P.K.BALASUBRAMANYAN, J. - (1.) THIS appeal is by the plaintiff in a suit for recovery of the damages for breach of contract of supply of fire clay bricks and recuperator tubes by the first defendant company. The plaintiff invited quotations for the supply of the above articles and the quotation of the first defendant was accepted and on 8.1.1971, the plaintiff placed an order with the first defendant for supply of 14, 420.27 M.T. of fire clay bricks. On 3.2.1971 the plaintiff placed another order with the first defendant for supply of 31,917 pieces of recuperator tubes. The first defendant was to make available samples for testing by the plaintiff. The supply was to commence after the samples were approved. On 8.4.1971, the first defendant requested the plaintiff to arrange for an inspection of fifty pieces of samples of recuperator tubes. Some samples were produced. The plaintiff tested them and found that the recuperator tubes did not conform to the required drawings as per which the supplies had to be made. The plaintiff called upon the first defendant to make available a fresh supply of samples. The first defendant assured the plaintiff that fresh samples would be supplied. After reminders were sent by the plaintiff, the defendant produced 18 pieces of bricks as sample for Inspection by the plaintiff. The plaintiff found the sample defective and on 7/12th, October, 1971 called upon the first defendant to rectify the defects noticed in the samples and then to go ahead with a bulk manufacture for supply. According to the plaintiff, reminders were also sent to the first defendant. On 23.2.1972, the first defendant promised to commence manufacture in lots after two or three weeks. The Works Manger of the first defendant called on the Chief of Materials of the plaintiff in the fourth week of May, 1972 and promised to commence the supply of tubes and bricks if and after the time was extended. The plaintiff extended the time to commence supply by two months. On 14.9.1972, the officers of the plaintiff visited the worksite of the first defendant. The first defendant intimated the plaintiff that on being satisfied with the samples the first defendants would supply materials at 1500 to 2000 pieces per month. The plaintiff again found on testing the samples that the tubes were defective. On 14.10.1972, the first defendant informed that 300 pieces of recuperator tubes would be ready for inspection by 27/28th October. 1972. But nothing further was heard from the first defendant. Ultimately, on 8.1.1973, the plaintiff made a final request to the first defendant to supply the materials contracted for, within thirty days and informed the first defendant that on failure of thefirst defendant to do so. the plaintiff would be constrained to procure the materials from other sources at the risk and cost of the defendants. Since the first defendant failed to supply the materials, the plaintiff was constrained to purchase materials from elsewhere at higher prices. On 4.2.1976, the plaintiff filed the suit for recovery of the difference in prices as damages.
(2.) THE first defendant alone resisted the suit. The others did not contest. It raised a contention that the suit was barred by limitation. It further pleaded that the plaintiff had never approved the samples and communicated the information to the first defendant and this resulted in the first defendant not manufacturing and supplying the materials contracted for. The first defendant was hence not liable for any damages. There was a strike in the factory of the first defendant and all activities had to be suspended during the period of the strike. Hence, there was frustration of the contract to supply the bricks and tubes contracted for. Since the performance of the contract became impossible by frustration, the first defendant was not liable for damages for breach of contract. The suit was liable to be dismissed. The plaintiff examined a number of witnesses and proved the correspondence between the parties relating to the contract and the supply. The first defendant also led evidence. The other defendants did not file written statement. The trial Court, on an appreciation of the pleadings and the evidence in the case, held that the suit was in time. It also held that there was no frustration of the contract which would enable the first defendant to get out of the obligation of paying the difference in the market value at which it had agreed to supply the materials and at which the plaintiff had to purchase it from others, on the failure of the first defendant to supply the goods contracted for. It further held that the first defendant was guilty of breach of contract and hence the plaintiff was entitled to claim the difference in market value as put forward by it in the plaint. Thus, the trial Court decreed the suit. On appeal by the first defendant (sic) the trial Court holding that the suit was barred by limitation and that the first defendant could rely on the doctrine of frustration to get out of the liability for breach of the contract. But the learned Single Judge held that there was a concluded contract between the plaintiff and the first defendant, overruling the contention in that behalf raised by the first defendant. Thus, reversing the judgment and decree of the trial Court, the learned Single Judge dismissed the suit. This dismissal is challenged by the plaintiff in this appeal under Clause 10 of the Letters Patent.
(3.) BOTH the trial Court and the learned Single Judge have held that the contract for supply at the prices agreed upon, had come into existence between the plaintiff and the first defendant. The first defendant was to supply samples, get them approved and thereafter was to commence supply. The first defendant submitted samples, but the plaintiff informed the first defendant that the samples were defective. On the third occasion, the first defendant agreed to make available further samples after carrying out the rectification suggested by the plaintiff, but the same was not done. The plaintiff repeatedly called upon the first defendant to get the samples approved arid to commence the supply, but the first defendant failed either to make available the acceptable samples or to get them approved. Then the plaintiff informed the first defendant that the plaintiff was constrained to make purchases elsewhere at the risk and cost of the first defendant. It may be noted that as per the terms of the contract, the time for supply could either be extended with liability on the first defendant to pay penalty at 1 percent of the value going up to 10 percent depending on the circumstances, or the plaintiff was entitled to recover the difference in the market value between the prices at which the first defendant was to supply and the prices at which the plaintiff had to purchase from outside. On the failure of the first defendant either to produce the necessary samples as per the design and on failure to supply, it is obvious that the plaintiff was justified in purchasing the materials from outside. There was no attempt made to contend that the prices at which the first defendant was to make supply were unreasonable or the purchases by the plaintiff were not at the prevailing market value. In this situation, it is obvious that the plaintiff was entitled to recover the difference in prices from the first defendant on the failure of the first defendant to perform its part of the contract. Thus, the trial Court, in our view, was fully correct in upholding the claim of the plaintiff.;