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1983 Supreme(All) 118

Allahbad High Court
K.C.AGRAWAL,O.P.SAXENA
Manager, Hardware and Tools Ltd. - Appellant
Versus
Saru Smelting Pvt. Ltd. - Respondent
Decided On : 05/04/1983

Advocates:
M.S. Negi, for Appellant.

The measure of damages for breach of contract for the sale of goods is the difference between the contract price and the market price on the date of breach.

Headnote:

CONTRACT - BREACH - DAMAGES - SALE OF GOODS - NON-SUPPLY OF GOODS - MEASURE OF DAMAGES - DIFFERENCE BETWEEN CONTRACT PRICE AND MARKET PRICE ON DATE OF BREACH.

Fact of the Case:

The plaintiff, a company manufacturing locks and other articles, entered into an agreement with the defendant, a company manufacturing and supplying zinc alloy, for the supply of 100 tonnes of Saru Zamak Ingots at a rate of Rs. 6.85 per Kg. The defendant acknowledged the order and agreed to supply the same. However, the defendant failed to supply the entire quantity and only supplied 70 tonnes. The plaintiff agreed to pay an enhanced rate of Rs. 7.40 per Kg. for the balance quantity of 30 tonnes. The defendant assured the plaintiff that the balance quantity would be supplied soon, but it failed to do so. The plaintiff sent a final notice to the defendant giving a period of two weeks to supply the balance quantity, which was not complied with. The plaintiff filed a suit for the recovery of Rs. 3,30,000/- as damages on the basis of the cause of action accruing on 21st November, 1973, after the expiry of two weeks of service of notice dated 4th November, 1973.

Finding of the Court:

The trial court dismissed the suit on the ground that the plaintiff failed to establish the quantum of damages suffered. On appeal, the High Court held that the defendant committed breach of contract by not supplying the balance quantity of 30 tonnes of Zamak. The court further held that the plaintiff was entitled to get the difference between the contract price and the market price prevalent on the date on which the breach was committed.

Issues: 1. Whether the defendant committed breach of contract by not supplying the balance quantity of 30 tonnes of Zamak? 2. Whether the plaintiff was entitled to get the difference between the contract price and the market price prevalent on the date on which the breach was committed?

Ratio Decidendi: 1. The defendant committed breach of contract by not supplying the balance quantity of 30 tonnes of Zamak as per the agreement. 2. The plaintiff was entitled to get the difference between the contract price and the market price prevalent on the date on which the breach was committed.

Final Decision: The appeal was partly allowed. The judgment and decree of the trial court was set aside, and the suit was decreed for the recovery of Rs. 1,08,000/- as damages with interest @ 6% per annum to be payable from the date of filing of the suit till payment.

Judgement

K. C. AGRAWAL, J.:- This is a plaintiffs appeal against the judgment and decree of the Second Additional Civil Judge, Aligarh, dt. November 25, 1975, dismissing the suit for damages filed on the ground of non-supply of Saru Zamak.

2. The facts, briefly stated, are these. M/s. Anchor Pressings Private Limited (hereinafter referred to as the plaintiff), is a Company carrying on business, inter alia, of manufacture, distribution, and sale of various kinds of locks and other articles, including zinc locks, and in that connection it requires zinc alloy, which is known by the standard name of Zamak. On November 28, 1972, M/s. Saru Smelting Private Limited (hereinafter referred to as the defendant), which is carrying on the business of manufacture; supply and sale of Zamak, offered during the course of a telephonic talk to supply 100 tonnes of Saru Zamak Ingots to the plaintiff. The defendants offer was accepted by a letter dt. 5th December, 1972 (Ex.=1) by the plaintiff to the defendant. The relevant terms and conditions, on which the agreement had been arrived at were:

SARU ZAMAK INGOTS -

100 tonnes @ Rs. 6.85 per Kg. plus 1 ½ U. P.S. Tax. For Meerut Less actual freight and octroi.

DELIVERY - 10 tonnes every week from January 1973.

DESPATCH - Per Road Transport to Aligarh.

PAYMENT - Document to be negotiated through P. N. Bank, Aligarh together with your bill in triplicate.

Note : The Composition Certificate of the ordered alloy should accompany each supply positively and the lead content should in no case exceed. 003%".

3. The defendant acknowledged the receipt of the said order by means of a letter dt.8th December, 1972, (Ext. 2) agreeing to supply 100 tonnes Zamak booked by the plaintiff @ Rs. 6.85 per kilogram F.O.R. The plaintiff was also informed by this letter that despatches would be made according to Delivery Schedule. In pursuance of the agreement the first week of January 1973 (sic) but it was only after repeated demands by letters and telegrams that 30 tonnes of Zamak were supplied between 28th February, 1973, and 15th March, 1973, in three instalments of 10 tonnes each. The defendant, thereafter, informed the plaintiff that as the price of Zamak had been raised by the M. M. T. C., from which purchases used to be made by the defendant, the defendant was not in a position to supply the same at the old rate of Rs. 6.85 per kg. The defendant wanted the plaintiff to agree to enhance the rate for the supply to Rs. 7.50 per kg. The case of the plaintiff, however, is that at the first instance it refused to enhance the price as agreed to and stated that it had never agreed to any such enhancement and the entire supplies had to be made @ Rs. 6.85 per kg., but seeing the urgency of its requirement, the plaintiff, ultimately, agreed on 15th May, 1973, that it would take the balance at Rs. 7.40 per kg., The defendant despatched three more instalments of 10 tonnes each as follows:-

10 tonnes on 18-5-1973

10 tonnes on 9-7-1973

10 tonnes on 11-7-1973

4. Out of the 100 tonnes initially agreed, the total supply made was of 70 tonnes. The defendant had promised to supply the balance at the rate of Rupees 7.40 per kg. at the earliest, but it did not do so. The defendant began to plead that since Zinc had not been received from the M. M. T. C., the supply could not be made by it. The defendant asked the plaintiff to wait for the receipt of supply of Zinc by it. Assurances were also given from time to time that immediately on receipt of Zinc, the balance of 30 tonnes of Zamak would be supplied. Ultimately, the plaintiff repudiated the excuse and allegations of the defendant by means of its notice dt. October 9, 1973, and clearly told the defendant that it was no concern of the plaintiff that the defendant had not received the Zinc from M. M. T. C. The defendant continued making false promises till November 1973, When the plaintiff served a final notice dated 4th November, 1973, giving a period of two weeks to supply the balance quantity o




























































































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