1969 Supreme(Cal) 108

HIGH COURT OF CALCUTTA
P. B. Mukharji
COLLES CRANES OF INDIA LTD. - Appellant
Versus
SPEEDEO SPARES CORPORATION - Respondent
Suit 2243  Of  1965
Decided On : MAY 19, 1969

Time is of the essence of a contract if such was the real intention of the parties. Moreover, an intention to this effect may be expressly stated or may be inferred from the nature of the contract or from its attending circumstances.

Headnote:

CONTRACT - SALE OF GOODS - TIME OF THE ESSENCE - EXTENSION OF TIME - TERMINATION OF CONTRACT - READINESS AND WILLINGNESS TO DELIVER - SET-OFF AND FORFEITURE - INTEREST.

Fact of the Case:

The plaintiff company instituted this suit against the defendant firm for the recovery of a sum of Rs. 12,862. 73 P. , interests and costs. The plaintiff's case was that on May 1, 1964, the plaintiff company placed an order with the defendant for the sale to the plaintiff of iron joists and other articles, the particulars of which are mentioned in the order itself. The defendant agreed to sell and deliver these goods according to the terms and conditions of that purchase order. These iron joists and other articles were intended to be used in the construction of a building and/or a factory. It was also a term and condition of the agreement that the defendant should deliver the said goods within 10 days of the date of the agreement. In other words, the supply was to be completed within 10-5-1964. It is pleaded that time was of the essence of the contract. On that very same day, i. e. , May 1, 1964, the plaintiff paid Rs. 40. 188. 46 P. in advance to the defendant towards the price of the said goods. The plaintiff further states in the plaint that the defendant failed to deliver the poods according to the contract and within the time stipulated thereunder. It is, therefore, alleged that the defendant committed breach of the contract. The further pleading of the plaintiff is that it extended the time for delivery of the goods to enable the defendant to fulfil their obligations under the contract and the last date extended for the delivery of such goods was up to August 21. 1964. With regard to the delivery and supply of these goods, the position is that the defendant from time to time delivered diverse quantities of Roods under the contract not only up to the extended time of 21-8-1964 but also up to 27-11-1964. There is a balance of 9. 037 M. Tonnes of 400 x 100 m. m. joists still outstanding under the said contract The whole case of the plaintiff now is based on the fact that the defendant failed to deliver the said balance quantity of goods or any part thereof under the contract. By a letter dated 30-12-1964, the plaintiff terminated the contract. The plaintiff com-panv now claims a refund for the sum of Rs. 12. 362. 73 P. being the balance on the aforesaid advance payment of Rs. 40,188. 46 P. after deducting Rs. 27,325. 73 P. being the price of the goods delivered by the defendant and accepted by the plaintiff. The plaintiff also by a letter dated 10-9-1965 gave notice to the defendant that unless payment of Rs. 12,862. 73 P. was made by the defendant, the plaintiff would charge interest on the said sum at the rate of 6% per annum.

Finding of the Court:

1. Time was of the essence of the contract. 2. The plaintiff's termination of the said agreement was lawful. 3. The defendant was ready and willing to deliver the balance quantity of the goods, but such readiness or willingness were not according to the terms of the contract. 4. The defendant is not entitled to set-off or forfeiture as claimed in paragraphs 6 and 7 of the Written Statement.

Issues: 1. Whether time was of the essence at the agreement? 2. Did the plaintiff lawfully terminate the said agreement? 3. Was the defendant ready and will-ing to deliver the balance quantity of the materials under the said agreement? 4. Is the defendant entitled to set off Rs. 13,960. 73 P. or forfeit the plaintiff's alleged claim of Rs. 12. 862. 73 P. as alleged in paragraphs 6 and 7 respectively of the written statement? 5. To what reliefs, if any, is the plaintiff entitled?

Ratio Decidendi: 1. Where time is stipulated to be the essence of a contract, the failure to perform at a fixed time makes the contract voidable at the option of the promisee. 2. Acceptance of performance at a time other than that agreed upon, without notice of intention to claim compensation for loss occasioned by the non-performance at the time agreed, bars such claim. 3. Where no time for performance is specified, the engagement must be performed within a reasonable time, and what is a reasonable time is a question of fact in each case. 4. Extension of time for performance of a contract cannot go on indefinitely, and the promisee is entitled to say that after a certain extension it is not going to give any further extension. 5. Readiness and willingness to perform a contract must be according to the terms of the contract. 6. A seller cannot claim a right to forfeit advance payment of price as the seller cannot claim a right to forfeit such money paid as advance price because I consider such advance payment of price as in the nature of a trust or quasi trust ear-marked for the purpose of price for the goods to be supplied and when there is a failure to supply the goods, such advance pavment of price cannot be diverted or forfeited for other purposes or on the ground that there was an alleged breach on the part of the buyer.

Final Decision: Decree for the sum of Rs. 12,862. 73 P. as claimed by the plaintiff with interim interest and interest on judgment at the rate of 6% per annum thereupon and costs.