Point of Law: Section 74 declares law as to liability upon breach of contract where compensation is by agreement of parties.

JUDGMENT :

[Vinod Chandran, J.]

1. The appeal is against the judgment and decree of the Principal Sub Court, Kollam which allowed recovery of an amount of Rs.72,40,392.68 with future interest @ 6% after deducting the counter claim; which was confined to Rs.93,952.10. The defendant is in appeal and the case arose from different contracts for supply of raw cashew nuts to the plaintiff, sourced from abroad. The plaintiff procures raw cashew nuts, processes it in its ten factories; four owned by the plaintiff and six taken on lease/contract, and exports processed cashew as per the orders received. The defendant is a company registered in Singapore engaged mainly in the supply of raw cashew nuts. The 1st plaintiff, a partnership firm and a recognized two-star export house, entered into import contracts with the defendant, the transactions in which led to differences of opinion leading to the above suit. The contracts which are dealt with in the above suit, number eight, two of which were entirely cleared, two cancelled by the defendant, one partly cleared and partly repudiated and three fully repudiated by the plaintiff. The plaintiff alleged that there was a breach of contract by reasons of short supply, delayed supply, the advance amounts having not been fully given credit and more importantly the absence of a certification required for the purpose of ensuring the quality and quantity of the goods and the sea worthiness of the vessel in which the goods are shipped.

2. The terms were agreed upon by the parties and the same reduced to writing, which is first executed by the defendant in Singapore and sent to the plaintiff at Kollam, as an offer, which is accepted by the plaintiffs by putting their signature on the offer document thus concluding the contract. The advance amounts are deposited by the plaintiff to the account of the defendant in Singapore, through the plaintiff's Bank at Kollam, which varied between 5% & 10% of the total consideration payable for the quantity agreed upon at the stipulated rate; evident from the contract. There is a time stipulated in all the contracts within which the supply is to be carried out, but however subject to the availability of vessels. On the consignment being shipped from the port of origin, which in all these contracts was Abidjan in Ivory Coast, the Bill of Lading ('B/L' for brevity) is transmitted to the bankers of the plaintiff by the defendant's bank and on the plaintiff remitting the balance consideration as per the invoice sent along with the B/L, the plaintiff receives the goods at the port of entry and processes it in its factories. The plaintiff alleged breach of the terms of the contract by the defendant, when the plaintiff refused to clear the goods imported into the country.

3. The defendant alleged that Lloyd's Certification was not a mandatory condition of the contracts and in any event the shipments reached India; which makes the necessity of a certificate redundant. The defendant alleged breach on the plaintiff firm and forfeited the advance amounts; as per the terms of the contract. The plaintiffs sued for return of the advance amounts against which, supply was either not delivered or refused to be cleared by the plaintiff, on allegation of breach of contract. The defendant raised a counter claim alleging liability of loss including that of freight and demurrage from the plaintiff, which, according to them occurred only by reason of the refusal of the plaintiff to clear the goods. At the time of filing of the written statement, there was no computation of loss, which according to the defendant could be only computed after the sale of the goods which were refused to be cleared by the plaintiff. The liability to freight and demurrage were computed in a tabular form in the written statement as on that date, but there was no further amendment made to the pleadings alleging any loss having been occasioned. There was a further claim for the plaintiff, other than the advance amo