 of the order acknowledgement. It is impossible to believe that if the terms and conditions of the agreement had the meaning assigned by the defendant it would not increase the rate despite the price going up. THE statement only shows that condition No. 1 did not have that intention behind it. 24. In view of what we have said above, we need not discuss the evidence relied upon by the counsel for the parties in support of their respective contentions on this controversy as to whether the order of acknowledgement containing the terms and conditions had been sent by the defendant to the plaintiff. We have noted above that the trial Court recorded the finding in favour of the plaintiff on this controversy. 25. THE other questions raised in the written statement of the defendant were about recession, novation and frustration of the contract. THEse have been dealt with by the learned Civil Judge under Issues Nos. 4, 5 and 8 and on these issues the findings recorded are against the defendant. THEse findings were not challenged before us. On the materials produced, we are of opinion that the learned Civil Judge was right in deciding them against the defendant. On 5th April, 1973, when the parties entered into the agreement for supply of the balance of 70 tonnes of zinc at the higher rate of Rs. 7. 40, than what had been agreed upon in the original agreement dated 8-12-1972, the parties did not substitute the original contract. Only one of the terms had been modified, and in respect of all other matters the agreement had remained the same. THE question of novation arises only when the parties to a contract agree to substitute new contract for it, or to rescind or alter it. This has not happened in the present case. THE original contract had not been altered or rescinded. 26. So far as the question of frustration is concerned, it may be said that only when a contract becomes impossible of performance or unlawful, that this may apply. In the instant case, neither of the two contingencies had come into existence. We will show from the discussion to follow that the defendant had ample material in its possession and that supplies of Saru Zamak could be made to the plaintiff from the same. We, accordingly, find that the trial Court was right in deciding this issue against the defendant. 27. THE next controversy, which according to us is the main one, whether the defendant had special high grade zinc available with it from which it could manufacture Saru Zamak and supply the same to the plaintiff. In this connection the defendant took inconsistent pleas in its written statement. At one place the defendant alleged that as the supply of zinc by the M. M. T. C. , had stopped, the defendant could not make the supplies to the plaintiff. At another place, the plea taken was that Saru Zamak could not be manufactured by the defendant on account of special high grade zinc being not available with it. THE Court below after discussing the evidence found that delivery of Saru Zamak to the plaintiff by the defendant was not linked with the supply of raw material by the M. M. T. C. We are in agreement with its finding. In a number of letters, which had been exchanged between the parties, there is no indication that the defendant would supply the agreed quantity of zinc only on the receipt of raw material from M. M. T. C THE defendant could not escape the liability of delivery of goods agreed to be supplied to the plaintiff on the pretext of fresh allotment of special high grade zinc not having been made by the M. M. T. C. From the Chart, which we will give later, it would be found that the defendant had goods in its possession, and that it deliberately not make did Saru Zamak available to the plaintiff. By not doing so, it committed breach of the contract. 28. Before us, the learned counsel appearing for the defendant contended that supply of Saru Zamak was not made by the defendant to the plaintiff on account of the price of special high grade zinc going up and the plaintiff having not agreed to pay the same. In the written statement, the case taken by the defendant was different. In paragraph 11 of written statement, the defendant asserted that since no zinc had been received from M. M. T. C. , Saru Zamak had not been manufactured for supplying to the plaintiff. In paragraphs 13, 26 and 28, the plea for not supplying Saru Zamak is the same, as stated in paragraph 11. What was said in paragraphs 27 and 28 was that all stocks of special high grade zinc required for manufacture of Saru Zamak ingots had been exhausted and the defendant was experiencing inability to supply any more goods. 29. Naresh Chandra Jain (D. W. 2) in his statement also gave similar version. He denied the suggestion put to him in the cross-examination that the breach of the contract had been committed by the defendant with a view to get the rate of Saru Zamak increased. THE explanation offered by him was that special high grade zinc was not available. He admitted that the defendant used to enter in the register the entire quantity of zinc received after purchase. This register used to be known as Raw Material Stock Register. He further admitted that the quantity consumed in manufacturing various items was entered in the consumption register. THE defendant has not produced these documents. THE suggestion of the learned counsel for the plaintiff was that these documents were deliberately withheld from the Court lest the same would have demonstrated that the defendant had fresh special high grade zinc available with it and despite the same, Saru Zamak was not supplied to the plaintiff by the defendant. THE non- supply obviously was with the intention to earn more profit by selling the same in the market at the higher price which had an increasing trend. THE suggestion of the learned counsel for the plaintiff appears to be well founded. By making a reference to the statement of Naresh Chandra Jain (D. W. 2), where he asserted that he did not know about the books and registers which were being maintained in the defendant company, the learned counsel for the defendant submitted that there was no occasion for drawing adverse inferences from the same. We are unable to accept this argument of the defendant's counsel. In the earlier part of his statement he clearly admitted that regular registers were being maintained in the factory showing the receipt and consumption. It is impossible to believe that the defendant would carry on the business at such a large scale without maintaining proper registers. Truth had slipped out from Naresh Chandra Jain when he admitted the presence of these documents in the factory. Later, when he denied the same, he simply wanted to wriggle out of the admission. 30. THE only question that remains to be examined is about the availability of special high grade zinc with the defendant on the relevant dates. In that connection, we may refer to some of the documents filed by the defendant itself to show that the defendant had zinc available with it. THE first thing to be referred to is Ext. A-35, a statement showing zinc receipt in Store from 1-10-1972 to 31-12-1973. THE relevant portion of this statement is extracted below : THE supplies made work out from Items 2 to 20 as follows : THE defendant had available roughly. THE defendent had available roughly. 144 tonnes. Supplies made up to 15-3-1973, roughly. tonnes Balance60 tonnes roughly. On 28-3-1973, vide Item 21 of despatch register, they supplied. 2 tonnes Balance58 tonnes roughly as on 30-3-1973. 31. THE despatch Register Ext. A-36, would further show that 84-181-400 gms. had been supplied up to 15th March, 1973. After deducting this supply as well as 2 other tonnes, which had been despatched on 28th March, 1973, the balance at hand by the defendant was 58 tonnes roughly. This is demonstrated from the Chart given below. THE supplies made work out from Items 2 to 20 as follows : 32. THE defendant had up to 15th March, 1973, supplied to the plaintiff the total quantity of 30 tonnes. By telegram dt. 20th March, 1973, it started demanding increased rate of Rs. 7. 60 per Kg. on 1-4-1973, the demand was reduced to Rs. 7. 50 per Kilogram. Ultimately, the agreement arrived at was for supplying the balance @ Rs. 7. 40 per Kilogram. 33. As shown above, 58 tonnes were in possession of the defendant, but it forced the plaintiff to increase the rate to Rs. 7. 40 per kg. Ext. A-35, which is a letter dated 23-3-1973, showed that the defendant was to receive 56 tonnes more from the M. M. T. C. , which it obtained on 25-6-1973 as a result whereof, the actual position of the special high grade Sale note No. and date Date of Receipt Quantity of SHG Zinc. Ton. Kilo. Gms. 1. 2n/124/72/2/8/1972 10-11-1972 -133-800 gms. 24-11-1972 -195-600 gms. 2. 2n/127/72/7/8/1972 9/30-11-1972 62-872-300 gms. 8-12 -1972 -993-200 gms. Total 135-194-900 gms. Ext. A-26 is a copy of "register despatch position". On 7th Dec. , 1972, vide Ext. A-36, the supply position was as under: Note 1. First Item was a supply of 10,897. 400 gms. leaving a balance as follows : Total 135-194-900 gms. Supplied on 7-12-1972, 10,897-400 gms. Balance 124-297-500 gms. Taking the expected supply on 8th Dec. , 1972, the total quantity which was available with the defendant was : Expected supply vide-297. 500 gms. Item 3 Col 2.-993-000 gms. Total 144-290-500 gms. Roughly 144 tonnes as on 8-12-1972, the date on which the defendant accepted the plaintiff's offer. zinc between 16-4-1973 and 11-7-1973, when the last supply was made to the plaintiff, vide Item 29 of Ext. A-36, was as follows: Stock position brought forward 58 tonnes On 25-6-1973 vide sale note dt. 23-3-1973 Ext. A-35 at p. 347 defendant received 56 tonnes (roughly) at prices for March quarter 58 tonnes vide paper 51c at p. 353 when rate was Rs. 6. 29 per kg. 56 tonnes 114 tonnes 34. From Ext. A-36 it would appear that the defendant had 114 tonnes on 11-7-1973, out of which the total supplies made by it were of 51 tonnes. THE balance in hand was 63 tonnes. THEreafter, in between 12-7-1973 and 12-11-1973, the defendant supplied 5 tonnes roughly, vide Items 31 to 40 of Ext. A-36. After deducting 5 tonnes, the defendant had 58 tomes in hand. 35. From the above Charts it is demonstrated that at all relevant times, the defendant had sufficient quantity of special high grade zinc in its possession and the agreement entered into between the parties could be honoured, but it was not done. It is established that the defendant committed breach of the contract by not doing so. 36. Learned counsel for the defendant contended that the defendant was not only manufacturing Saru Zamak but also various other items and, therefore it was not possible to hold on the basis of the papers filed in the suit that the defendant had raw materials available with it. We are unable to accept this submission. THE papers from which the aforesaid figures have been arrived at and which, in fact, had not been disputed, go against his contention. If the defendant had any other paper in its possession showing consumption of raw materials, the same should have been filed by the defendant to prove it. THE Court below rightly drew the presumption against the defendant. 37. THE only point on which the suit of the plaintiff had been dismissed by the Trial Court was that, the plaintiff could not prove the damages which it suffered on account of non-supply of Saru Zamak on 9th October, 1973, when the breach, according to its finding, took place. On this question of breach, there was a conflict between the plaintiff and the defendant. THE plaintiff alleged that the breach took place in Nov. 1973, whereas the defendant's case was that the breach, if any, occurred in August, 1973. On the basis of the breach in November, 1973, the plaintiff claimed Rs. 3,33,000/- as damages. THE damages had been claimed @ Rs. 11. 10 per kg. being the difference between the contracted rate of Rs. 7. 40 and Rs. 18. 50, the market rate on the unsupplied 30 tonnes of Zamak. 38. In its reply dated 21st November, 1973, (Ext. 10), the defendant asserted, that if it was held liable to pay damages, the same had to be calculated on the basis of the price prevailing on 3rd August, 1973, when the plaintiff had been informed that the defendant was not in a position to supply Zamak ingots. Later on, in the written statement, the defendant took a different stand. We had been taken through various letters exchanged between the parties on this controversy. Sri. V. K. Gupta learned Counsel appearing for the plaintiff, referred us to the letters which had been received by the plaintiff from time to time assuring that supply of Saru Zamak would be made to the plaintiff on the raw materials being available. He submitted that as the plaintiff had bona fide believed the defendant's representation, the breach took place on 4th November, 1973, when the final notice (Ext. 15) repudiating the contract was given by the plaintiff to the defendant. We have gone through the letters exchanged between the parties and the evidence led on the controversy. On the facts and circumstances of the present case, we find that the breach of contract should be held to have been committed by the defendant in August 1973 when total inability of supplying Saru Zamak had been unequivocally communicated to the plaintiff. THE defendant had stated clearly that as no quantity of Zinc was expected to be received from M. M. T. C. for about 6 or 8 months, the delivery of the balance quantity of Zamak would be delayed accordingly. If despite this clear communication, the plaintiff kept on waiting for the supplies to receive, the date of breach could not be extended beyond the date on which this letter was received by the plaintiff. THE plaintiff was not concerned whether the defendant had received the zinc from the M. M. T. C. after August 1973. Since the plaintiff had the final reply from the defendant that the supply could not be made for 6 or 8 months, the contract should, in law, be held to have been repudiated on that date. 39. Whether a breach of contract amounts to repudiation is, "a serious matter not to be lightly found or inferred. " What has to be established is that the defaulting party has made his intention clear beyond reasonable doubt no longer to perform his side of the bargain. Proof of such an intention requires an investigation inter alia of the nature of the contract, the attending circumstances, of the motive which prompted the breach. " (Cheshire, Eight Edition, page 565 ). 40. On the facts and in the circumstances, to us it appears that no doubt could be left in the mind of any body after this letter that the breach had been committed by the defendant, and that being so, the contract should be deemed to have been repudiated by the defendant. 41. Coming to the question of damages, we are of opinion that the plaintiff was entitled to get the difference between the contract price and the market price prevalent on the date on which the breach was committed. THE law laid down in this regard is : "the market value is taken because it is presumed to be the true value of the goods to the purchaser. In the case of non-delivery where the purchaser does not get the goods he purchased, it is presumed that these would be worth to him, if he had them, what they would fetch in the open market, and that, if he wanted to get others in their stead, he could obtain them in that market at that price. " (see Wertheim v. Chicoutimi Pulp Co, 1911 AC 301 ). 42. THE actual sum, therefore, to be awarded to the party, which has suffered on account of the breach of the contract by was of damages depends upon the difference between the market and the contract prices on the day the breach took place. In the instant case, the defendant in its letter dated 3rd August, 1973, admitted that the market rate was Rs. 11/- per. kg. THE difference between the contracted price and the market price would be Rs. 3. 60 per Kilo- gram (Rs. 11/- minus Rs. 7,40, = Rs. 3. 60 ). THE total amount would come to Rupees 1,08,000/ -. 43. THE Court below refused to grant the decree in favour of the plaintiff on the erroneous ground that as tile plaintiff had not proved the market rate on the date on which the breach of contract was committed, the suit could not be decreed. Although we do not agree with the trial Court that the breach occurred in October, 1973, but we shall point out that the admitted position between the parties was that the rate of special high grade zinc in the market in August 1973, was Rs. 11/- per kilogram, and that it had a rising tendency. This was admitted by the defendant. On this evidence, the Trial Court should have decreed the claim of the plaintiff. THE law does not require the plaintiff to prove with exact precision the damages suffered by him. Determination of the quantum is no doubt a matter of difficulty. THE Courts in some cases have held that in practice evidence led to prove it may also be taken into account to find the same. THE law does not require the plaintiff to prove the amount claimed by him with mathematical accuracy. That could not be a reason for depriving the plaintiff of compensation. THE settled position in law is that a buyer can claim damages on the basis of difference between the contract price and the market price prevalent on the date of breach of the contract. That being so, the suit of the plaintiff for the recovery of damages is liable to be decreed. 44. In the result the appeal succeeds and is partly allowed. THE judgment and decree of the Court below is set aside, and the suit is decreed for the recovery of Rs. 1,08,000/- as damages with interest @ 6% per annum to be payable from the date of filing of the suit till payment. THE plaintiff will be entitled to get costs of both the Courts on the amount decreed by us, whereas costs of the balance will be borne by the parties themselves. Appeal partly allowed. .;
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