PHOENIX MILLS LTD Vs. M H DINSHAW AND CO

JUDGEMENT

(1.) ON August 29, 1941, the plaintiffs and the defendants entered into a contract whereby the defendants agreed to supply to the plaintiffs certain dyeing and. bleaching machinery consisting of one scutcher, one piler and one six-bowls water mangle at certain rates and on certain terms and conditions. The contract is expressed to be a c. i. f. contract, and it is important to note this because most of the controversy between the parties in this suit has turned round the rights and obligations of the contracting parties under a c. i. f. contract. ON September 15, 1941, the plaintiffs paid to the defendants a sum of Rs. 3,500 being approximately the one-third price of the machinery. The plaintiffs after that wrote several letters to the defendants making inquiries as to the arrival of the goods. ON February 11, 1942, the defendants replied to the plaintiffs stating that they had received the shipping documents of the articles contracted to be sold. They asked the plaintiffs to send the cheque so as to enable' them to deliver to the plaintiffs the bill of lading. They also enclosed with this letter their bill. The bill sets out with some particularity the description of the goods, the rate, the price, the full amount payable under the contract, and the part-payment of Rs. 3,500 which had been received by the defendants and the final amount due and payable by the plaintiffs. ON February 16, 1942, the plaintiffs wrote to the defendants pointing out that the balance of the price was to be paid on intimation by the bank that the shipping documents had arrived. That is one of the terms of the contract. The plaintiffs point out that so far they had not received any intimation from any bank; then they go on to state that as, according to the defendants, the shipping documents had arrived, they would be prepared to pay the balance against the defendants handing over all the necessary documents. It is common ground that on February 16, 1942, the plaintiffs paid the balance, viz. Rs. 7,046 to a representative of the defendants and it is also common ground that the only document which was delivered by the defendants to the plaintiffs on that day was the bill of lading. The plaintiffs have filed this suit for a refund of the full price paid by them on the ground that the defendants failed to perform their obligations under the contract and also there was a failure of consideration. The plaintiffs' contention is in brief that the defendants merely gave them the bill of lading but failed to deliver to them the original invoice and a proper policy of insurance. The defendants' answer to the suit is that the documents delivered by them were the proper documents which they were bound to deliver under a c. i. f. contract. In any event the defendants say the plaintiffs have waived their right to the original invoice and what according to them is a proper policy of insurance. In the alternative the defendants contend that the plaintiffs have dispensed with the performance of those obligations on the part of the defendants under Section 63 of the Indian Contract Act, 1872; and finally they also base their defence on an estoppel operating against the plaintiffs.

(2.) THE incidents of a c. i. f. contract have been very clearly and precisely defined by Mr. Justice Hamilton in Biddell Brothers v. E. Clemens Horst Company [1911] 1 K. B. 214. He defines these incidents as follows (p. 220): A seller under a contract of sale containing such terms has firstly to ship at the port of shipment goods of the description contained in the contract; secondly to procure a contract: of affreightment, under which the goods will be delivered at the destination contemplated by the contract; thirdly to arrange for an insurance upon the terms current in the trade which will be available for the benefit of the buyer; fourthly to make out an invoice as described by Blackburn J. in Ireland v. Livingston (1872) L. R. 5 H. L. 595, 406 or in some similar form; and finally to tender these documents to the buyer so that he may know what freight he has to pay and obtain delivery of the goods, if they arrive, or recover for their loss if they are lost on the voyage. Such terms constitute an agreement that the delivery of the goods, provided they are in conformity with the contract, shall be delivery on board ship at the port of shipment. It follows that. against tender of these documents, the bill of lading, invoice, and policy of insurance, which completes delivery in accordance with that agreement, the buyer must be ready and willing to pay the price. THErefore, under a c. i. f. contract, the seller can give symbolic delivery of the goods by tendering to the buyer three documents, viz. a bill of lading, an invoice and a policy of insurance. In law the tendering of these documents is tantamount to giving delivery of the goods covered by these documents and the buyer is bound to accept these documents and pay the price. As pointed out by Halsbury's Laws of England, Hailsham Edition, Vol. XXIX, p. 210, the commercial reason for the evolution of the " c. i. f. " contract lies in the length of time taken in the carriage of goods by sea. THE contract which has been ultimately evolved is both for the benefit of the seller. and the buyer. It is to the seller's interest to receive the money equivalent of the goods as soon as possible after the date of the contract of sale; on the other hand, it is to the interest of the buyer to be able to deal with the goods for resale or finance as soon as possible.

(3.) THE evidence of Keshavdev has been very strongly attacked by Mr. Bhatt on behalf of the defendants. THEre is no doubt that there are discrepancies in his evidence, and the strongest discrepancy is the fact that in subsequent correspondence this particular interview of February 16, 1942, is not referred to. I shall presently consider the correspondence, and to my mind it is quite apparent, looking at the correspondence as a whole, that the plaintiffs made it perfectly clear to the defendants that they insisted upon the performance of all the defendants' obligations under the contract; and the defendants equally clearly realised that they were under an obligation to perform whatever duties they had to under the contract. Neither party in this correspondence even suggested that the plaintiffs had waived their rights under the contract and that the defendants were no longer bound to perform their obligations. It seems that the plaintiffs forwarded the bill of lading to their clearing agents, Messrs. S. D. Engineer and Son, on February 16, 1942, asking them to clear the goods. On February. 17, Messrs S. D. Engineer and Son replied stating that they understood that the ship by which the goods were arriving was not coming to Bombay on account of causes arising out of the war and therefore they returned the bill of lading. THEn we have, according to Keshavdev, the telephonic conversation to which I have referred. Nothing further happens till March 19, 1942, when the plaintiffs address a letter to the defendants. In this letter they specifically mention that they had handed over the balance of the price on the defendants having given to the plaintiffs all the shipping documents except the insurance policy and the original invoice; then they go on to state that when they reminded the defendants on the telephone, the defendants assured the plaintiffs that the same would be sent in a day or two. THEn the plaintiffs; make a complaint of the fact that although a month had passed, they had not received the insurance policy and the original invoice; they even accuse a reputable firm like the defendants of dilly-dallying. THE reply to this letter is sent by the defendants on March 25, 1942. THEre is no denial of the telephonic conversation nor of the assurance given by the defendants to the plaintiffs; on the contrary there is an explanation as to why these documents have not yet been sent to the plaintiffs. THE defendants point out that the insurance policy had not yet been received by them and they had asked for the policy to be sent by air mail and that it would be sent to the plaintiffs as soon, as it was received. With regard to the invoice, the defendants said that they had sent it to the customs authorities for verification. THE plaintiffs wrote another letter on March 25 apparently before they received the defendants' letter of the same date where they again make a complaint of their not having received the insurance policy and the invoice and charge the defendants with delaying the matter and not giving a straightforward reply. THEn on April 1, 1942, the defendants acknowledge the plaintiffs' letter of March 25, 1942, and forward an insurance certificate which they had received. It is to be noted that even in this letter of April 1 which refers to the plaintiffs' letter of March 25, there is no denial of the fact that the defendants had given certain assurances to the plaintiffs with regard to the remaining documents. On April 9, 1942, the defendants inform the plaintiffs that they had received a cablegram from their principals in England that the steamer carrying the machinery sold to the plaintiffs had been sunk by enemy action. THEn on April 14, 1942, the plaintiffs approach their attorneys, and a letter is written on that day by their solicitors. THEn further correspondence follows.