Damages for breach of contract are to be computed as the difference between the contract price and the market price at the time of the breach, and the party suffering the loss is not required to actually purchase the goods in order to claim damages.

( 1 ) THIS appeal is directed against the judgment of alearned single Judge of this court dated September 21, 1979. It was dismissed by us by means of a short order dared February 27, 1984. Now we proceed to give reasons for the said decision.

( 2 ) M/s Saraya Distillery, the contractor agreed to supply 3, 87, 666 litres of rum to the respondent-Union of India@ Rs. 2. 13 per litre vide agreement dated August 14, 1972. The stores were to be delivered in 5 instalments-90,000 litres rum by 21-9-1972, 90,000 litres rum by 21-10-1972, 90,000 litres rum by 21-11-1972 80,000 litres rum by 21-12-1972, and 37, 666 litres rum by 21-1-1973. The contractor supplied only 45,000 litres of rum out of the first lot. He failed to supply the remaining stores inspite of extension of time on his request and and thus committed a breach of the contract.

( 3 ) THE Union of India claimed a sum of Rs. 3, 35, 888. 00 as damages. Out of this amount a sum of Rs. 4005. 00 was claimed for loss suffered on account of repurchase of 16,020 litres of rum and the remaining amount as general damages. The contractor admittedly refuted this claim. In pursuant to an arbitration clause the dispute was REFERRED TO to the decision of Dr. Bakhshish Singh, the sole arbitrator. He made an award on August 12, 1977 holding that the Union of India was entitled to recover only Rs. 72,600. 66 from the contractor.

( 4 ) UNION of India thereafter made a petition (Suit No. 798-A of 1977) under sections 14 and 17 of the Arbitration Act for directing the arbitrator to file the award and the proceedings in the court and making the award a rule of the court. The award and proceedings were duly filed. On receipt of the notice of the filing of award the contractor filed objections (IA 196 of 1978) under sections 20 and 33 of the Arbitration Act for setting aside the award. It was averred that the Union of India had gone for the repurchase of the cancelled quantity and had thus elected to claim only repurchase loss which amounted to Rs. 4005. 00 and therefore, the claim for general damages was not maintainable. Even otherwise the Union of India having not actually purchased the remaining stroes was not entitled to any damages. The arbitrator bad failed to determine the date of breach of the contract, the market rate prevalent on that date at the place of the breach, the award was, therefore, erroneous and unsustainable. It was also averred that the arbitrator was guilty of judicial misconduct in taking upon the record certain documents filed by the Union of India after the conclusion of the arbitration proceedings.

( 5 ) UNION of India denied the averments. The objections did not find favour with the learned single judge who dismissed the same vide his impugned judgment and made the award a rule of the court.

( 6 ) THE normal rule for computing damages for nonsupply of the goods would be the difference between the contract price and the market price of such goods at the time when the contract is broken. If there is no available market, at the place of delivery, the market, price at the nearest place or the price prevailing in the controlling market may be taken into consideration.

( 7 ) LEARNED counsel for the contractor contended that before a party could claim damages he must go to the market, purchase the goods not supplied or short supplied and suffer actual loss. Only then, argued the learned counsel, he would be entitled to damages. We do not agree.

( 8 ) SECTION 73 of the Indian Contract Act prescribes the method of assessing compensation due to a plaintiff suing upon a breach of contract. It says:

"when a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things for such breach. "

( 9 ) WHAT the buyer is deprived of in the usual course of things by non delivery is the value of the goods at