Bapna, J. - (1.) THIS is a second appeal by the plaintiffs in a suit for recovery of money.
(2.) THE appellants sued the Government of Jaipur who is respondent in this case on the allegations that they had a contract for the supply of various articles to the Lady Willing-don and the State Zenana Hospitals at Jaipur for a period from 1st September, 1942, to 31st August, 1943, and supplied articles of the value of Rs. 4628/12/6 for which they had not been paid. After adding interest amounting to Rs. 732/- at 6% p. a. they claimed Rs. 5260/12/6. The defendant admitted that the plaintiffs had supplied articles of the value of Rs. 4614/10/6, but pleaded non-liability on the ground that one of the articles for which they had contracted to supply was malmal of a particular quality and width. This was to be supplied at Rs. 4/2/- per Than. The plaintiffs informed on the 20th of February, 1943, that they would not be able to supply malmal from 1. 3. 43. They ceased to supply malmal from 13th March, 1943, and the department accordingly got the supply of malmal from Maliram Nemichand at Rs. 9/1/- per. Than. The plaintiffs were liable to pay the excess price paid for the malmal thans obtained by the department elsewhere, and after deducting the excess price paid by the department there remained a sum of Rs. 573/13/-payable to the plaintiffs This item also included the security amount which the plaintiffs had deposited at the time of taking the contract. It was pleaded that the Director of Medical Services who had entered into the contract on behalf of the then Govt. of Jaipur deducted the sum of Rs. 73/-13/- on account of negligence in the supply of articles, and he was prepared to refund the sum of Rs. 500/-, but the plaintiffs did not take away the amount. According to the defendant, therefore, there was no amount outstanding against the Government beyond the sum of Rs. 500/- which the Government had always been willing to pay. The plaintiffs in rejoinder accepted the correction in their bills as pointed out by the defendant and reduced their claim of the principal sum to Rs. 4614/8/- and reduced the claim of interest to Rs. "30/ -. They denied their liability to pay for the excess charges incurred by the Director of Medical Services in obtaining malmals elsewhere on the ground that the plaintiffs had informed the defendant that malmals as contracted were not available in the market and they could supply nensukh in their place and the department accepted nensukh for about two months and agreed to pay its price at 9/6/- per than. The defendant had later informed the plaintiffs that nensukh was not required also but they were not informed that the Director of Medical Services would get malmals from the market at enhanced rates owing to the inability of the plaintiff to supply the same. It was pleaded that no indent was issued to them as required under the contract for these malmals and, therefore, they were not liable to pay any damage caused to the department by obtaining malmals elsewhere. The trial court passed a decree for Rs. 80/- with proportionate costs. The plaintiffs filed an appeal for the balance of the amount and the defendant filed cross objections for costs. The learned District Judge dismiss the appeal with costs, but allowed cross-objections and held the defendant entitled to costs in both the courts. The plaintiffs have come in second appeal. The relevant portion of the agreement entered in to between the plaintiffs on the one hand and the Director of Medical Services on the other, Ex. A. l, dated 21st of August, 1942 is as under: - Term 1.- During the continuance of the contract, the contractor (Ramlaxman Surajnarain, plaintiffs) shall supply to the Mayo Hospital (later know as the Lady Willingdon Hospital) and the Zenana Hospital such of the diets, etc. , specified in the schedules within 24 hours of the receipt of indents or intimations to be subsequently confirmed by regular indents at the settled rates. Any article of food not specified in the schedule should be supplied at the current market rate or rates. All articles will be indented for by the Director of Medical Services, Jaipur, or persons authorised by the Director of Medical Services. Term 2.- If the contractors fail to supply any of the articles mentioned in the schedules, the same shall be bought in the open market and the extra cost thereof (if any) will be chargeable to the contractor. Term 3.- If any articles mentioned in the schedules are supplied of inferior quality, it shall be entirely at the discretion of the Director Medical Services to reject such articles or make a deduction in prices. Term 4.- In case of serious breach of any of the terms or condition of the contract the Director of Medical Service shall be at liberty absolutely to determine the cancellation of the contract and the forfeiture of the amount or part of the amount deposited as security. There are two schedules of articles to be supplied at specified rates annexed to the agreement and schedule B contains an item No. 33, malmal thans, 22yd. X27", at Rs. 4/2/-per than. It is admitted for the parties that a few months after the contract the plaintiffs by letter Ex. A. 5 dated 20th February, 1943, wrote to the Supdt. , of the Lady Willingdon Hospital that the malmal thans as required for bandages were not available in the market and it was not possible to get the articals from outside, and, therefore, the plaintiffs shall be unable to supply malmal thans from 1st March 1943. It was pointed out that the State Zenana Hospital authorities were using the latha cloth for bandaged instead of the malmal thans and the same could be supplied. The office of the Hospital noted on the application Ex. A. 5 that latha cloth could be used for bandages, but at least 75 malmal thans for various purposes would still be required. The Officer-in-charge of the hospital however does not seem to have agreed to the proposal and bought malmal thans from Maliram Nemi-chand on the 1st and 2nd March at enhanced rates. The plaintiffs agreed to indemnify the department for the excess price paid on the 2 days and thereafter continued the supply of malmals at contracted rate for some time. On the 9th of March, however, the plaintiffs wrote to the Director of Medical Services that malmal thans were not available either at Jaipur or outside, and could not be supplied, but they could supply nensukh in its place. The Secretary of the Lady Willingdon Hospital also wrote to the Director of Medical Services on 13. 3. 43 (Exhibit A 7) saving that Ram Laxman Suraj Narain, contractors, had intimated their inability to supply malmal thans, any were offering cloth of inferior quality. He also informed (the Director of Medical Services that malmal thans of the required quality were available in the market from Messrs. Maliram Nemichand at Rs. 9/8/- per than, and requested for and order whether the thans of inferior quality offered by Ram Luxman Suraj Narain be accepted or malmal thans be obtained from the market at Rs. 9/8/-per than. The Officer-in-charge of the Hospital recommended that Ramlaxman Suraj Narain should be called upon to supply the stuff of the approved quality, and his excuse that it was not available in the market was not correct, since Maliram Nemichand were prepared to supply the approved stuff for the rest of the year. The Director of Medical Services passed a short order on 19th March, 1943. Ex. A. 8. ! "we should buy what we want, where available and at the cheapest rates. " It amounted to an acceptance of the recommendation of the officer-in-charge of the Hospital. The plaintiffs, however, continued to supply Nensukh upon the indents in place of malmal till the 30th of April, 1943, when, according to the defendant, they were informed that Nensukh was no longer to be accepted and malmal thans would be got from the market since they were not able to supply the same. The plaintiffs in the meanwhile claimed Rs. 12/- per than of nensukh supplied from 13th March to 30th April and the Director of Medical Services passed the following order which is Ex. 1 on 7th August, 1943 - "as Messrs Ramlachman Surajnarain have failed to supply to the Lady Willingdon Hospital, Jaipur, malmal thans from 1st March,' 1943 the same have been purchased from another source @ Rs. 9/8/-per than. The tender rate for the thans was Rs. 4/2/- each Messrs. Ramlachman Surajnarain should, therefore, according to the terms of contract pay the difference in cost. Upon the contractor's failure to supply this cloth (presumably because rates were rising) another dealer supplied the cloth at a higher rate, admittedly. The fact remains that the cloth was obtainable so that the contractor's contention that he could not obtain it does not hold water. This attitude is the reason for imposing the penalty of having him pay the entire difference between tendered rates and the ever rising rates. Had he not 'let us down' some mitigation of the extra expenses he was put to might have been considered. Messrs, Ramlachman Surajnarain supplied 220 thans of nensukh (24 yds. x 40") instead of malmal thans without any specific orders for the supply of this type of cloth. These have been accepted @ Rs. 9/1/6 per than instead of Rs. 12/-per than as claimed by them. " The plaintiffs on receiving Ex. 1 made an application to the Director of Medical Services on 10th August. 1943, saying that malmal thans were not available at Jaipur or elsewhere for only a month or so from 1st March 1942 but they had obtained the goods later on and could supply the same but no indent was placed on them and the Department wrongly began to accept malmal thans from Motiram Nemichand and they prayed for reconsideration of the decision to hold the plaintiffs responsible for indemnifying the department in respect of the higher rate paid to Maliram Nemichand. Learned counsel for the appellant argued that the intimation of the inability to supply malmal than by letter dated 20th February, 1943, or subsequently by letter of 9th March, 1943, was only an anticipatory breach of contract, but it was condoned in the first instance by acceptance of nensukh in its place and at any rate, as the department did not accept the repudiation, the contract remained operative even for the rest of the period to the advantage of both the contracting parties. It was contended that the failure to supply mentioned in term No. 4 entitling the department to obtain their supplies from the market could only be considered to have happened if the plaintiffs failed to supply on indent being placed on them as provided by term No. 1, and as no indents were placed after the 1st of April for malmal thans there was no failure to supply the malmal thans and in such case if the department went and purchased malmal thans elsewhere at extra cost,the plaintiffs were not liable to indemnify the department. Reliance was placed on sec. 39 of the Contract Act, and it was argued that the promisee did not in the case put an end to the contract in respect of letter of 20th February by intimating acceptance of the repudiation or by purchasing their future requirements elsewhere at once. Reliance was also placed on Jawahar Singh vs. Secy. of State, where, it was urged the facts were very similar One Jawahar Singh had contracted to supply goods for a period of 12 months to various jails on indent being placed on him. Certain orders placed on him in October, and November, 1917, were not complied with and he sent a letter to the Inspector General of Prisons, who was the contracting party, on 14th December, 1917, alleging that the Inspector General had broken the contract by ordering goods not covered by the contract and it was intimated that Jawaharsingh would no longer carry out the contract. The Inspector General issued instructions to the various Superintendents to get the supplies according to their requirements from time to time during the period of contract from the market and later on instituted a suit against Jawaharsingh for damages representing the difference between the price actually paid in the market and the price at which Jawaharsingh had contracted to supply. After holding that Jawaharsingh had by his letter of 14th December wrongly refused to carry out the contract it was observed that the plaintiff had three courses open to him on receipt of the letter of 14th December. He could write acknowledging its receipt and accepting the position as there defined, and so fulfil the requirements of sec. 19. He could also act upon the letter by going into the open market and purchasing his requirements for the year, and in either case he could sue the defendants for damages, these damages being calculated at the date i e. at a future date on which the requirements would arise, this calculation being necessarily a mailer of guess work. If he did not adopt either of these alternatives he could ignore the letter and treat the contract as still subsisting. But if he did so, it must inure for the benefit of both sides; and sec. 48 of the Contract Act would apply. It was not possible for him to go on accepting the offer of the 14th December in instalments throughout the year. The I. G. accepted the offer of 14th December in so far as he went into the market and supplied his wants represented by the goods he had ordered and which the defendants had failed to supply. He might at the same time have supplied his future wants which would accure during the rest of the year. But the fact that he did not do so does not debar him from claiming damages on the amount of goods which he did buy there and then. It was unnecessary for him to communicate the fact of his purchase; his action in making the purchase was sufficient. The plaintiff's claim was, therefore, decreed for damages accruing on the purchases made for failure to supply the earlier orders of October and November 1917 but was dismissed with respect to the future purchases for which the contract was held to have remained open and the purchases were made without placing an order on the defendants. With great respect we are unable to accept the exposition of law made in the above judgment to be accurate An ingenuous argument raised by learned counsel for the respondent may be disposed of here. It was argued that sec. 39 of the Contract Act was not at all applicable for it only contemplated refusal to perform the contract in its entirely and as the plaintiffs supplied all other articles except malmal during the remaining period of the contract there was no refusal to perform the contract in its entirety. The contract, though one, was really so many separate contracts each for the supply of a particular article so that the refusal to supply malmal was a repudiation of that particular contract which was separable from the contract to supply other article. There is no doubt that the provisions of sec. 39 of the Contract Act were applicable to the present case. When the plaintiffs intimated on 20. 2. 43 to the Superintendent of the L. W. Hospital (who was authorised to indent the articles by exhibit A5 that malmal thans will not be supplied from 1st March, the Superintendent began to get supplies from the market and thereby acted in a manner indicating that the Superintendent accepted the repudiation of the contract. The plaintiffs also agreed to indemnify the department for the excess price paid by the department for two days and from the 3rd of March, again began to supply the required article. The acceptance of malmal thans from the plaintiffs from 3rd March, wiped off the previous repudiation and the parties were relegated to their original agreement and this position continued till 8th of March. On 9th of March they again intimated to the Director of Medical Services their inability to supply malmal and from 13th March, the plaintiffs began to commit default inasmuch as while the orders were being placed for malmal thans, the plaintiffs supplied nainsukh. In this connection reference may be made to the plaintiff' application of 10th August, 1943, to the Director of Medical Services, Ex. 1/1, in which they said "we also agreed to supply nainsukh in place of malmal which is superior to the latter. As we did not receive any order on our application in the negative we went on supplying nainsukh and the authorities were continually accepting it. . . Although we had not received any written specific order for the supply of this type of cloth yet there was no order to the contrary and the authorities continually accepted the nainsukh in place of malmal for about two months. " It may here be pointed out that the plaintiffs never agreed to supply nainsukh for the same rate as contract for malmal and in fact were allowed double the price by the Director of Medical Services by order dated 7th of August, 1943, Ex 1. This only explains the keenness with which the plaintiffs wanted to substitute nainsukh for malmal. It may also be mentioned that which plaintiffs were so substituting nainsukh for malmal to the Super-intendent they had also made an application on the 9th March, 1943, that malmal thans were not available, expressing thereby their inability to supply malmal thans. It was perhaps on this or similar application of 9th March which finds mention in Ex 1/ that the Superintendent drew up a note on the 13th March, 1943, for instructions as to whether the substituted cloth offered by plaintiffs should be accepted or malmal thans be purchased from Maliram Nemichand at higher price. The order of the Director of Medical Services on 19th March, 1943, gave instruction for the purchase of malmal thans from the market as referred to in the earlier portion of this judgment. The Punjab case is distinguishable in as much as the order of the Director of Medical Services was in our opinion communicated to the plaintiffs though not in writing. Dulichand, Secretary of the Lady Willingdon Hospital D. W. 2, stated in cross examination that he did not inform the plaintiffs in writing that further goods (malmal thans) will not be taken (purchased) from them as the plaintiffs themselves gave in writing that they will riot be in a position to supply. He said further that he did not give the plaintiffs in writing as he thought that it was mentioned in the contract that if the goods would not by supplied damages will be recovered, "but they had been informed orally". Surajnarain one of the plaintiffs admitted in his statement before the issues that the plaintiffs informed the defendant that malmal was not available in the market and so nensukh which was a superior stuff be taken in its place and in accordance with his request nensukh was taken for two months and its price was latter agreed to be paid at 9/1/6 per than. He went on to say that thereafter (i. e. after two months) the defendant told the plaintiffs that they did not want nensukh "and should not supply it". At the trial Surajnarain gave evidence that no information was given (to the plaintiffs) about the purchase of malmal from Maliram Nemichand and that no such letter was written to them that the taking of goods (nensukh) would be stopped. . The admission made before issues that the plaintiffs were intimated that nensukh will not longer be accepted from them coupled with statement of Dulichand that he had informed orally to the plaintiffs; that goods will be purchased elsewhere leaves no room for doubt that the plaintiffs were intimated that the repudiation of the contract made by them was accepted by the defendant. Dulichand when he says that no application from the plaintiffs was received after 20th February seems to have made some mistake for the plaintiffs themselves admitted in Ex. 1/l having given an application on 9th March reiterating their inability to supply. Assuming for a moment that the intimation of acceptance of the repudiation was not made to the plaintiffs and the defendant purchased from the market their supplies every month according to their needs after receiving the second repudiation of 9thmarch, 1943, we have to see whether the line of reasoning adopted by the Punjab Court was correct. According to the decision in Jawer Singh's case the contractor could only be made liable if all further requirements were purchased atonce. This view does not commend itself to us for many difficulties arise which cannot be answered on this view. If for instance the purchases were made at rates then current and the prices fell on the dates when actual requirement arose the contractor can hardly be made liable for any damage incurred in purchasing goods at the higher price immediately on repudiation of the contract. In that very judgment the damages were stated to be calculated according to rates on the date on which requirement would arise. In the hypothetical case promised will thus suffer for having purchased at higher rates immediately on repudiation of the contract without making the promissor who committed breach of the contract liable for the excess amount paid. Again, the immediate purchase would involve a decision on the quantity to be purchased. If the purchase be found to have been made of a larger quantity than ultimately found to be necessary after the expiry of the period of contract, the Contractor will not be liable for the damage in respect of excess quantity purchased and the department will have to bear the loss. A true appreciation of the situation would be that the breach is not committed supplying any particular quantity for unless the indents are placed and refused there is no breach of the contract to supply. The intimation of inability to supply in further acts as a breach of promise to under take to supply according to indents based on requirements. A contract of the nature entered into by the parties in this case is only a promise to supply on indents placed during a particular period and the repudiation of the contract is a breach of the agreement to stand by that promise and the promisee in only entitled to oblation another promise of a similar nature from another party to continue the supplies during the particular period and the damages suffered would be the difference in price offered by the promisor and the new contractor and the measure of damages would be the amount calculated on actual supplies required and made in accordance with the agreement. In the present case what was done by the department was that when the plaintiffs repudiated their contract on the second occasion they made a search in the market and found that Mailram Nemichand was agreeable to undertake to supply material for the remaining period of contract at the higher rate of Rs. 9/8/- per than instead of the rate of Rs. 4/2/-stipulated earlier by the plaintiffs. Mr. Duli-chand's report while complaining of the inability of the plaintiffs to supply malmal thans goes on to say "messrs Maliram Namichand have also promised for supplying than for the remaining period of six months on the same rate of Rs. 9/8/- per than. Mr. Dulichand DW. 2 also deposed that he purchase malmal from Maliram Nemichand because it could not be obtained in the market as rates cheaper than offered by them. He stated that he had taken the rates from several shopkeepers out of whom the cheapest rates were given by Maliram Nemichand and the quality was the same which plaintiffs used to supply. In our opinion it was not at all necessary in a contract of this nature to purchase goods of estimed further requirements all atonce. What was necessary was to find another person who could undertake to agree to make supplies at an agreed rite during the rest of period as and when indents were placed upon him. This was done in the present case and the requirements of sec. 39 of the Contract Act were wholly fulfilled. This also disposes of the argument that the department was bound to place orders on plaintiffs before getting supplies from elsewhere. After the department found some body else ready and willing to undertake supply at a definite rate, and this was a cheapest rate, it was no longer necessary to place indents on the plaintiffs, and the plaintiffs were liable to the department for the difference in the rates stipulated by the new contractor and the plaintiffs We are not prepared to accept the contention raised by plaintiffs in their application dated 10th August, 1943, that they had received supplies of malmal thans and were in a position to supply if order had been; placed on them for we do not find at any place any intimation of this fact by the plaintiffs to the defendants. On the view that we have taken in this case it was however not necessary to place any indent on the plaintiffs after the department had settled to take supplies from another contractor after repudiation of the promise to supply made by plaintiffs. It was finally argued that it had not been proved that the number of thans purchased from Maliram Nemichand was strictly according to the requirements of the department. According to evidence, the following quantity was purchased: - May . . . 40 Thans of 46"=68-1/2 Thans of 27". . . 140 Thans of 27" =140 Thans June. . . 272 Thans of 27" =272 Thans July. . . 206 Thans of 27" 206 Thans 90 Thans of 47" Width = 157-1/2 Thans Total number of thans of various width comes to 748 = 844 thans of 27" width. Dulichand Secretary of the Hospital was not questioned about purchases having been made in excess of the requirement. Suraj Narain admitted that the requirement of the thans was about 150 per month. In Ex. 1 the plaintiffs were paid price of the 250 thans of nensukh 24 yds x 40" and these were supplied according to the plaintiffs from 13th March upto 30th of April. The requirement thus turned out to 150 thans of 40" the requirement would come to approximately 225 thans of 27" width per month. The purchases calculated in terms of the width of 27" were only of 842 thans. They purchases, in our opinion, for 4 months (May to August), were thus not in excess of the requirements.
(3.) THE lower court came to a right conclusion that the plaintiffs were liable to indemnify the department for the excess price pad for the thans purchased from Maliram Nemichand and if that excess price is deducted out of the claim the plaintiffs are only entitled to recover Rs. 80/- from the defendant in addition to the refund of the deposit of Rs. 500/- which the defendant was always ready and willing to pay. It was finally argued by learned counsel for the appellant that term No. 7 only allowed damages to the respondent to the extent of the security of Rs. 500/- and the plaintiffs were not responsible for the excessive loss In our opinion this contention is not correct. Failure to supply goods was specially provided in term No. 4 but there were many other conditions as well and term No. 7 was a general one applicable to other kind of breaches, In our opinion the judgment and the decree of the lower court are correct and this appeal fails and is dismissed with costs. .;