1963 (11) TMI 105 - HC - Indian Laws

Summary

Issues:
1. Suit for recovery of sale price
2. Validity of contract renewal
3. Liability for interest payment
4. Claim for damages and set-off
5. Crediting advance deposit
6. Entitlement to relief

Analysis:

1. Suit for Recovery of Sale Price:
The State of Madras filed a suit against the defendant for the recovery of a sum of Rs. 22,000 for the sale of matches supplied by the plaintiffs. The defendant was constituted as the sole selling agent for matches manufactured at the Government Match Works. The relationship between the plaintiff and the defendant was that of a purchaser and not principal-agent. The contract required payment within 15 days of delivery, and despite some irregular payments, a dispute arose over a consignment not admitted by the defendant.

2. Validity of Contract Renewal:
The contract renewal process was not executed as required by Article 299 of the Constitution. The Director of Industries sent a letter proposing renewal, but the formal contract was not signed on behalf of the plaintiff. The defendant signed the agreement but disagreed with a new clause added later. Despite continued supply of goods, credit was stopped due to substantial arrears, leading to a dispute over non-supply of goods post-October 1958.

3. Liability for Interest Payment:
The plaintiff claimed interest at 6% per annum for delayed payments. The Sale of Goods Act allows for interest in the absence of a contrary contract. The court, citing a Supreme Court ruling, modified the interest calculation to start after 15 days from the transaction date, as per the terms of the contract.

4. Claim for Damages and Set-Off:
The defendant denied liability for interest and claimed damages of Rs. 10,000 for breach of agreement. However, the court found that the defendant was in breach by not paying for goods within the stipulated time, rendering the counterclaim invalid.

5. Crediting Advance Deposit:
The plaintiff was directed to credit Rs. 500, an initial deposit, in the final adjustment of the suit amount.

6. Entitlement to Relief:
The court ruled in favor of the plaintiff on issues 1, 6, and 7, entitling them to the suit amount with revised interest calculation, and ordering the defendant to pay within four months with accruing interest from the suit date. The counterclaim was dismissed, and costs were awarded to the plaintiff after deducting the initial deposit amount.