The Chief Justice.-

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The appellant company was the defendant in a suit for damages for breach of contract for sale of yarn. Most of the facts are not in dispute. The plaintiff company has its office in Bangalore and works in conjunction with a mill in Cochin state. The defendant company has an office at Coimbatore. On the 14th May, 1943, under Ex. P-1 the plaintiff agreed to sell to the defendant 200 bales 40 s. of Cochin Egyptian Special D.H.X.C.R. yarn at a price of Rs. 49 per bundle of 10 lbs. ex-mill site, delivery July 1943, payment cash against goods or railway receipt. There was trouble between the parties about the performance of this contract and on the 31st July, 1943. The parties met at Coimbatore and entered into a fresh agreement, Ex P-1(a) the relevant portion of which provides that the defendant withdraws all complaints regarding quality and count which have been raised so far and agrees to accept and take immediate delivery of 150 bales of yarn of the same description as originally accepted without any objection as to quality and count or ticket. The bales are to be despatched from “tomorrow” from Pudukad (which is in Cochin State) to Cochin harbour or Wadibunder as the case may be; and it is mutually agreed that the balance of the original contract should be treated as cancelled without liability on either side. In pursuance of this revised agreement 85 bales were despatched to the order of the defendant and delivery was taken without complaint. With reference to the remaining 65 bales, the defendant gave instructions for their despatch to Calcutta and on the 17th August, 1943, an invoice for these goods of the total price of Rs. 1,27,416-4-0 was tendered to the defendant’s agent to Coimbatore by the agent of the plaintiff together with the railway receipt relating to the consignment of these goods from Pudakad to Calcutta. This railway receipt, unfortunately, is not in evidence and we do not know whether it was made out to “self”or to the consignee-a point which has a considerable bearing on the contentions in appeal. The defendant refused to take delivery, nominally because of a counter claim relating to another transaction. In the end the railway receipt was auctioned at the risk of the defendant and the goods were sold at the price of Rs. 26-8-0 per bale as compared with the contract price of Rs. 49. The plaintiff claimed damages measured by the difference between the contract price and the price fetched at the re-sale.

Various contentions were raised in the suit. We are now concerned with only two of these contentions, Firstly, a contention that the contract is illegal because neither the plaintiff nor the defendant had licences as required under the Madras Yarn (Dealers) Control Order, 1943, and secondly a contention that in any case the defendant is entitled to a rebate by reason of the subsequent fixing of the ceiling prices under the Cotton Cloth and Yarn (Control) Order, 1943, read along with the Cotton Cloth and Yarn (Contracts) Ordinance, 1944. It is common ground that although the plaintiff had a licence to deal in yarn issued by the Mysore Government and although the defendant had licences to deal in yarn issued by the Governments of Bombay and Calcutta, neither the plaintiff nor the defendant had a licence from the Government of Madras. The Madras Yarn (Dealers) Control Order, 1943, in terms extends to the whole of the Province of Madras. It defines “dealer” as “a person who sells or stores for sale yarn, whether wholesale or retail, whether on his own account or as a commission agent, and whether or not in conjunction with any other business, but it does not include a cotton spinning mill or its authorised agent selling on its behalf yarn produced by it.” Clause 3 of the Order states that except as provided in clause 10 (which has no application here) no person shall carry on business as a dealer in this Province unless he has a licence issued under this order by the Provincial Textile Commission

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