The measure of damages for non-delivery of goods is the difference between the market price and the contract price. The buyer is not required to repurchase the goods in order to succeed in its claim for damages.

AVADH BEHARI ROHATGI, J. (ORAL)

( 1 ) ON 15th January, 1972 the petitioner, Union of India, entered into a contract of purchase of stores with the respondent. Commercial Metal Corporation (the Corporation ). The stores to be supplied to the Union were leaded bronze ingots. 200 metric tonne of these ingots were to be delivered. The Corporation supplied 1,63,020 metric ton. They failed to supply 36,980 metric ton. The last date for delivery was 31st January, 1973. The delivery period was extended from time to time. Finally the Union of India cancelled the contract on 15th February, 1975.

( 2 ) DISPUTES arose between the parties. There was an arbitration clause in. the contract. The matters in difference were referred to the arbitrator. The Union Of India made a claim for Rs. 3,28,258. 86 on accouut of general damages against the Corporation for non-delivery. The Corporation in its turn made a counter claim against the Union of India. The arbitrator heard the parties. On 28th March, 1980 he made and published the award. He awarded a sum of Rs. 2,36,494 to the Union of India on account of general damages. The claim of the Corporation he rejected. He allowed them only Rs. 1,399 on account of sales tax charges. After making adjustment of the said amount he directed the Corporation to pay to the Union of India Rs. 2,35,095. This was his award.

( 3 ) THE award was filed in court. The Corporation raised objections to the award. On their objections the following issue was framed :

(1) Whether the award in question is liable to be set aside on any one or more grounds out of the grounds I to 12 mentioned in para 9 of the objections ?

WHAT happened before the arbitrator in this case was this. In their claim before him the Union of India submitted that after cancellation of the contract they repurchased the stores at a higher price and incurred a loss of Rs. 3,28,258. 86. This amount was claimed as general damages. The particulars of the claim were set forth in Annexure a . It was stated that the "goods were repurchased at a cost of Rs. 8,06. 805. 25. The contractual value of the undelivered stores was Rs. 4,78,546. 39. On this basis it was claimed that the Union had sustained a loss of Rs. 3,28,258. 86. This was the claim made on 29th December, 1979.

( 4 ) ON 12th March, 1980 this claim was aband oned. The Union of India filed a revised reduced claim amounting to Rs. 2,73,897. 20. This revised reduced claim was made on the basis of the Corporation s letter dated 7-11-73. In this letter the Corporation wrote to the Union of India that there was an exorbitant increase in the price of basic raw material and it was not therefore possible for them to supply the stores at the contractual price of Rs. 12. 37 per kg. They asked the Government to increase the price to Rs. 19. 45 per kg. to enable them to supply the balance stores. On the basis that the market price of the said goods had risen from Rs. 12. 37 to Rs. 19. 45 per kg. the Government made a claim for damages at the rate of Rs. 7. 08 per kg. before the arbitrator. On 12th March, 1980 when this revised reduced claim was filed a copy of it was given to counsel for the Corporation. The arbitrator then heard the parties. He closed the case for making the award. On 28th March, 1980 he made the award, as I have stated. Damages

( 5 ) THE Corporation impeaches the award mainly on two grounds. In the first place counsel for the Corporation says that Corporation unless it is shown that the Government actually repurchased the subject goods at a higher price and sustained a loss they are not entitled to damages. He submits that there is no proof that in this case the Government repurchased the goods. The. claim for damages on the basis of repurchase was abandoned. In its place a revised reduced claim was put in. Therefore for all purposes, counsel says there is no evidence that the Government went into the market and repurchased the goods at a higher price. In support of his contention counsel re

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