A party who wrongfully repudiates a contract is entitled to the restitution of benefits received under Section 64 of the Indian Contract Act when the other party puts an end to the contract under Section 39, subject to the other party's right to set off damages.

JUDGEMENT

Appeal (No. 56 of 1940) from a decree of the High Court in its appellate jurisdiction (July 14, 1939) which had reversed a decree of the same court in its original jurisdiction (January 10, 1939).

The following facts are taken from the judgment of the Judicial Committee This appeal raised an important question of commercial law under the Indian Contract Act. It was brought by the appellant, who carried on business from Calcutta as a distributor of cinema films. The respondents were a limited company who imported such films into India. The contract between the parties was expressed

Law. Rep. 70 Ind. App. 35 ( 1942- 1943) Muralidhar C hatterjee V. International Film C ompany Limited 93

in a letter dated May 8, 1936, sent by the respondents to the appellant, under which the appellant was to maintain at his own cost the respondents office in Calcutta, and handle their films in Bengal, Bihar, Orissa, Assam and Burma in conjunction with the respondents head office at Cawnpore. The main stipulation was in the following terms "That we shall deliver you "a brand new positive print of each picture approximately "at the average of one picture a month and we shall pay for "all the royalties to the producers for the exploitation of the "pictures and in consideration of this, you will pay us a sum "of Rs.1750 towards the cost of each print supplied to you. "Such payments to be made to us on demand and the prints "to be delivered to you within four to five weeks from the date "of the payment. The exact price of the print to be adjusted "on the delivery of the print and to be reckoned by adding "the actual duty as would be payable on the footage together "with the costs of the positive print and other incidental "charges (shippers, freights, etc.)."

That was followed by a provision whereby the appellant was to retain twenty-five per cent, of the revenue received on the exhibition of the film until he had recovered half of his " investment on the prints" or "print cost," the balance being divided between the parties equally thereafter the whole revenue was to be divided equally. The prints were to be returned to the respondents after the "exploitation " was over.

The correspondence between the parties which followed upon the contract and continued until January, 1937, showed that two films only—Shipmates 0 Mine and Annie Laurie— were offered to and accepted by the/appellant. On July 2, 1936, the appellant paid the respondents Rs.2000 on account of the sum due, or to become due, under the contract. From a bill dated September 30, 1936, it appeared that the full sum due for Shipmates o* Mine, the first picture delivered, was Rs.2043-4-0—which included the cost of making the positive print, customs duty, shipping charges, clearing charges, censors fee, etc. The film was delivered by the respondents to the appellant on October 5 ; but it would seem that the appellant had difficulty in getting it booked by cinema exhibitors, and on or about December 4, 1936, at the respondents suggestion, he returned it to the respondents for a time so that they might try to get it exhibited.

Meanwhile, on November 7, 1936, the appellant had likewise paid Rs.2000 on account of the sum due, or to become due, for Annie Laurie under the contract; but that film had not been delivered by the respondents when, on December 1, 1936, the appellant wrote to the respondents making various complaints of delay and breach of contract; and saying that "in the circumstances which have happened we find you have "no bona fide intention of carrying out the contract and we "decline to have any business dealings with you." This letter intimated a claim by the appellant for refund of the sum of Rs.4000 already paid, for Rs.908-13-0 expenses incurred, and for Rs.5000 damages. The respondents by letter of December 3 denied that they had committed any breach. The appellant on December 12, by letter and telegram, adhered to his letter of December 1 and refused to act as respondent