Case: P.S.N.S. Ambalavana Chettiar And Co. Ltd And Anr Vs. Express Newspapers Ltd., Bombay

1. The dispute arises out of a contract between the appellants and the respondent entered into on November 13, 1951. The terms of this contract were recorded in writing in the form of a letter written by the respondent to appellant No. 1 and set out below"Messrs. P. S. N. S. Ambalavana Chettiar and Company Ltd260, Angappa Naicken Street, MadrasWe confirm having purchased from you and the Madras Paper Marketing Company, Madras, 500 tons of Russian Newsprint as per the following description:-About 70 per cent in reels of 34 inches widthAbout 15 per cent in reels of 22 inches widthAbout 15 per cent in reels of 36 inches widthat annas 9 per lb. Ex-Wharf Bombay duty, etc., paid. The buyers are to take delivery within four days of the offer of delivery. Any wharfage, etc., up to the fourth day of the offer of delivery will be on sellers account and thereafter on buyers accountWe have also sold you about 415 tons of Russian newsprint in sheets in size of about 30"x42 (760mm x1083 mm) ex-godown, Madras at Re. 0-9-6 per lbWe will keep the stock of sheets in our godown on your account free of rentWe shall advance you moneys against this newsprint at annas 8 per lb. This advance will carry interest at 5 per cent per annum. We will also charge you the exact amount of insurance which we pay to our Insurance Company against the goodsWe shall pay Rs. 5,60,000 to your Bankers in Bombay and take delivery of the 500 tons of newsprint from the harbour in Bombay. Accounts will be made on the basis of the above arrangement and whatever one party is Liable to pay to the other will be adjusted subsequentlyFor Express Newspapers Limited Director."The document shows that the respondent agreed to buy from the appellants 500 tons of Russian newsprint in reels at 9 annas per lb., ex-wharf, Bombay and to take delivery of the goods on payment of Rs. 5,60.000/-. At the same time, the appellants agreed to buy from the respondent 415 tons of Russian newsprint in sheets then lying in a godown in Madras at 9 annas 6 pies per lb. upon the term that the appellants would pay the insurance charges and also interest at 5 per cent per annum on an amount equivalent to the price of the goods calculated at 8 annas per lb. The understanding was that the appellants would within a reasonable time take delivery of the goods bought by them in instalments, and the accounts would be finally adjusted on the completion of the deliveries. It may be mentioned that appellant No. 2 carried on business under the name and style of Madras Paper Marketing Company2. On November 26, 1951, the parties orally agreed that instead of 500 tons the respondent would buy 300 tons of newsprint in reels and that instead of 415 tons the appellants would buy 300 tons of newsprint in sheets and the terms of the contract dated November 13, 1951 would stand varied accordingly3. On December 5, 1951, the respondent took delivery of 300 tons of newsprint in reels on payment of Rs. 3,18,706-9-10 and a sum of Rs. 57,816-13-2 remained due to the appellants on account of the price of these goods. From November 29, 1951 up to February 27, 1952, the appellants took delivery of 122324 Lbs. of newsprint in sheets on payment of Rs. 63,032-15-9 to the respondent. Subsequently, the appellants refused to take delivery of the balance 547501 Lbs. of newsprint in sheets. Counsel for the parties agreed before us that March 29, 1952 was the date when the appellants repudiated the contract. On April 21, 1952 after giving notice to the appellants the respondent resold the balance goods to one G. R. Lala at 6 1/2 annas per lb4. On April 18, 1952, the appellants filed in the High Court of Madras C. S. No. 175 of 1952 claiming from the respondent Rs. 57,816-13-2 on account of the balance price of 300 tons of newsprint in reels and interest thereon. The respondent admitted the claim for the balance price. On July 30, 1952, the respondent filed in the High Court of Madras C. S. No. 262 of 1952 claiming a decree for Rs. 62,266-13-2 on account of the balance price of 122324 Lbs., the deficiency on resale of 547501 Lbs. of the newsprint in sheets, interest and insurance charges after setting off the sum of Rupees 57,816-13-2 due to the appellants. The principal defence of the appellants was that the contract with regard to 415 tons of newsprint in sheets was cancelled in November, 1951 and that appellant No. 2 was not a party to this contract. The appellants also denied the factum and validity of the resale. The two suits were tried by Rajagopala Ayyangar, J. He dismissed C. S No 175 of 1952 and decreed C. S. No 262 of l952 From these two decrees, the appellants filed two appeals in the High Court of Madras. A Division Bench of the High Court dismissed the two appeals. The present appeals have been filed on certificates granted by the High Court.

Reasoning:
5. The two Courts concurrently found that (1) appellant No. 2 was a party to the contract of purchase of 415 tons of newsprint in sheets, (2) on November 26, 1951 the parties orally agreed that instead of 415 tons the appellants would buy 300 tons of the newsprint and (3) there was no cancellation of the contract as alleged by the appellants. These findings are not challenged. The two Courts concurrently found that the resale held on April 21, 1952 was genuine and was effected at a proper price on due notice and after proper advertisement. Mr. Gupte attempted to challenge these findings, but we see no reason to interfere with themWe are inclined to accept this argument6. It is to be noticed that the contract did not envisage any loan of money by the respondent to the appellants on the security of the newsprint in sheets. The payment of Rs. 3,18,706-9-10 was made by the respondent towards part discharge of its liability for the price of the newsprint in reels10. The appellate Court held that the property in the entire 415 tons passed to the appellants who were subsequently relieved from, their liability to take 115 tons and that the respondent could resale any 300 tons out of the larger stock of 415 tons. We are unable to accept this line of reasoning. It is true that originally the property in the en tire 415 tons had passed to the appellants. But the result of the variation of the contract was to annul the passing of property in the goods. The effect of the bargain on November 26, 1951 was that the respondent would sell and deliver to the appellants any 300 tons out of the larger stock of 415 tons. As from November 26, 1951, the property in the entire stock of 415 tons belonged to the respondent. The parties did not intend that as from November 26, 1951 the property in any individual portion of the stock of 415 tons would remain vested in the appellants12. No portion of 415 tons of the newsprint lying in the respondents godown was appropriated to the contract by the respondent with the appellants consent before the resale. On the date of the resale, property in the goods had not passed to the buyer. Consequently, the respondent had no right to resell the goods under S. 54 (2). The claim to recover the deficiency on resale is not sustainable13. The respondent is entitled to claim as damages the differences, between the contract price and the market price on the date of tint breach. Where no time is fixed under the contract of sale for acceptance of the goods, the measure of damages is prima facie the difference between the contract price and the market price on the date of the refusal by the buyer to accept the goods, see Illustration (c) to S. 73 of the Indian Contract Act.In the present case, no time was fixed in the contract for acceptance of the goods. On March 29, 1952, the appellant refused to accept the goods. The respondent is entitled to the difference between the contract price and the market price on March 29, 1952. Counsel for both parties requested us that instead of remanding the matter we should assess the damages on this basis and finally dispose of the matter. We have gone through the materials on the record and with the assistance of counsel, we assess the market price of the Russian newsprint in sheets on March 29, 1952 at 8 annas per lb. Counsel on both sides agreed to this assessment. The claim of the respondent for Rs. 6,798-5-1 on account of interest and Rs. 1,119-6-0 for insurance charges is admitted before us by Mr. Gupte, on this basis the final position is as follows :Price of 122824 Lbs. at 9 1/2 anna par lb. less Rs 63.032 15.9Rs.9.596-14-8Difference 547051 Lbs. at 1 1/2 anna per lb.Rs.51,286-0-6Insurance chargesRs. 1,119-6-0Total amount due to the respondentRs. 68.797-9-10Deduct amount due to the appellantsRs. 57,816-18-2