IN THE HIGH COURT OF ALLAHABAD
B. Mukherji and S. C. Manchanda, JJ.
SITA RAM - Appellant
Versus
KUNJ LAL - Respondents
First Appeal 334 Of 1951
Decided On : 07/10/1962
CONTRACT - SALE OF GOODS - CONTROLLED COMMODITY - ILLEGALITY - ENFORCEABILITY - GUR PRICE CONTROL ORDER, 1946.
Fact of the Case:
Plaintiff sued defendant for damages for breach of contract to purchase jaggery powder at a rate higher than the controlled price fixed under the Gur Price Control Order, 1946. The plaintiff claimed that the defendant had agreed to pay the difference between the controlled rate and the higher rate, but the defendant denied this and pleaded that the contract was illegal.
Finding of the Court:
The court held that the contract was illegal and unenforceable as it violated the Gur Price Control Order, 1946, which prohibited the sale of jaggery powder at a price higher than the controlled rate. The court also held that the plaintiff's claim for commission and incidental charges could not be recovered as the contract was unenforceable.
Issues: 1. Whether the contract for the sale of jaggery powder was illegal and unenforceable due to violation of the Gur Price Control Order, 1946? 2. Whether the plaintiff was entitled to recover commission and incidental charges in respect of the transactions?
Ratio Decidendi: 1. A contract that violates a law or a legal provision is illegal and unenforceable. (Section 23, Indian Contract Act) 2. The Gur Price Control Order, 1946, prohibited the sale of jaggery powder at a price higher than the controlled rate. The contract in question violated this provision and was therefore illegal and unenforceable. 3. Since the contract was illegal, the plaintiff could not recover commission and incidental charges in respect of the transactions.
Final Decision: The court allowed the appeal, set aside the decree of the lower court, and dismissed the plaintiff's cross-objection. The parties were directed to bear their own costs.
( 1 ) THIS is an appeal by a defendant arising out of a suit for the recovery of a sum of Rs. 11,773/15/6 in respect of damages for breach of a contract which was entered into in respect of supply of jaggery powder (a form of gur ).
( 2 ) ON the 14th August, 1947, the defendant was alleged to have contracted to purchase four wagons of jaggery powder roughly weighing about 2,000 maunds through the plaintiffs agency at two different rates. The first two wagons were contracted to be supplied at Rs. 25/8/- per maund, while the other two wagons at Rs. 25/12/- per maund. The price agreed to be paid was, what was in the market known as, Bilti-cut rate, that is to say, it was inclusive of charges incurrable to have the goods loaded in wagons, i. e. , the rates were F. O. R. rates. According to the plaintiff, it was agreed that commission, would be paid at the rate of Rs. 1/9/- per cent that expenses, etc. would be at one anna per cent. , and that brokerage would be Rs. 10/- a wagon. In pursuance of the aforementioned contract it was alleged by the plaintiff and agreed to on behalf of the defendant, that the defendant had deposited a sum of Rs. 2,000/- on the 28th August, 1947, with the plaintiff.
( 3 ) ON the 23rd August, 1947, one wagon was despatched to the defendant in terms of the aforementioned contract and the second wagon was despatched on the 12th September, 1947. After the respective wagons were despatched, Railway Receipts were sent and the recovery or the amounts was made through Hundis. It appears that a sum of Rs. 11,983/2/- was received on the 29th August, 1947, and another sum of Rs. 11,981/4/- was received on the 15th August, 1947. After the two wagons mentioned above had been despatched the position in regard to the availability of wagons became precarious, and therefore despatch of jaggery, sugar and such other commodities could only be made on obtaining a requisite permit for despatch of such goods. There was admittedly no requisite permit in favour of either of the parties for the despatch of jaggery in pursuance of the aforementioned contract, so that right from September till December 1947 the remaining two wagons of jaggery could not be despatched.
( 4 ) ON the 9th December, 1947, the plaintiff informed the defendant that the control in respect of movement of jaggery had been lifted and that it was therefore possible to despatch the balance of the goods of the contract. According to the plaintiff, the defendants man came and had the goods weighed and despatched. The first despatch, after the movement of goods had been restored, was made on the 11th December, 1947, and the Railway Receipt in respect of this despatch was sent along with a Hundi to the defendant at Indore for being honoured. The second wagon was despatched on the 16th December, 1947, and along with the Railway Receipt for this wagon a hundi was also sent to the defendant. The defendant refused to honour the Hundis and refused to take delivery of the wagons which had been despatched on the two dates in December 1947, mentioned above. The plaintiff, therefore, was faced with the situation that the goods which he had despatched to Indore lay there at his peril and therefore what he did was that he serves the defendant with a notice dated the 3rd January, 1948, saying that he would sell the goods. The defendant However took no steps after receipt of the notice and, the plaintiff re-sold the goods at indore on the 6th January, 1948. This was the case set up by the plaintiff in regard to the re-sale. The plaintiffs further case in regard to this re-sale was that the goods fetched a price of Rs. 10/12/- per maund. The plaintiff filed the suit, out of which this appeal arises, for damages, as we have said earlier, for a breach of contract and claimed damages in regard to the difference between the contracted price and the price actually fetched on re-sale of the goods, as also commission and incidental charges. The plaintiff also claimed a cer
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