Insolvency of a buyer does not automatically terminate contracts; the seller is entitled to insist on cash payment in case of buyer's insolvency.

Devadoss, J.

1. The plaintiffs who are piece-goods merchants, allege that they entered into certain contracts with the defendants, for the purchase of a number of bales of piece goods, under contracts Nos. 3311, 3348 to 3350, 3357 to 3360, 3363 to 3368 and 3374, between December 1919 and July and August, 1920, that they took delivery of a number of bales, and 120 bales remaining to be delivered to the plaintiffs, that on the 28th September, 1921, an arrangement was come to, between the plaintiffs and the defendants, whereby it was agreed that the plaintiffs were to take delivery of the 120 packages, within nine months from that date, that the defendants were to deliver the said goods to the plaintiffs, against the promissory notes of the plaintiffs payable 60 days from the date of the promissory notes and that the defendants were to pay the plaintiffs an allowance of Rs. 30,000 subject to certain conditions. The plaintiffs took delivery of 15 bales against promissory note. Ten defeadants wrote on the 8th May, 1922 that, if the plaintiffs did not pay cash for the goods, they would be sold at their risk. The plaintiffs replied on the 176b. May, 1922, cancelling the contract with the dafendants. The plaintiffs pray that the contract with the defendants be rescinded that the defendants be restrained by injunction from selling the goads at their risk, and that they be further restrained from commencing and prosecuting any proceedings in arbitration they also pray for incidental reliefs.

2. The defendants admit several o the allegations in the plaint, and contend that the arrangement of the 28th September, 1921 was in consequence of the heavy loss sustained by the plaintiffs and that, in order to induce them to fulfil their contract, they (defendants) made certain concessions, that the plaintiffs defaulted to perform their part of the contract, that they themselves did not break their contract with the plaintiffs, and that the plaintiffs are not entitled to any relief.

3. The following issues have been framed:

1. What are the terms o the suit contract?

2. Were the contracts superseded by the letter of the 28fch September, 1921.

3. Was there a breach of the contracts, and if so, by whom, and if there was supersession of the contracts by Exhibit A, was there a breach thereof and if so, by whom?

4. To what reliefs are the plaintiffs entitled?

4. The contracts, which are the subject matter of this suit are Nos. 3311, 3348 to 3350, 3357 to 3360, 3363 to 3368 and 3374. They are marked Exhibits A and P. Under the terms of the contracts, the plaintiffs were to take delivery of the goods by paying cash. By letter, dated the 28th September, 1921, the defendants agreed among other things to give credit for 60 days. Exhibit A is, by the defendants to the plaintiffs, and it is in these terms:

In consideration of your taking delivery of the above mentioned goods in full, within 9 months from to-day, delivery to be made against 60 days promissory notes, We will pay you an allowance subject to the following conditions:

1. Your present overdue promissory notes amounting to Rs. 24,362-4-6 are to be paid by you in full, within 15 days from this date.

2. The allowance will only be paid to you on completion of delivery of and payment for the 120 bales.

3. Should any promissory notes become over-due the allowance will be subject to cancellation.

4. Allowance Rs. 30,000 (Rupees thirty thousand only). We shall be glad to receive your confirmation of the foregoing.

5. It is not disputed that this letter was the result of negotiations between the plaintiff and the defendants owing to a falling market in order to enable the plaintiffs to take delivery of the goods contracted to be purchased by them. It is admitted that after the date of this letter, plaintiffs took delivery of only 15 packages. One hundred and five packages were not taken delivery of. On the 8th May, 1922, defendants wrote Exhibit D, which is in these terms:

Dear Sirs,

Contracts Nos. 3311, 3348 to 33