The main legal point established in the judgment is that damages for a breach of contract must be based on the market price ruling at the date of the breach, and the court must consider any stipulations in the contract regarding the delivery of goods.

Leach, C.J.

1. The appellants entered into a contract to sell to the respondents five cases of printed muslin. The appellants delivered only two of the five bales and consequently the respondents filed a suit on the original side of this Court for the recovery of the damages suffered by them as the result of the appellants breach. The appellants denied that they were in default, but the learned Judge (Chandrasekhara Ayyar J.) held that they were and that they were liable to the respondents in the full amount of their claim. The appellants have appealed. They say that the learned Judge was wrong in holding that they had broken the contract and that in any event he has assessed the damages on a wrongful basis. We are in agreement with the learned Judge on the question whether the appellants broke the contract, but we consider that the damages have been assessed on an erroneous basis.

2. The contract is in writing and is dated 23rd November 1941. The goods had to be obtained from the United Kingdom and the sellers undertook to make the shipment in the month of November unless they were prevented by force majeure. If by reason of circumstances beyond their control the shipment was delayed they were to be entitled to "unlimited free extension." The contract was signed after the appellants had entered into a contract with the firm of Ralli Brothers, under which they were to buy from Ralli Brothers 25 bales of the same kind of muslin. The respondents were not concerned with any arrangement between the appellants and Ralli Brothers. The contract between the parties to this suit made no mention of the contract between the appellants and Ralli Brothers and was quite independent. The appellants also agreed to sell similar goods to two other persons. They expected to be able to fulfil all the three contracts out of the goods which were to be supplied to them by Ralli Brothers.

3. The shipment was delayed and it has been accepted that the delay arose out of a cause beyond the control of the appellants. Twelve out of the 25 bales which the appellants bought from Ralli Brothers arrived in Bombay on 22nd October 1942, and were forwarded by Ralli Brothers to the appellants in Madras. The goods arrived in this city on 2nd December 1942, when the appellants delivered to respondents 2 of the 12 bales. They delivered two bales to each of the two other persons with whom they had contracted and retained the balance of six bales for sale by themselves. The market was rising then. The respondents having ascertained that the appellants had received 12 bales demanded delivery of three bales to make up the five bales which they had bought. This demand was made on 9th December 1942, but was not complied with. Thereupon the respondents filed the suit which has given rise to this appeal.

4. Both the parties have treated the shipment of goods which arrived in Bombay on 22nd October 1942, as a shipment under the contract. In other words, the respondents have accepted the position that the appellants were not able to make the shipment before. The respondents were entitled under the contract to the delivery of five bales. As the appellants only delivered to them . two bales, the contract was broken to the extent of three bales.

5. The contract provided that delivery should be given "ex-godown, as and when the goods come." The learned Judge held that the date to be taken for the assessment of the damages was 10th October 1942, and in this connection relied on Section 35, Sale of Goods Act, which says that apart from an express contract, the seller of goods is not bound to deliver them until the buyer applies for delivery. The damages based on. the market price ruling on 10th December 1942, amounted to Rs. 6075 and a decree for this amount was passed. On the other hand, the appellants say that here there is an express contract. The sellers were bound to deliver to them the goods as soon as they arrived in Madras, which was on 2nd December 1942. If this date is