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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Khanwilkar A.M., J.
The Cotton Corporation of India Limited - Plaintiffs
Versus
M/s.Ramkumar Mills Pvt.Ltd. - Defendants
Suit No.1342 Of 1980
Decided On : 02nd JUNE 2008
Contract Act, 1872 - Section 73-Concluded contract-Termination of contract-Claim of.-In the present case, the plaintiffs did call upon the defendants to furnish bank guarantee, but the defendants did not comply with that requirement. That by itself does not result in a situation of non-existence of contract between the parties inter se. From the contemporaneous record and the conduct of the parties, it is amply clear that the parties proceeded on the clear under-standing that there was a concluded contract between them. In fact, it is the defendants who claim to have terminated the contract at their instance for reasons recorded in their communication sent to the plaintiffs. There is no iota of evidence that the plaintiffs cancelled the contract by invoking Clause 34 of the contract muchless due to failure to furnish the bank guarantee.
Contract Act, 1872 - Section 73-Quantum of loss- Breach of contract.-The defendants have computed the total loss suffered by the plaintiffs on account of re-sale of the stated goods to Rs. 13,34,025.12. The plaintiffs have claimed interest on the said amount from the defendants @ 20% p.a. from the date of sale till the date of suit and for further interest @6% p.a. till payment. Although defendants have disputed the liability to pay interest as it is a case of breach of contract and having found that there was concluded contract between the parties, which makes the defendants liable to pay interest @ 20% p.a. The plaintiffs are, therefore, not only justified but entitled to claim interest at that specified rate. There can be no two opinions that the transaction in question is a commercial transaction. The plaintiffs, therefore, would succeed to the claim of interest @ 20% p.a. from the date of suit till the date of judgment as prayed. The plaintiffs are also entitled for future interest @ 6% p.a. till payment, as prayed.
Key Points: - The Court has jurisdiction because the contract was made, performed and breached in Mumbai (!) (!) (!) . - A concluded contract existed for supply of 200 bales of Orleans/Texas Cotton and 200 bales of Sudan Cotton on C.I.F. basis (!) (!) . - The defendants committed breach by refusing to take delivery despite goods arriving at Mumbai (!) (!) . - Plaintiffs are entitled to damages of Rs.14,56,720=94 for losses on resale (!) (!) . - Interest at 20% p.a. from suit filing and 6% p.a. till payment is payable under contract clause 17 (!) (!) .
1. This is a suit for damages for breach of contract. The plaintiffs is a company registered under the Companies Act, 1956 and is a Government of India undertaking. The principal business of the plaintiffs is to act as Canalising Agent for import and supply of foreign cotton to Indian Textile Mills. A Circular dated 12th March 1977 was issued by the plaintiffs to all textile mills in India including the defendants, inviting offers for purchase of Global Cotton proposed to be imported by the plaintiffs of the varieties and at the rate mentioned in the said Circular. In response to the said circular, the defendants-a company registered under the Companies Act who owns Textile Mill at Rajaji Nagar, Bangalore, by its letter dated 22nd March 1977 furnished their requirement of global cotton of 300 bales of Orleans/Texas Cotton and 300 bales of Sudan Acala Cotton R.G.. Besides sending the said letter, the defendants had sent Telex dated 22nd March 1977 requesting the plaintiffs to register their aforesaid requirement of cotton. The defendants by the said letter requested the plaintiffs to confirm the said booking. It is the case of the plaintiffs that pursuant to the said request, the plaintiffs, as per their usual practice and by way of confirmation of the said offer, sent to the defendants a contract in standard form being Contract No.G/527 dated 28th March 1977 duly signed by the plaintiffs. This contract was signed in duplicate to enable the defendants to return one copy thereof duly signed by them to the plaintiffs. It is the case of the plaintiffs that although the said Contract No.G/527 was not signed by the defendants, the same was accepted and confirmed by the defendants, which constituted valid and binding contract between the plaintiffs and defendants. Accordingly, the plaintiffs agreed to import and supply the requisite quantity of cotton at specified rate to the defendants as per their request. It is the case of the plaintiffs that the price agreed upon was C.I.F. Mumbai, Cochin and Bhavnagar excluding L/C Bank charges and plaintiffs’ service charges. According to the plaintiffs, the defendants agreed that the plaintiffs contract with the foreign suppliers for import of the cotton would be integral part of the contract between the plaintiffs and the defendants. In short, it is the case of the plaintiffs that relying upon the defendants commitment to purchase the requisite quantity of the cotton at the specified price, the plaintiffs imported the goods on clear understanding that if the defendants fail to pay the price, the plaintiffs would clear the same and take delivery of the said goods at the costs and risk of the defendants and if the defendants fail to take delivery of the said goods from the plaintiffs, the plaintiffs would be entitled to sell the goods to any other party by private sale or by auction and loss suffered by the plaintiffs would be borne by the defendants and the defendants would be liable to pay the same on demand by the plaintiffs. It is the case of the plaintiffs that the plaintiffs imported the required 200 bales of both, Orlens/Texas Cotton and Sudan Acala Cotton Rg.. The goods arrived at Mumbai. It is the case of the plaintiffs that the plaintiffs had to take delivery of 175 bales of Orleans/Texas Cotton and 193 bales of Sudan Cotton which were equal to the contracted quantity of bales of each variety. That, in spite of intimation given by the plaintiffs, the defendants failed to pay the price which compelled the plaintiffs to clear the said goods and take delivery thereof. Even after taking delivery when the plaintiffs called upon the defendants to pay the consideration and take delivery, the defendants failed and neglected to do so which necessitated sale of the said goods to third party. The plaintiffs sold 117 bales out of said 175 bales of Orleans/Texas Cotton to M/s.Sonal Enterprises and realized @ US $ 51 per lb. and realized a sum of Rs.2,48,110=29, as against the total in
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