Judgment Case ID: 1119

Judgment:
Appeals Nos. 54 and 55 of 1957. Appeals from the judgment and decree dated March 11	 1953	 of the Judicial Commissioner 's Court	 Rewa	 in First Appeals Nos. 104 and 116 of 1952. B. C. Misra	 for the appellant. Tarachand Brijmohan Lal	 for the respondent. January 31. The Judgment of the Court was delivered by HIDAYATULLAH	 J. Mahabir Prashad Rungta	 appellant in these two appeals	 was plaintiff in his own suit and defendant in a counter suit filed by Durga Datt	 the respondent. The two appeals have been filed on certificates granted by the Judicial Commissioner	 Vindhya Pradesh against a common judgment and decree of the Judicial Commissioner 's Court in four appeals filed by the rival parties	 two in each civil suit. Certificate was also granted to the respondent; but he did not take steps in that behalf	 and we are	 therefore	 concerned only with the appeals of Mahabir Prashad Rungta. The two suits were filed in the following circumstances: Rungta owns a colliery at Budhar in Madhya Pradesh. On October 30	 1950	 an agreement was executed between Rungta and the respondent	 Durga Datt. Durga Datt agreed to transport coal from the colliery to the railway station at the rate of Rs. 2 8 0 per ton for a period of two years commencing from November 11	 1950	 to November 10	 1952. That agreement is exhibit P 1. The case of Rungta was that Durga Datt broke the contract from July 29	 1951	 by stopping the work of transport. Durga Datt in his suit on the other hand	 averred that Rungta had 641 broken the agreement and work of carriage as a result was stopped from July 30	 1951. The difference of a day between them is of no consequence. Rungta 's case was that as a result of the breach of the contract on the part of Durga Datt	 he was required to employ other carriers and to pay them at Rs. 3 per ton	 and he incurred demurrage and damages to his constituents for delay in supplies. He	 therefore	 claimed a sum of Rs. 60	000 as damages	 including Rs. 20	000 as general damages for loss of business	 credit and repu tation. He admitted that a sum of Rs. 15	087 5 0 was owed by him to Durga Datt on account of coal carried by the latter	 and he thus claimed Rs. 44	912 11 0	 after allowing credit for that sum. Durga Datt	 in his suit	 asked for a decree for Rs. 49	544 12 0. This included Rs. 26	139 11 0 on account of arrears of bills and Rs. 905 1 0 as interest on the amount. The balance (Rs. 22	500) was claimed as damages for loss of business and profits of the unexpired period of the contract at Rs. 1	500 per month. In giving the particulars for Rs. 26	139 11 0	 Durga Datt stated that he had transported 15	844 tons 2 Cwts. of coal to the end of July	 1951	 which were loaded in the wagons and despatched. He also claimed Rs. 7	500 in respect of 3	000 tons of coal which he had transported to the railway yard	 but which had not beed loaded in the wagons. After adjusting sundry amounts and allowing credit for Rs. 21	861 7 6	 he claimed Rs. 26	139 11 0	 as stated above. Durga Datt alleged that Rungta was guilty of breach of the contract	 particularly of cls. (4)	 (5) and (8) thereof	 which compelled him to rescind the contract. These clauses may be quoted here: "(4) Petrol : It will be arranged by party No. 1 himself but party No. 2 will help in time of need to get the petrol; the expenses incurred by party No. 2 for securing such petrol will be borne by party No. 1. If party No. 2 in spite of his best efforts cannot arrange for petrol then in such case party No. 1 will not be responsible for any loss in regard to transportation of coal. 642 (5) Payment of Bills: Party No. 2 will make payment of Bills of party No. 1 for actual despatch of coal on the 10th of the following months; (8) The road will be kept in repair by party No. 2. " The two suits were consolidated by the trial Judge	 and evidence was partly recorded separately and partly for the two suits together. The trial Judge held that the breach of the contract proceeded from Durga Datt	 and the suit of Rungta was decreed in the sum of Rs. 12	900 as damages due to him. In the other suit	 the trial Judge held that Durga Datt was entitled to a payment of Rs. 26	695 6 6 and a decree for Rs. 13	795 6 6 was passed in his favour after setting off the two amounts against each other. The rest of the claims in the two suits were dismissed. The parties were dissatisfied with the decrees	 and four appeals were filed. The learned Judicial Commissioner reversed the decision of the trial Judge. He held that Rungta was guilty of the breach of the contract	 because he had not made payments to Durga Datt as laid down by el. (5) of the agreement and had not kept the road in repair. He ordered the dismissal of Rungta 's suit in its entirety	 and reducing the amount decreed in Durga Datt 's favour by Rs. 918 6 0 for which there was a double charge	 he passed a decree for Rs. 25	113 4 0 awarding interest at 6 per cent. per annum on the amount from August 1	 1951	 till date of realisation. In these two appeals	 Rungta challenges (a) the dismissal of his suit for damages based on the finding that the breach proceeded from him; (b) the inclusion of Rs. 7	500 in respect of 3	000 tons of coal said to have been transported to the railway yard but not loaded in the wagons; and (c) the award of	 and in the alternative the rate of	 interest. The main question in these appeals is	 who was responsible for the breach of the contract ? The admitted position is that work stopped about the end of July	 1951. Previous to the closure of work	 each party had written letters of protest to the other	 Rungta complaining that Durga Datt had slowed his work and he was suffering loss	 and Durga Datt 643 complaining that lack of arrangements for petrol	 failure to repair the road and the withholding of the money due to him were making it impossible for him to fulfil the contract. The trial Judge did not accept the case set up by Durga Datt	 and held that he had wilfully stopped work. The learned Judicial Commissioner	 on the other hand	 held that Rungta had unreasonably and in breach of the agreement	 withheld large payments and had left the road in a poor state of repair and thus caused the breach of the contract. He did not attach much importance to the controversy over the supply of petrol	 which controversy was not mooted before us again. of the two reasons on which Rungta was held responsible for the breach of the contract	 the important one was the withholding of payment. Learned counsel for Rungta contended that time was not of the essence of the contract	 and that	 in any case	 the payment of bills to Durga Datt depended upon the presentation of the bills in time. From the evidence	 it appears that when the trucks were loaded	 coal was not weighed. It was weighed at the bridge where the wagons were loaded	 details of which were either with the railway company	 or with the representative of Rungta at the station. Durga Datt was required to obtain the information from one source or the other	 before he could make his bills. How much coal was transported by Durga Datt was a fact also within the knowledge of Rungta	 and the clause quoted above merely provided for payment of the bills by the 10th of the following month	 without stating expressly that the presentation of bill was a condition precedent to the payment. The learned Judicial Commissioner held	 on both the points	 against Rungta	 and in our opinion	 rightly. Even if the presentation of the bills be regarded as a condition precedent to payment	 it is clear enough that Rungta paid not the whole of the amounts due under the bills but	 only small sums from time to time. Learned counsel for Rungta contended that Durga Datt	 by receiving such payments and by not insisting on his rights	 must be deemed to have waived payment in a lump sum under cl. But no case of waiver 644 was pleaded by him		 and the evidence	 if any	 cannot be looked into. In any event	 an examination of the accounts between the parties discloses that payments were	 in fact	 withheld. Under the agreement	 10 per cent. of the bills was to be withheld to build up a security deposit of Rs. 2	000	 and an amount in excess of this was withheld by the end of May. No doubt	 the bills were not presented by Durga Datt at the end of each month; bills for April and May were submitted on July 16	 1951 and bills for June and July	 on August 6 and 12 respectively. Even so	 the indebtedness of Rungta to Durga Dutt stood as follows: 16th July	 1951 about Rs. 7	835 27th July	 1951 " Rs. 6	790 6th August	 1951 " Rs. 11	170 12th August	 1951 " Rs. 15	590 These sums were in addition to a security deposit of Rs. 2	038. Whatever might be the intent and purpose of the clause in question	 it is clear enough that Rungta was withholding substantial amounts over a very long period without any reasonable cause. To Durga Datt	 the receipt of money in time was a vital consideration if he was to fulfil his contract at all. It was not to be expected that he would go on carrying thousands of tons of coal from the colliery without receiving payments. In our opinion	 these facts speak for themselves	 and amply support the finding of the learned Judicial Commissioner that Rungta was really responsible for hamstringing the work of Durga Datt. Why Rungta did so is not very clear from the record of the case	 though an 'attempt was made to show that the quantity of coal transported from month to month was falling. An abstract of the quantities transported does not support this allegation. This abstract is of the quantity loaded in wagons. The figures are almost constant	 except in one month (April). There were	 of course	 variations in the quantity of coal loaded in the wagons from month to month; but the evidence shows that some coal remained at the siding in heaps and was not loaded immediately. The variation in the quantity also might have been due as much to Durga Datt as to the colliery and its output. In our judgment	 no 645 inference can be drawn from the abstract	 showing the quantities of coal loaded into the wagons	 that Durga Datt had slackened work after May. Learned counsel for Rungta cited some cases in which time was not considered as of the essence of the contract. Most of these cases deal with immovable property	 where a different rule applies. In commercial transactions	 time is ordinarily of the essence	 and in the agreement	 with which we are concerned	 the payment of bills by a particular date was expressly mentioned. The intention	 obviously	 was that Durga Datt would receive payments for work executed as soon as the amounts became due. Rungta did not pay these amounts	 which were also within his own knowledge either by the 10th of the following month or even within a reasonable time after the presentation of the bills. In these circumstances	 we are of opinion that cl. (5) was breached by Rungta. In addition to this	 there were difficulties of the road being in a bad state during the rainy season. The evidence shows that the wheels of the trucks used to sink in the mud frequently and the trucks had to be dragged out. For this state of affairs	 Rungta was mainly responsible under cl. The inclusion of the clause in the agreement itself shows that the parties realised that there might be hindrance to	 the trucks	 if the road was not repaired. The finding of the Judicial Commissioner on this part of the case is	 therefore ' sound	 though that reason by itself might not have been sufficient for stopping the work altogether and rescinding the contract. The case is thus covered by section 55 of the Indian Contract Act	 and Durga Datt was entitled to rescind the contract	 when the very important condition of the agreement was broken by Rungta. We confirm the finding of the Judicial Commissioner on this part of the case. This brings us to the inclusion of Rs. 7	500 on account of 3	000 tons of coal alleged to have been transported. The evidence on. this part of the case is somewhat unsatisfactory. Fortunately for Durga Datt	 some of the witnesses of Rungta admitted that besides coal 646 which was loaded in the wagons	 there were three large heaps of coal lying in the yard and that this coal was transported by Durga Datt. The estimate of Durga Datt was 3	000 tons. That is no more than a mere guess. A railway official was examined in the case	 and he stated that loose coal was sufficient to fill " 100 or 50 wagons ". From the schedule filed	 it appears that a wagon carries on an average 20 tons. Taking the number of wagons as 75	 the quantity could not exceed 1	500 tons. A sum of Rs. 3	750 as payment for 1	500 tons at Rs. 2 8 0 per ton ought to have been included	 instead of Rs. 7	500. To that extent	 the decree in favour of Durga Datt would be modified. There remains the question of interest. Interest for a period prior to the commencement of suit is claim. able either under an agreement	 or usage of trade or under a statutory provision or under the Interest Act	 for a sum certain where notice is given. Interest is also awarded in some cases by Courts of equity. (Bengal Nagpur Railway Co. Ltd. vs Ruttanji Ramji (1)). In the present case no agreement about interest was made	 nor was it implied: The notice which was given did not specify the sum which was demanded	 and	 therefore	 the Interest Act does not apply. The present case also does not fall within those cases in which Courts of equity grant interest. Learned counsel for Durga Datt claimed interest as damages; but it is well settled that interest as damages cannot be awarded. Interest up to date of suit	 therefore	 was not claimable	 and a deduction shall be made of such interest from the amount decreed. As regards interest pendente lite until the date of realisation	 such interest was within the discretion of the Court. The rate fixed is 6 per cent. which	 in the circumstances and according to the practice of Courts	 appears high. Interest 	shall be calculated at 4 percent. per annum instead of at 6 per cent.	 and the decree shall be modified accordingly. Except for reduction in the amount decreed by Rs. 3	750 and of interest up to the date of the filing of the suit which has been disallowed arid of the rate of (1) (1937) L.R. 65 1.A. 66. 647 interest pendente lite until realisation	 the appeals shall stand dismissed. In view of the substantial failure of the appeals	 the appellant shall pay the costs in this Court. One hearing fee.

Summary:
The respondent had agreed to transport coal from the appel lant 's colliery to the railway station. The appellant had to keep the road in repair and arrange for petrol and had to make the payment for the actual coal despatched by the 10th of the following month. The appellant complained that he was suffering loss as the respondent had slowed down the work and the respondent complained that by not arranging for the petrol	 not keeping the road in repairs and not making payments of amounts due the appellant had made it impossible to fulfil the contract. The quantity of coal transported was a fact within the knowledge of the appellant and the agreement merely provided for payment of the bills by 10th of the following month	 without stating expressly that the presentation of bill was a condition precedent to the payment. The appellants contended that time was not of the essence of the contract and in any case the payment of the bills depended upon the presentation of bills in time and also challenged the award of the interest. Held	 that in commercial transactions time is ordinarily of the essence of the contract and was made so in the contract and when this important condition of the agreement was broken	 section 55 of the Indian Contract Act could be invoked by the aggrieved party and he was entitled to rescind the contract. In the present case by withholding the payment of the bills cl. (5) of the contract was breached by the appellant. Held	 further	 that interest for a period prior to the com mencement of suit is claimable either under an agreement or usage of trade or under a statutory provision or under the Interest Act for	% sum certain where notice is given These 640 conditions not being satisfied and this being not a case in which Court of Equity grants interest	 interest was not awardable as damages. Held	 further	 that interest pendente lite being in the discretion of Court	 should be fixed in accordance with the circumstances and practice of the Court and should not be too high. Bengal Nagpur Railway Co. Ltd. vs Ruttanji Ramji	 (1937) L.R. 65 I.A. 66	 referred to.