1955 Supreme(Bom) 74
IN THE HIGH COURT OF BOMBAY
Desai S.T, J.
Appellants: Navnital Co. and Ors.
Versus
Respondent: Kishanchand Co.
Suit No. 46 of 1954
Decided On: 11.07.1955
Counsels:
For Appellant/Petitioner/Plaintiff: K.K. Desai and C.J. Shah, Advs.
For Respondents/Defendant: M.V. Desai and Lulla, Advs.
The words "as soon as delivered to us" in a contract for the sale of goods do not introduce a condition precedent in the contract to the creation of an obligation on the part of the seller to deliver the goods, but deal with the mode or manner of performance of the contract.
Headnote:
CONTRACT - SALE OF GOODS - CONSTRUCTION OF CONTRACT - WHETHER CONTRACTS WERE ABSOLUTE OR CONDITIONAL - WORDS "AS SOON AS DELIVERED TO US" - INTERPRETATION - INTENTION OF PARTIES - IMPLIED CONDITIONS - GENERAL PRINCIPLES OF CONSTRUCTION.
Fact of the Case:
The plaintiffs sued the defendants for breach of two contracts for the sale and delivery of cotton yarn. The defendants contended that the contracts were conditional on the Alagappa Textiles (Cochin) Ltd. delivering the goods to them and that since the Mills failed to do so, they were absolved from all obligation under their contracts with the plaintiffs.
Finding of the Court:
The court held that the contracts were absolute and created absolute obligation on the defendants to deliver the goods. The words "as soon as delivered to us" were interpreted as dealing with the mode or manner of performance of the contracts and not as affecting the very obligation to perform the contract. The court found that the obligation was not conditional but absolute and that the mode or manner of performance consisted of the fact that delivery could be given by the defendants to the plaintiffs as soon as the goods were delivered to the defendants by the Mills.
Issues: 1. Whether the contracts were absolute or conditional? 2. Whether the words "as soon as delivered to us" introduced a condition precedent in the contract to the creation of an obligation on the part of the defendants to deliver the goods? 3. Whether the defendants were absolved from all obligation under their contracts with the plaintiffs? 4. What was the date of breach of contract?
Ratio Decidendi: 1. The court applied the general principles of construction of contracts to interpret the contracts in question. 2. The court held that the words "as soon as delivered to us" dealt with the mode or manner of performance of the contracts and not with the question of their very obligation to perform the contract. 3. The court found that the obligation to perform the contracts was unconditional and absolute.
Final Decision: The court held that the contracts were absolute and created absolute obligation on the defendants to deliver the goods. The court referred the suit to the Commissioner for assessment of damages on the footing that the breach of contract took place on 31-3-1951.
1. The plaintiffs sue to recover damages from the defendants for breach of two contracts for the sale and delivery of cotton yam. It is the plaintiffs case that the first plaintiffs Carry on business of export and import in Bombay that in the matter of the contracts in suit they acted for and on behalf of plaintiffs 2 to 5 who carry on business in cotton yam and piece-goods fit Singapore in the name and style of Manalal Gowindji Co.
On 16-11-1950 two contracts were entered into between the defendants and the first plaintiffs acting On behalf of their overseas friends Messrs. Manalal Gowindji Co. One contract was for the sale by the defendants to the overseas firm of 50 bales of cotton yarn at Rs. 34/- per bundle of ten pounds F. O. B. Cochin on terms and conditions recorded in a letter dated 16-11-1950.
A similar contract for the sale of 100 bales of cotton yarn was entered into between the same parties on the same terms except that in the first contract credit was to be valid upto the end of February 1951 whilst in the other contract credit was to be valid upto the end of March 3951. According to the plaintiffs the defendants failed to perform their part of the two contracts and delivered only 30 bales of cotton yarn after considerable delay.
There was some correspondence between the parties in the course of which the defendants Stated that their vendors, Messrs. Alagaopa Textiles (Cochin) Ltd. had failed to perform their part of the contracts with the defendants and the defendants were consequently absolved from all obligation under their contracts with the plaintiffs.
They also stated in that correspondence that the contracts were conditional on the Alagappa Textiles (Cochin) Ltd. delivering the goods to the defendants and the Mills having failed to do so the defendants in their turn had become entitled to cancel their contracts with the plaintiffs.
2. It is not necessary to summaries the pleadings in this case since issues were raised On behalf of the defendants in respect of only two of the contentions taken up in their pleading and of the two contentions one, relating to the illegality of the contracts, was abandoned by Mr. M. V. Desai, learned counsel for the defendants, after the hearing of the suit had proceeded for some time.
The only issue and the only question that remains for my determination in this case is whether the two contracts were absolute, i.e. created absolute obligation on the defendants to deliver the goods, or whether the contracts were conditional, i.e., contingent upon Messrs. Alagappa Textiles (Cochin) Ltd. in their turn performing their part of their contracts with the defendants.
3. Both the contracts are substantially in the same terms had it will suffice if I set out here only one of them. The contract is as follows:
"We have to advise having sold to your overseas friends Messrs. Manalal Gowindji Co., 46, Saffling St., Singapore, 50 bales of cotton yarn 40/1 at Rs. 34 per bundle of 10 lbs. F.O.B. Cochin. The goods have been purchased by us from Messrs. Alagappa Textiles (Cochin) Ltd. for January delivery and will be shipped to your friends as soon as delivered to us.
You are requested to pay us a deposit of Rs. 5,000/- in the meantime and the L/C from your overseas friends must reach us within 7 days of the date of this contract. The credit is to be valid upto the end of February 1951 and should provide partial shipments."
4. It is not disputed that the defendants had in their turn entered into contracts for the purchase of similar quantities of yarn with Messrs, Alagappa Textiles (Cochin) Ltd. Nor is it disputed that the Mills failed to perform their part of the contracts with the defendants. The argument pressed before me on behalf of the defendants is that the defendants never contemplated to enter into any absolute contracts with the plaintiffs.
They strongly rely on the words in the second sentence of the contract, "the goods have been purchased by us from Messrs. Alagappa Textiles (C