JUDGMENT
M.P. Varma, J.
1. This is an appeal by the plaintiff. He filed the suit for recovery of damages, which he is said to have suffered on account of breach of a contract caused by the defendant and also for the loss of his reputation and goodwill.
2. The, plaintiff-appellant is a coal-merchant carrying on business of sale and purchase in the name of a firm “Sri Jagdamba Coal Company” as its proprietor. The defendant respondent, the Fertilizer Corporation of India Ltd. Sindri is a Public Sector Ltd. Company.
3. Sometime in July 1968 the respondent inivited tenders for sale of 3500 tons of pearl coal and in response thereof, the appellant offered his tender to purchase the same at the rate of Rs. 31/- per ton. The admitted case of the parties is that his being the highest offer, it was accepted by the respondent by its letter dated 10-8-1968 (vide Ext. 3/b). The appellant
signified his acceptance of the terms and conditions as laid down by respondent in its another letter, dated 19/20th of August, 1968 (vide Annexure 3/c). A sum of Rs. 5000/- was also deposited by the appellant as security amount and he placed orders for supply of a few wagons of coal at the initial stage and the price thereof was also paid in advance. It is stated that 64.9 tons coke was received and plaintiff again placed orders for further supply of coke but the defendant respondent by letter dated 21-8-68 (vide Annexure 3/d) cancelled the contract and refused to make any further supply.
4. The moot point, which the plaintiff had raised in the suit was that the defendant had no right to cancel or determine the contract and that on account of such an illegal act, he has suffered a loss and therefore, after due notice to the defendant, instituted the suit for recovery of damages.
5. The defendant resisted the claim solely on the ground that it had not made a blanket acceptance of the offer. The acceptance was with certain reservations and on such terms and conditions as was indicated in its letter, Ext. 3/b referred to above. The acceptance was conditioned that the price of the coal to be paid was subject to variation and alteration and also that the defendant had not given any guarantee to supply the full quota of 3500 tons. Of course, it was further given out that efforts would be made to make the supply as much as possible up to 3500 tons. A further term was imposed that the plaintiff before placing order would make payment thereof in advance. The case of the defendant is that the cancellation of the contract was in consonance with the termination clause and it had not committed any breach of the contract.
6. The trial court non-suited the plaintiff for grant of damages but decreed the claim in part for refund of the security amount of Rs. 5000/- by its Judgment and decree dated 24-2-1971 against which the plaintiff has preferred this appeal.
7. There is not much dispute in the pleadings of the parties with respect to the facts of the case. Sri S. C. Ghose, counsel for the appellant, has, however, contended that it was a case of concluded contract between the parties and the trial court was in error in giving its finding that breach was committed by the appellant. While laying stress on Ext. 3/b, it has been urged that the tender of this appellant was finally accept-
ed and the respondent should not have gone back in refusing to make further supply of coal without adhering to the conditions as laid down in the aforesaid letter, i.e. Ext. 3/b dated 10-8-1968. The appellant on the other hand, had further conveyed unqualified acceptance of the terms and conditions on the 19/20th August, 1968 (vide Ext. 3/c). True it is that the respondent did not give any guarantee for the total supply of 3500 tons of coal, but at the same time it was made clear that every endeavour would he made to make up the supply. The respondent had supplied only 64.9 tons of coal and the appellant had placed orders on 21-8-1968 for further supply, but the respondent, instead of acceding to the demand, in its wisdom thought of cancelling the contract itself and conveyed its intention of cancellation, vide Ext. 3/d of the same date i.e. 21-8-1968. By the same letter it was further communicated that the plaintiff’s order for supply of coal was not accepted. Learned counsel for the appellant has argued that the change of circumstances referred to above clearly establish that the respondent committed breach of the contract and the act of repudiation thereof was not only unjustified, but illegal too. It has also been contended that the respondent while cancelling the contract negotiated with another firm M/s. Project Equipments for the supply of same quality of coal, i.e. pearl coke at a higher rate. This shows dirty dealing. Inasmuch as, as per Ext. 3/b the respondent should have given at least fifteen days clear notice if the respondent thought of bringing any alteration on the price or to increase the rate in the supply of the coke. There is no evidence that any such notice was given. On the other hand, the evidence of D. W. 3 for the respondent speaks otherwise. He has admitted that only reason for cancellation of the contract with the plaintiff-appellant was the higher rate offered by another firm M/s. Project Equipments. He further admitted that when tenders were invited, this firm M/s. Project Equipments was one of the tenderers, but the tender offered by the appellant being the highest was accepted. Thus, it is clear that the respondent in their act of cancelling the contract made negotiation with different firms and finally agreed to make a contract with the said firm M/s. Project Equipment for supply of pearl coke on a higher rate. It has been submitted that before resorting to such action, respondent should have given notice to the
appellant if it was thought of to make any increase in the price position and in absence of it, the unilateral action of cancellation was quite illegal.
8. Sri K.D. Chatterjee, learned Advocate appearing for the respondent, on the other hand, has argued that a critical reading of Ext. 3/b would show that it was not a case of a concluded contract. It has been submitted that it was rather a case of continuing offer and a successive contract. The terms were to be intimated from time to time. In other words, Sri K.D. Chatterjee attempted to canvass that in the instant case the conditional offer meant a sort of standing offer as the agreement was arrived at with a qualified condition making counter offers. All contracts, no doubt, will mean agreements between the parties, but all agreements do not necessarily mean a concluded contract and according to learned counsel, since a counter offer was made, it was not a case of concluded contract. According to Ext. 3/b the appellant was to make an advance payment before placing an order, which was not done, inasmuch as the respondent had, at no time, guaranteed a total supply of 3500 tons or coke and the appellant, as such is not entitled to any compensation for the cancellation or the repudiation of the contract.
9. Thus, to decide the contentions raised, it is necessary to construe the import of the contents of Ext. 3/b to find out the relationship between the parties, which had given rise to this proceeding. Contentions raised for the respondent are two. One is that it is not a case of concluded contract and the respondent was at liberty to terminate the contract and the other contention is that the appellant having expressly agreed to the terms and conditions (vide Ext. 3/c) committed breach at his end, which prompted the respondent to cancel the contract. Reliance has been placed on the case of Chaturbhuj Vithaldas Jasani v. Moreshwar Parashram (AIR 1954 SC 236) to illustrate that when a contract consists of a number of terms and conditions, each condition does not form separate contract, but is an item in one contract, of which, each condition is part of the contract and that stipulation to make supply at intervals on demand was in the nature that it was a continuing one. In my opinion this case does not help the respondent at all in view of the fact that there was no such clause in the tender form that a separate order would be placed by the appellant for supply for each consignment or for
supply of coke for which he offered his tender. Respondent, on the other hand had agreed that he would make all efforts to complete the supply up to 3500 tons of pearl coke for which the tender was invited. So, it is not a case of split up of the contract into several considerations.
10. Sri K.D. Chatterjee had next referred to the case of Union of India v. Maddala Thathaiah (AIR 1966 SC 1724). Placing reliance on it the learned counsel has submitted that in the said case the Supreme Court has held that since there was no specified date to complete the requisite quantity of materials to be supplied, mere acceptance of the tender did not amount to placing order for any definite quantity and therefore, it was not a concluded contract in the strict sense of the term. In the aforesaid case the tenderer had preserved the right to cancel the contract at any time during tenure of contract without calling up outstandings of unexpired portion of contract. On placing reliance on this case it has been further submitted that the acceptance of the offer would only constitute an agreement, which falls short of the requirements amounting to a legal contract. It has been further submitted that the agreement arrived at between the parties in the present case was loosely called a contract. In my opinion, the present case before us stands on a different footing. I can visualise a situation that mere acceptance of the tender, however, does not convert the offer into a binding contract but the case before us is different to that of Union of India (supra). True it is that under Exhibit 3/c the respondent laid down certain conditions while finally accepting the tender offered by the appellant. Whatever be the terms and conditions spelled out in this letter, these were accepted by the appellant ungrudgingly as would appear clear from Ext. 3/c. It is the letter written by the appellant to respondent on 19th/20th August, 1968 intimating acceptance of the rate of Rs. 31/- per ton for purchase of pearl coke on the terms and conditions as indicated by the respondent. This letter further shows that the appellant had deposited the security of Rs. 5000/- for which a demand was made by Ext. 3/b. Thus I do not find any hesitation in holding that the present case appears to be a case of concluded contract and not a continuing offer or a successive contract for acceptance of conditions from time to time as contended by the counsel for the respondent.
11. I now, revert to find out if there was any breach committed by the respondent giving rise to the claim of damage, in view of my finding I may incidentally mention here that trial court has also held it to be a case of concluded contract, which appears clear from paragraph 17 of the judgment, which reads as follows :–
In the view that I have just recorded, there was a concluded contract between the parties in paragraph 20 of the impugned judgment the trial court has further held that having regard to the evidence it was a case of breach of concluded contract by the defendant. The relevant findings in paragraph 25 of the impugned judgment are as follows :–
“I hold that the defendant committed breach of concluded contract in that there was no ground for exercising the right of termination of the whole contract. In other words the right under the second condition was wrongfully exercised and so there was a breach of the concluded contract in that (it) abrogated the whole of it with one stroke”.
12. Counsel for the respondent has conceded that the respondent contacted with M/s. Project Equipments for purchase of pearl coke at a higher rate. It is an admitted position that before making alteration in the price, no such notice was served on the appellant, inasmuch as the appellant’s order for supply of further wagon of pearl coke was refused and the respondent with the same stroke of pen cancelled the contract. Obviously it must be held that breach was committed at the respondent’s end, which rightly gave rise to the (right of) appellant to claim damages.
13. On consideration of the facts as stated above I hold that the respondent committed breach of the contract and the action in repudiating same or cancellation thereof is wholly illegal and I further hold that the appellant is entitled to damages claimed in the suit. A breach of contract, naturally entails payment of compensation by the defaulting party for any toss or damages occasioned by the breach and such compensation may reasonably be computed on the basis of the difference between a contract price and the market price. The appellant in the present case has claimed a differential rate between the contract rate that is Rs. 31/-per ton and contracted rate with its own customers i.e. Rs. 38/- per ton. Evidence has been led to show his contract with
the customers for the sale of pearl coke vide Ext 7 series. Bills and accounts-books (Exts. 9 and 10 series) have also been produced in proof of the fact that appellant, in fact, sold the earlier consignment of pearl coke, which he had received at the rate of Rs. 38/- per ton. There is some evidence (vide Ext. 7/c) that one V. N. Rajan & Company had purchased pearl coke at Rs. 40/- per ton. But this occurred long after sometime in January, 1969, whereas the contract between the parties arose in August, 1968 but then the contracted rate as shown by the appellant for the sale of pearl coke at Rs. 38/- per ton appears to DC the prevalent market rate and it can reasonably be computed as the amount of loss and damages so suffered by the appellant for the abrupt cancellation of the contract by the respondent.
14. Thus, to conclude, the appeal succeeds in part. The appellant is entitled to a decree for compensation on the rate to be computed, as indicated above, for the remaining quantum of pearl coke, which the respondent failed to supply to the plaintiff-appellant as per terms of the tender offered for the same with proportionate interest at the rate of 6 per cent per annum, besides cost.
15. Hari Lal Agrawal, J. I, have had the advantage of perusing the judgment prepared by my learned Brother M. P. Varma, J. while I agree with him, I would like to add a few observations of my own. The facts of the case have been fully set out in the judgment of my learned Brother and, therefore, I need not repeat them. The whole argument of Mr. S. C. Ghose, learned counsel for the appellant was that admittedly the concluded contract came into existence between the parties, and its cancellation by letter dated 21-8-1968 (Ext. 3/d) amounted to breach of the contract on the part of the defendant and, therefore, the plaintiff was entitled to get the damages.
16. Mr. K.D. Chatterji, appearing for the defendant-respondent, on the other hand, took the position that in point of fact no concluded contract had come into existence and all that was there was a “standing offer”. In support of his contention he referred to certain passages from the Law of Contract by various authors, such as Anson, Chesire, etc. The whole basis of Mr. Chatterji’s argument was that each party at every stage had been adding its own conditions and there was never any unequivocal acceptance,
and in that view of the matter, every time it gave rise to a counter offer. The argument at one stage appeared to be attractive, but Mr. Ghosh combated this argument on reference to the statements made in paragraphs 11, 12 and 22 of the written statement of the defendant, where a clear statement was made that the offer of the plaintiff company was accepted by the defendant “on terms and conditions mentioned in the letter dated 10th August. 1968…..” He, therefore, argued that it
was not open to Mr. Chatterji to shift the stand of the defendant for the first time in this court when the parties had proceeded to contest the suit on the assumption that the contract had come into existence, and the only question that was canvassed was as to whether there had been a breach of the same on the part of the defendant or not and what would be the measure of damage? I find force in this contention of Mr. Ghose and, therefore, would not enter into the realm of the discussions in the finalities of the terms, “standing offer”, concluded contract”, ‘conditional offer’, “conditional acceptance” and the like, and, therefore, it is not necessary to refer to the commentaries. In the written statement a clear statement has been made in paragraph 22 to the effect that “all the tenderers were interviewed by a Board constituted by the defendant and it was for the time agreed to accept the offer of Sree Jagadamba Coal Company for supply of pearl coke at a rate of Rs. 31/- …..That immediately thereafter by mutual discussion between different tenderers the rates were increased to Rs. 32/- and as a matter of fact Sree Jagadamba Coal Company was asked to increase its rate …..the defendant
being a public undertaking has every right to refuse to supply as the defendant was to get more price for supply of pearl coke to different parties.”
In this way the only ground for cancelling the contract in question by the defendant obviously is that the defendant got a higher price for the commodity than that was agreed to with the plaintiff earlier. In my view, this amounts to a clear breach of the agreement and the understanding that was arrived at between the parties.
17. Coming to the question of measure or damage, no evidence has been adduced whatsoever by the defendant. The plaintiff, however, has given three instances of sales of the commodity in question by itself to different persons
near-about the relevant time. The genuineness of these transactions was not disputed. I would accordingly hold that the plaintiff must get the damage for breach of contract for the non-supply of 3-435 tonnes of pearl coke @ Rs. 7/- per ton, which is mentioned in Schedule II of the plaint. The plaintiff, however, cannot get the claim made under Schedule III, namely, the damages for the loss of reputation and goodwill etc.
18. In the result, the appeal is allowed in part to the extent indicated above. The appellant would be also entitled to interest at the rate of 6 per cent per annum pendente lite and future, besides the proportionate cost.