1959 (12) TMI 56 - HC - Customs

Summary

Issues Involved:
1. Breach of contract.
2. Liability of the defendant as an agent under Section 230(1) of the Indian Contract Act.
3. Applicability of the principle of frustration.
4. Determination of damages.

Detailed Analysis:

1. Breach of Contract:
The appellant (plaintiff) claimed damages for the alleged breach of contract by the defendant-firm regarding the non-supply of 500 fan belts under indent No. 5039. The defendant-firm contended that they acted merely as agents for the plaintiff with Messrs. Thermoid Company, U.S.A., and unforeseen difficulties with Customs Authorities delayed the delivery. The trial court concluded that the defendant-firm, as accredited agents, were liable under Section 230(1) of the Contract Act but dismissed the suit due to insufficient evidence on the market price for determining damages.

2. Liability of the Defendant as an Agent under Section 230(1) of the Indian Contract Act:
The trial court held that the defendant-firm could be sued under Section 230(1) of the Contract Act. However, the appellate court scrutinized the contract terms and found that the defendant-firm acted as agents, not principals. The contract was essentially between the plaintiff and the foreign merchant (Messrs. Thermoid Company). The terms of the contract explicitly protected the defendant-firm from liability for delays caused by circumstances beyond their control, such as errors by the Customs Authorities.

3. Applicability of the Principle of Frustration:
The trial court erroneously applied the principle of frustration. The appellate court clarified that the delay caused by Customs Authorities was a circumstance beyond the defendant-firm's control and was explicitly covered under the contract terms. The plaintiff's unilateral action to make time the essence of the contract through a letter dated 21-8-1950 did not impose a new term on the contract. Therefore, the defendant-firm could not be held liable for breach of contract.

4. Determination of Damages:
The trial court dismissed the suit on the ground that the plaintiff failed to provide evidence of the market price of the goods on the date of the breach, making it impossible to ascertain the quantum of damages. The appellate court noted that if the findings on the other issues were accepted, the dismissal on this ground would be unsustainable. However, since the appellate court found that no breach of contract occurred due to the protected delay, the issue of damages became moot.

Conclusion:
The appellate court concluded that the defendant-firm could not be sued for breach of contract even if they were personally liable under the contract. The delay was due to circumstances beyond their control, and they were protected by the contract terms. The contract was between the plaintiff and the foreign merchant, with the defendant-firm acting as an agent. Consequently, the appeal was dismissed, and the cross-objection by the defendant-firm regarding reimbursement of clearance costs was also dismissed. The judgment of the lower court was upheld, though for different reasons.