IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH & THE HONOURABLE MR. JUSTICE M.L.JOSEPH FRANCIS WEDNESDAY, THE 9TH DECEMBER 2009 / 18TH AGRAHAYANA 1931 AS.No. 236 of 1996(A) --------------------- OS.7/1993 of PRINCIPAL SUB COURT,KOCHI .................... APPELLANT/ DEFENDANT: -------------- THE PLANTATION CORPORATION OF KERALA LTD., P.B. NO: 12, KOTTAYAM - 4, REPRESENTED BY ITS MANAGING DIRECTOR BY ADV. SRI.JOSEPH MARKOS,SRI.JOSEPH MARKOSE RESPONDENT/ PLAINTIFF): --------------- NARESH KUMAR JAIN PROPRIETOR M/S. NARESH KUMAR JAIN & CO. 1048/R INT AREA, JALANDHAR BY ADV. SRI.K.N.SIVASANKARAN,V.V.ASOKAN THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 30/11/2009, THE COURT ON 09/12/2009 DELIVERED THE FOLLOWING: K. M. JOSEPH & JOSEPH FRANCIS JJ., - - - - - - - - - - - - - - - - - - - - - - - - - - - - A. S. NO: 236 OF 1996 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 9th Day of December, 2009. JUDGMENT Joseph Francis J., This appeal is filed by the defendant in O.S. No: 7 of 1993 on the file of Sub Court, Kochi. The respondent herein is the plaintiff in that suit which was filed for damages. 2. The facts of the case are as follows: The plaintiff is carrying on business as dealers of raw rubber and chemicals in Jalandhar. M/s. Sudesh Jain, Malwa Rubber corporation, is the agent of the plaintiff at Cochin, representing the plaintiff in their dealings with the defendant. The defendant is a company holding rubber plantations and dealer of rubber latex of various grades. The defendant used to offer sale of rubber latex from their office at Kottayam and delivery from their depot at Willingdon A. S. NO: 236 OF 1996 :2: Island. The latex is stored in Willingdon Island and therefore in pursuance to any contract of sale, delivery of the material has to be obtained from the godown of defendant in Willingdon Island. 3. The plaintiff through his representatives enquired from Mattancherry about the market rate of latex and they informed about interest to purchase latex. Plaintiff's representative was informed over telephone that under an incentive scheme, they are prepared to sell latex at the rate of Rs.18/- per litre, if they purchase a minimum quantity of 450 drums. On receipt of the offer by the defendant, the plaintiff confirmed and accepted it for sale from Cochin to purchase 450 drums of rubber latex at the rate of Rs.18/- per litre, by a telegram. On receipt of the telegram the defendant sent a telex message on 20.4.1992 confirming sale and demanding demand draft for 10 loads on the next day, informing that there are chances for revision of rate. On 21.4.1992 demand drafts were sent from Mattancherry, one for A. S. NO: 236 OF 1996 :3: Rs.9 lakhs and another for Rs.7,84,800/- representing the full value of the goods requesting to arrange despatch through M/s. Rastriya Transport corporation. 4. The amount was collected by the defendant by endorsing on the copy of the letter addressed to them. The demand drafts were encashed. Later plaintiff was informed by the defendant that they are unable to supply latex under the incentive scheme, as the scheme is stopped. According to the message received, the rate was revised to Rs.20 per litre. The defendant enquired whether they can supply latex at the rate for Rs.20/- or refund the amount. On receipt of this message, the plaintiff sent a telex stating the correct facts. Plaintiff informed the defendant that at about 10.30 am on 20.4.1992 Sudesh Jain contacted the defendant's Manager for supply of cenex. Two offers were made; one was for purchase at the rate of Rs.18/- per litre for a total quantity of more than 10 loads consisting of 42 to 45 drums A. S. NO: 236 OF 1996 :4: provided that the payment to be made within one week under the incentive scheme. Another offer made was at Rs.18.50 per litre, if quantity purchased is less than 10 loads. The message of acceptance of offer was sent from Mattancherry on 20.4.1992 at 3.30 pm and on 21.4.1992 a sum of Rs.16 lakhs was remitted as the full value of goods at the rate of Rs.18/- per litre. Acknowledgment was received on 22.4.1992 at 3.30 p.m. The purchase was made under the incentive scheme and it is clear that the scheme is said to have withdrawn only after confirming the order and completion of sale. 5. On 25.4.1992 the defendant issued two demand drafts refunding the amount collected on 21.4.1992. The defendant has committed breach of contract. Contract was entered into at Cochin on 20.4.1992 with the plaintiff's representative. It was understood between the parties that it is for specified goods in a deliverable state. Once contract was confirmed subject to the payment and condition of payment has been fulfilled it becomes A. S. NO: 236 OF 1996 :5: a concluded contract. There is nothing to be performed by the plaintiff and the plaintiff is entitled to take delivery and the seller is bound to effect delivery. A lawyer notice was sent demanding the defendant to pay Rs.1,80,000/- as damages being the price difference of the goods purchased on the date of contract as well as on the date of breach. 6. The admission on the part of the defendant that they have revised the rate with effect from 22.4.1992 from Rs.18/- to Rs.20/- shows the market rate on the date of breach. In fact, the time for payment was one week and request for payment on the next day was made, only with the apprehension that price may go up. Under a concluded sale the defendant is not entitled to cancel delivery alleging revision of price. The revision of price and inability to deliver material, was communicated only at 3.30 pm on 22.4.1992. Therefore the revised rate and offer to supply at revised rate are not applicable and acceptable to the plaintiff. Plaintiff is entitled to get difference in price as A. S. NO: 236 OF 1996 :6: damages. On receipt of the notice, the defendant sent a reply setting up untenable contentions. Hence the plaintiff has filed the present suit. 7. A written statement was filed alleging that the suit is false, frivolous and speculative, is unsustainable in law. The Sub Court, Kochi has no jurisdiction to entertain the suit. The defendant is a company with its registered office at Kottayam. Any part of the cause of action has not arisen within the jurisdiction of Sub Court, Kochi. The entire transactions in dispute was carried on and conducted at the defendant's registered office at Kottayam. The question of jurisdiction may be tried and decided as a preliminary issue. There was no concluded contract between plaintiff and defendant and hence there was no breach. 8. It is true that the plaintiff had made certain enquiries with the defendant regarding the supply of latex. The defendant informed the plaintiff that under an incentive scheme, rubber A. S. NO: 236 OF 1996 :7: latex was available at Rs.18/- per litre provided there was an order for taking a minimum quantity. The plaintiff was aware that the price of rubber latex was subject to revision by the defendant at any time and the applicable price would be the one prevailing at the time of issuance of delivery order. The defendant deny the allegation that the plaintiff confirmed and accepted the offer for sale from Cochin to purchase rubber latex at the rate of Rs.18/- per litre on 20.4.1992. 9. The incentive scheme was only an invitation to offer and the plaintiff's offer to purchase rubber latex under the scheme had to be accepted by the defendant and this acceptance would be complete only by the issuance of a delivery order. This has been the accepted practice also. In the instant case the offer to purchase latex at Rs.18/- per litre and payment for the same was received by the defendant on 21.4.1992 evening by which time there was no possibility for issuing any delivery order since it was late in the evening. With effect from 22.4.1992, the A. S. NO: 236 OF 1996 :8: defendant revised the price of rubber latex and withdrew the incentive scheme. Hence further acceptance of the previous rate could not be made. 10. The defendant immediately informed the plaintiff that in view of the price revision and withdrawal of incentive scheme, with effect from 22.4.1992, they were not in a position to accept. The defendant enquired with the plaintiff whether he was willing to purchase at the revised rate of Rs.20/- per litre. Since the plaintiff was not willing to purchase rubber latex at the revised rate the defendant refunded the amount paid. It is incorrect to allege that the scheme was withdrawn only after confirming the order and completing the sale. The acceptance of completion of sale will take place only on issuance of delivery order. The entire amount remitted by the plaintiff was refunded and it was accepted by the plaintiff. The alleged breach is denied. No contract was entered into between the parties either at Cochin or A. S. NO: 236 OF 1996 :9: at any other place. Plaintiff has not sustained any damage. He is not entitled to any damages or difference in sale price. He has not suffered any loss. The defendant cannot be made liable to pay damages or interest at 18%. 11. In the Sub court, PW1 and DW1 were examined and Exts. A1 to A10 were marked. The learned Sub Judge on considering the evidence found that the Sub Court, Kochi has jurisdiction to entertain the suit and suit was decreed allowing the plaintiff to realise a sum of Rs.1,80,000/- with interest at the rate of 12% per annum from 14.8.1992 till realisation and the cost from the defendant. Against that judgment and decree, the defendant filed this appeal. 12. We heard the learned counsel for the appellant and the learned counsel for the respondent. 13. The learned counsel for the appellant submitted that the concluded contract would emerge only on the issuance of delivery order by the appellant and therefore the court below A. S. NO: 236 OF 1996 :10: went wrong in finding that there was a concluded contract between the parties. Learned counsel for the appellant further submitted that as there was no concluded contract, there could not have been any breach of contract and as such the respondent / plaintiff is not entitled to get any amount as damages. He submitted that the court erred in granting interest at 12%. 14. The learned counsel for respondent/ plaintiff supported the judgment and decree of the lower court. 15. The power of attorney holder of plaintiff is examined as PW1. PW1 deposed that he had enquired the market value of the latex with the General Manager of the defendant on 20.4.1992 through phone at about 10.30 am. PW1 deposed that they told him that usual rate for latex is Rs.18.50 per litre and that they have a scheme, if the plaintiff buys 450 drums they could offer at Rs.18/- per litre, under incentive scheme and the another condition was the payment must be made in seven days. 16. PW1 deposed that he received Ext.A2 telex message A. S. NO: 236 OF 1996 :11: confirming the telephonic conversation. That offer was accepted by the plaintiff by sending a confirmation message. Ext.A3 is the copy of the confirmation message sent on 20.4.1992. PW1 received Ext.A4, a message from the defendant stating that the plaintiff must remit the money on the next day itself, telling that price is likely to be revised. On 21.4.1992 PW1 sent two demand drafts for a total amount of Rs.16,84,800/-, which is the total value of 450 drums of latex. Ext.A5 is the copy of the letter sent along with the demand draft. PW1 deposed that on 22.4.1992 he received a telex message from the defendant stating that they are unable to send the latex, as the incentive scheme was withdrawn from 22.4.1992 onwards. Ext.A6 is the message received from the defendant. 17. DW1 is the General Manager (Sales) in the defendant Corporation. DW1 admits that the plaintiff's agent contacted him over phone on 20.4.1992 for purchase of latex. During that time the defendant had an incentive scheme for the supply of latex A. S. NO: 236 OF 1996 :12: that if any dealer takes 10 loads (450 drums) or more, they are eligible to get the latex at Rs.18/- per litre. DW1 admits that the plaintiff had offered to purchase latex and as per Ext.A3, the defendant was asked to confirm. DW1 admits that the plaintiff had sent two demand drafts which were received by the defendant on 21.4.1992 around 5.00 p.m. and that defendant did not issue delivery order as its too late. DW1 deposed that on 22.4.1992 there was a price increase and the incentive scheme was stopped. Since the plaintiff was not interested to purchase latex at Rs.20/- per litre, the defendant refunded the full amount. Ext.A8 is the letter dated 25.4.1992 issued by the defendant to the plaintiff in which it is stated that the two demand drafts sent by the plaintiff were received by the defendant on 21.4.1992 at 4.30 p.m. In Ext.A8, it is further stated that at 4.00 p.m. the representative from courier has left and the issue of delivery order could not be possible on 21.4.1992. The total amount A. S. NO: 236 OF 1996 :13: received from the plaintiff by two demand drafts is Rs.16,84,800/-. 18. It is true that there is no written contract between the parties. Section 5 of the Sale of Goods Act 1930 provides that a contract of sale is made by an offer to buy or sell the goods for a price and the acceptance of such offer. A contract of sale may be made in writing or by word by mouth or partly in writing and partly by word of mouth or may be implied from the conduct of parties. 19. Ext.A3 telex message dated 20.4.1992 shows that plaintiff accepted the offer of the defendant to supply latex at the rate of Rs.18/- per litre, subject to the plaintiff purchases minimum quantity of 450 drums. Ext.A4 is the telex message dated 20.4.1992 issued from defendant to the plaintiff asking the plaintiff to remit price of latex on 21.4.1992 itself, to get the benefit of the incentive scheme. From Ext.A8, it is clear that the plaintiff sent the full value of the latex by demand drafts and the A. S. NO: 236 OF 1996 :14: defendant received the demand drafts on 21.4.1992 at 4.30 p.m. itself and the delivery order could not be issued as there was no sufficient time. 20. When the plaintiff made the payment by demand drafts, the plaintiff had performed all his part of contract and the contract for sale of latex is formed by accepting the demand drafts by the defendant. Since the defendant failed to supply the latex at the rate of Rs.18/- per litre, as observed by the learned Sub Judge, the defendant has committed the breach of contract. 21. Section 57 of the Sale of Goods Act, provides that where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may sue the seller for damages for non-delivery. 22. In a suit for damages for non-delivery, the loss to be ascertained is the loss at the date of breach. The measure for damages, therefore to be the difference between the contract price and the market price on the date of breach. PW1 deposed A. S. NO: 236 OF 1996 :15: that the defendant themselves fixed the price of rubber latex on 22.4.1992, at the rate of Rs.20/- litre. PW1 deposed that the rate fixed by the defendant will be depending on the market rate. DW1 admits in cross examination that the defendant enhanced the rate of latex from Rs.18/- to Rs.20/- on 22.4.1992 per litre based on market rate also. The contract rate of latex was Rs.18/- per litre and the market price on the date of breach of contract on 22.4.1992 was Rs.20/- per litre. Therefore, the loss sustained by the plaintiff, can be estimated as Rs.2/- per litre of the quantity agreed to be supplied, which will come to Rs.1,80,000/-. Therefore we are of the view that the learned Sub Judge is fully justified in assessing the damages as Rs.1,80,000/-. The plaintiff claimed damages from the defendant as per lawyer notice dated 14.8.1992. Since the transaction between the parties is in the nature of commercial in nature, the learned Sub Judge is justified in awarding the interest at the rate of 12% per annum from 14.8.1992. As there is no valid ground to interfere with the A. S. NO: 236 OF 1996 :16: judgment and decree of the learned Sub Judge, we are of the view that this appeal is liable to be dismissed as it is without any merits. Accordingly this appeal is dismissed. The judgment and decree in O.S. No: 7 of 1993 in the file of Sub Court, Kochi is confirmed. Parties are directed to suffer their respective costs in this appeal. K. M. JOSEPH, JUDGE M. L. JOSEPH FRANCIS, JUDGE dl/