Case: Union Of India And Ors Vs. Sugauli Sugar Works (P) Ltd

These appeals are by certificate from the judgment and decree of the High Court at Patna dated 13 April, 1966 and 3 September, 1968.Four suits were filed by Sugauli Sugar Works Limited for recovery of money on account of non delivery of consignments. Two suits were filed by Majhaulia Sugar Works for recovery of money on account of non delivery of two consignments. The suits were filed in the Court of the Subordinate Judge, Motihari in Bihar.The plaintiffs are respondent. The case of the respondents was that goods were booked on 5 September, 1955 to several destinations under railway risk. The goods did not reach the destinations. The respondents alleged that non delivery was on account of gross negligence and misconduct on the part of the Railways.The defence was that the wagons containing the goods in suit along with other wagons were taken on Barge No. 6 from Samaria Ghat to Mokamah Ghat on 7 September, 19 55. There was an accident. The Barge with all the wagons sank in the river Ganges. The Railways contended that the employees were not guilty of any negligence or misconduct.The Subordinate Judge dismissed all the suits and held that the accident was not because of the negligence of the railway employees.The High Court accepted the appeals filed by the respondent. The High Court held that the consignments were booked at railway risk and there was no explanation given for the sinking of the Barge.The High Court held that the Barge sank because of serious negligence of the railway employees and it was not a case of inevitable accident. The High Court also held that the railway did not take the care which it was require d to take as a bailee. The High Court delivered the judgment on 13 April, 1966 and sent to the trial court for determination of the issue: "What is the amount for which the plaintiffs are entitled to a decree in this case?"One group of appeals is against the judgment of the High Court dated 13 April, 1966 which determined the liability.The Additional Subordinate Judge, Motihari, who tried the issue on remand by an order dated 10 September, 1966 gave decrees in favour of t he respondent. The High Court by judgment dated 3 September, 1968 set aside the judgment and decree of the trial court on remand. The High Court awarded decrees in favour of the respondents.The second group of appeals is by certificate against the judgment of the High Court dated 3 September, 1968.

Court's reasoning:
The High Court said that the evidence of plaintiffs witness Gaya Prasad showed the selling rate of sugar and there was no challenge to that evidence. The High Court found that the goods were despatched on 4 September, 1955. The barge sank on 7th September, 1955, and, therefore, the contract price would be the correct measure of damages. The High Court on the facts and circumstances of the case found that the contract price would also be the same as the market price at thatmarket rate is a presumptive test because it is the general intention of the law that, in giving damage for breach of contract, the party complaining should, so far as it can be done by money, be placed in the same position as he would have been in if the contract had been performed. The rule as to market price is intended to secure only an indemnity to the purchaser. The market value is taken because it is presumed to be the true value of the goods to the purchaser. One of the principles for award of damages is that as far as possible he who has proved a breach of a bargain to supply what he has contracted to get is to be placed as far as money can do it, in as good a situation as if the contract had been performed. The fundamental basis thus is compensation for the pecuniary loss which naturally flows from the breach. Therefore, the principle is that as far as possible the injured party should be placed in as good a situation as if the contract had been performed. In other words, it is to provide Compensation for pecuniary loss which naturally flows from the breach. The High Court correctly applied these principles and ad opted the contract price in the facts and circumstances of the case as the correct basis for compensation.