Rajagopala Ayyangar, J.-This appeal and the memorandum of objections are against the judgment of our learned brother Panchapakesa. Ayyar, J., in C.S. No. 363 of 1949 on the Original Side of this Court. The suit was one by a buyer for recovery of damages for non-delivery, and the claim made was for Rs. 51,499-6-0. The learned Judge held, that the defendants, (the sellers) were in default, and decreed the suit to the extent of Rs. 3,000. The plaintiff has filed this appeal, and the excess amount claimed in it, is confined to Rs. 17,349. The defendants (sellers) have filed a memo, of cross-objections, disputing the learned Judge’s finding regarding breach on their part, and on this basis pray for the setting aside of the decree for Rs. 3,000 passed against them.

The two points therefore that arise for consideration are: (1) The correctness of the finding of the learned trial Judge that it was the defendants who were guilty of breaking the contract. (2) The correctness of the quantum of damages awarded to the plaintiff. These we shall consider in that order. Before setting out or examining the details of the controversy between the parties bearing on the first of these points, it would be convenient to narrate certain facts as regards which there is no dispute. The plaintiff and the defendants are both merchants of Madras. The suit contract is Exhibit P-1, dated nth April, 1949. It is in the form of a letter, addressed by the plaintiff to the defendant and recites the purchase of 1310 bags of "self-raising Australian flour", each bag weighing 1501 b. gross. The price fixed was "Re. 0-5-9 Per lb. c.i.f., Madras Harbour, sales-tax extra". The payment was to be "on or before the arrival of the steamer". The shipment was per S. S. Masula from Australia, which, it is admitted, had already left Australian waters, and was on its way to Madras by the date of the suit contract. The sale was therefore one "on c.i.f. terms " in regard to goods afloat. The contract contained no reference to the party on whom the obligation lay, to arrange for or obtain an import licence, notwithstanding that during the period relevant to the contract in suit, it is common ground, the import into India of flour from Australia was subject to control restrictions based on quotas. Under the regulations framed in that behalf, licences were granted permitting the importation of goods of specified value, the quantity allowed to each importer, being dependent upon various factors, like their imports in certain previous years, which were treated as basic. Licences were generally valid for shipment for a period of one year from the date of their issue, and in order that a licence could cover a particular import, the goods should have been actually shipped from the supplying country on a date when the licence was in force. By the date of the suit contract, the defendants had obtained two licences under each of which they could import from Australia flour of the value of fifty thousand rupees, the two licences being operative from a date which covered the period when S. S. Masula left Australia, while the plaintiff held admittedly no import licence. The sellers had made arrangements for payment to their Australian suppliers by a letter of credit with the Bank of New South Wales, and the shipping and other documents in relation to the suit consignment had been received in Madras on 7th April, 1949, by the Mercantile Bank, Madras, with instructions to hand them over to the defendants on payment. S. S. Masula arrived at Madras on 17th May, 1949. A day before the arrival of this steamer, the defendants paid the bank the amount due to their suppliers, and with the aid of the documents, cleared the goods from the vessel on 27th May, 1949, on the strength of one of their own import licences.

The defendants had also ordered by cable, dated 18th April, 1949, further quantities of the same goods from Australia and had been informed by letter, dated 27th April, 1949, from their Austr

Click Here to Read the rest of this document