{"id":129322,"date":"1969-08-19T00:00:00","date_gmt":"1969-08-18T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/maula-bux-vs-union-of-india-on-19-august-1969"},"modified":"2018-12-22T06:47:43","modified_gmt":"2018-12-22T01:17:43","slug":"maula-bux-vs-union-of-india-on-19-august-1969","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/maula-bux-vs-union-of-india-on-19-august-1969","title":{"rendered":"Maula Bux vs Union Of India on 19 August, 1969"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Maula Bux vs Union Of India on 19 August, 1969<\/div>\n
Equivalent citations: 1970 AIR 1955, \t\t 1970 SCR (1) 928<\/div>\n
Author: S C.<\/div>\n
Bench: Shah, J.C. (Cj)<\/div>\n
           PETITIONER:\nMAULA BUX\n\n\tVs.\n\nRESPONDENT:\nUNION OF INDIA\n\nDATE OF JUDGMENT:\n19\/08\/1969\n\nBENCH:\nSHAH, J.C. (CJ)\nBENCH:\nSHAH, J.C. (CJ)\nRAMASWAMI, V.\nGROVER, A.N.\n\nCITATION:\n 1970 AIR 1955\t\t  1970 SCR  (1) 928\n 1969 SCC  (2) 586\n CITATOR INFO :\n RF\t    1970 SC1986\t (33)\n F\t    1973 SC1098\t (3,4)\n\n\nACT:\n   Indian   Contract  Act  (9 of  1872), s. 74\t Deposit  of\nmoney  as guarantee for due  performance  of   contract\t for\nsupply\t  of\tgoods-Breach  of   contract--Forfeiture\t  of\ndeposit--Proof\tof  loss suffered when\tnecessary--Scope  of\nsection--\"Whether or not actual damage or loss is proved  to\nhave  been caused thereby\", meaning of--Earnest money,\twhat\nis.\n\n\n\nHEADNOTE:\n    The\t  appellant  entered   into  a\tcontract  with\t the\nrespondent  to\tsupply some goods and  deposited  a  certain\namount as security  for due performance of the contract.  It\nwas stipulated that the amounts we're to stand forfeited  in\ncase the appellant neglected to perform his part of the con-\ntract. When the appellant made defaults in the supply,\t the\nrespondent  rescinded the contract and forfeited the  amount\ndeposited.  The appellant filed a suit for recovery of\t the\namount\twith interest.\tThe  trial  court decreed the  suit,\nholding that the respondent was justified in rescinding\t the\ncontracts, but could not 'forfeit the  deposit, for, it\t had\nnot  suffered  any  loss  in  consequence  of  the   default\ncommitted  by  the appellant.  The High Court  modified\t the\ndecree\tand awarded the 'respondent a major portion  of\t the\namount\tdeposited as damages.  The High Court took the\tview\nthat  the forfeiture of a sum deposited by way\tof  security\nfor  due  performance  of  a  contract,\t where\tthe   amount\nforfeited was not unreasonable s. 74 of the Contract Act had\nno.  application  and  that the deposits so  made  could  be\nregarded as earnest money.\n   HELD:  The High Court was., in error in disallowing\t the\nappellant's claim.\n    (i) Earnest money is a deposit  made by  a purchaser  to\nbe  applied  towards  part payment of  the  price  when\t the\ncontract  is  completed\t and  till  then  as  evidencing  an\nintention  on the part of the purchaser to buy\tproperty  or\ngoods.\t Forfeiture  of earnest money under a  contract\t for\nsale  of  property, if the amount is reasonable,   does\t not\nfall within s. 74 of the Contract Act. [933-D].\nKunwar\tChiranjit Singh v. Har Swarup, A.I.R. 1926  P.C.  1,\nrelied on.\n    (ii) Where under the terms of the contract the party  in\nbreach\thas undertaken to pay a sum of money or to forfeit a\nsum  of\t money\twhich  he has  already\tpaid  to  the  party\ncomplaining  of\t a breach of contract, the undertaking is in\nthe nature of a penalty and, s. 74 applied thereto. [933  E-\nF]\nFateh  Chand v. Balkishan Dass,<\/a> [1964] 1 S.C.R. 515,  relied\non.\n    Contrary  view  in\tNatesa Aiyar  v.  Appavu  Padayachi,\n(1913)\tLL.R. 38 Mad. 178, Singer Manufacturing Co. v.\tRaja\nProsad,\t (1909)\t I.L.R.\t 36 Cal. 960 and  Manian  Patter  v.\nMadras\t Railway  Company,  (1906)  I.L.R.  19\t Mad.\t188,\ndisapproved.\n    The expression \"whether or not actual damage or loss  is\nproved\tto have been caused thereby\" in s. 74 is intended to\ncover  different classes of contracts which come before\t the\ncourts.\t  In  ease of breach of some contracts.\t it  may  be\nimpossible for the court to assess compensation arising from\nbreach,\t  while\t in  other  cases,  compensation   can\t  be\ncalculated in\n929\naccordance  with  established  rules.  Where  the  court  is\nunable\tto  assess the compensation, the sum  named  by\t the\nparties,  if it be regarded as a genuine preestimate, may be\ntaken  into  consideration  as\tthe  measure  of  reasonable\ncompensation, but not if the sum named is in the nature of a\npenalty. [934 A-C]\n    In the present case it was possible for the\t respondent-\nGovernment  to lead evidence to prove the loss suffered\t but\nit did not attempt to do so.\n\n\n\nJUDGMENT:\n<\/pre>\n
    CIVIL  APPELLATE JURISDICTION:  Civil Appeal No. 851  of
\n1966.\n<\/p>\n
    Appeal  by\tspecial leave from the\tjudgment  and  order
\ndated December 20, 1963 of the Allahabad High Court, Lucknow
\nBench in First Civil Appeal No. 28 of 1954.\n<\/p>\n
    Jagdish  Swarup,  Solicitor-General,  Yogeshwar  Prasad,
\nC.M. Kohli and G.R. Chopra, for the appellant.
\nL.M. Singhvi and S.P. Nayar, for the respondent.
\nThe Judgment of the Court was delivered by
\n    Shah,  Ag.\tC.J.   Maula  Bux   hereinafter\t called\t the
\nplaintiff  entered  into  a  contract  No.  C\/74  with\t the
\nGovernment of India on February 20, 1947, to supply potatoes
\nat  the Military Headquarters, U.P. Area, and  deposited  an
\namount of Rs. 10,000 as security for due  performance of the
\ncontract.  He entered into another contract with  Government
\nof  India on March 4, 1947 No. C\/120 to supply at  the\tsame
\nplace  poultry, eggs and fish for one year and deposited  an
\namount\t  of  Rs.  8,500\/-  for\t due  performance  of\t the
\ncontract.  Clause 8  of the  contract ran as follows:\n<\/p>\n
\t\t    “The  officer sanctioning  the  contract
\n\t      may   rescind his contract by notice to  me\/us
\n\t      in writing :–\n<\/p><\/blockquote>\n
\t      (i)\n<\/p><\/blockquote>\n
\t      (ii)\n<\/p><\/blockquote>\n
\t      (iii)\n<\/p><\/blockquote>\n
\t      (iv)  If\tI\/we decline, neglect  or  delay  to
\n\t      comply  with any demand or requisition  or  in
\n\t      any other way fail to. perform or observe\t any
\n\t      condition of the contract.\n<\/p><\/blockquote>\n
\t      (v)\n<\/p><\/blockquote>\n
\t      (vi)
\n\t      In  ease of such rescission,  my\/our  security
\n\t      deposit  (or  such  portion  thereof  as\t the
\n\t      officer\tsanctioning   the   contract   shall
\n\t      consider\t fit   or  adequate)   shall   stand
\n\t      forfeited and be absolutely at the disposal of
\n\t      Government,  without  prejudice to  any  other
\n\t      remedy or action that the Government may\thave
\n\t      to take.\n<\/p><\/blockquote>\n
\t      930<\/span><\/p>\n
\t      In   the\tcase  of  such\t  rescission,\t the
\n\t      Government  shall be entitled to recover\tfrom
\n\t      me\/us   on  demand  any  extra   expense\t the
\n\t      Government   may\tbe  put\t to   in   obtaining
\n\t      supplies\/services\t  hereby   agreed    to\t  be
\n\t      supplied,\t  from\telsewhere  in\tany   manner
\n\t      mentioned\t  in  clause 7(ii) hereof,  for\t the
\n\t      remainder\t  of  the  period  for\twhich\tthis
\n\t      contract\twas entered into, without  prejudice
\n\t      to any other remedy the Government may have.”\n<\/p><\/blockquote>\n
The  plaintiff\thaving\tmade persistent\t default  in  making
\n“regular and full supplies” of the commodities agreed to  be
\nsupplied,  the Government of India rescinded  the  contracts
\nthe first on November 23, 1947, and the second on   December
\n2,1947,\t   and\tforfeited  the\tamounts\t deposited  by\t the
\nplaintiff.  The plaintiff commenced an action  against\t the
\nUnion of India in the Court of the Civil Judge, Lucknow, for
\na  decree for Rs. 20,000\/- being the amounts deposited\twith
\nthe Government of India for due performance of the contracts
\nand interest thereon at the rate of 6 per cent.\t per  annum.
\nThe  Trial Court decreed the suit.  The Court held that\t the
\nGovernment  of\t India\twas  justified\tin  rescinding\t the
\ncontracts,  but\t they  could not for  left  the\t amounts  of
\ndeposit,  for they had not suffered any loss in\t consequence
\nof  the default committed by the plaintiff.  The High  Court
\nof Allahabad in appeal modified the decree, and awarded\t Rs.
\n416.25 only with interest at the rate of 3 per cent from the
\ndate of the suit.  The plaintiff has appealed to this  Court
\nwith ‘special leave.\n<\/p>\n
   The\ttrial Court found in decreeing the plaintiff’s\tsuit
\nthat  there  was no evidence at all to prove that  loss,  if
\nany, was suffered by the Government of India in\t consequence
\nof  the\t plaintiff’s default, and on  that  account  amounts
\ndeposited  as security were not liable to be forfeited.\t  In
\nthe  view  of  the  High Court, to  for\t feature  of  a\t sum
\ndeposited  by  way  of security for  due  performance  of  a
\ncontract, where the amount forfeited is not unreasonable, s.
\n74 of the Contract Act has no application.The Court observed
\nthat  the  decision  of\t this  Court  in   Fateh  Chand\t  v.
\nBalkishan  Dass<\/a>(1)  did\t not  purport\tto   overrule\t the
\nprevious  “trend of authorities” to the effect that  earnest
\nmoney  deposited by way of security for the due\t performance
\nof a contract does not constitute penalty contemplated under
\ns.  74 of the Indian Contract Act, that even if it  be\theld
\nthat the security deposited in the case was a stipulation by
\nway of penalty, the Government was entitled to receive\tfrom
\nthe  plaintiff\treasonable compensation not  exceeding\tthat
\namount,\t whether or not actual damage or loss was proved  to
\nhave  been caused, and that even in the absence of  evidence
\nto prove the actual damage or loss caused to the Govern
\n[1964] 1 S.C.R. 515.\n<\/p>\n
931<\/span><\/p>\n
ment  “there were circumstances in the case  with  indicated
\nthat  the  amount  of  Rs. 10,000  in  the  case  of  potato
\ncontract and Rs. 8,500\/- in the case of poultry contract may
\nbe  taken as not exceeding the reasonable  compensation\t for
\nthe  breach of contract by the plaintiff.”  The\t High  Court
\nfurther observed that the contract was for supply of   large
\nquantities  of\tpotatoes, poultry and fish, which would\t not
\nordinarily  be\tavailable  in the market,  and\t“had  to  be
\nprocured  in case of breach of contract everyday with  great
\ninconvenience,”\t and in the  circumstances the Court  “could
\ntake judicial notice of the fact that 1947-48 was the period
\nwhen the prices were rising and it would not have been\teasy
\nto procure the supplies at the rates  contracted  for”.\t The
\nHigh Court concluded:\n<\/p>\n
\t\t    ”  ……  taking into consideration the
\n\t      amount  of inconvenience and the\tdifficulties
\n\t      and the rising rate of prices, it would not be
\n\t      unfair  if  in  case of such  breach  for\t the
\n\t      supply  of such huge amounts of  potatoes\t and
\n\t      poultry,\t we  consider  an  amount   of\t Rs.
\n\t      18,500\/.-by  way\tof  damages  as\t being\t not
\n\t      unreasonable.”<\/p><\/blockquote>\n
    Under the terms of the agreements the amounts  deposited
\nby  the plaintiff as security for due  performance  of\t the
\ncontracts  were\t to stand forfeited in\tcase  the  plaintiff
\nneglected  to  perform his part of the contract.   The\tHigh
\nCourt observed that the deposits so made may be regarded  as
\nearnest money.\tBut that view cannot be accepted.  According
\nto  Earl  Jowitt in “The  Dictionary of English Law”  at  p.
\n689:   “Giving\tan  earnest  or earnest-money is a  mode  of
\nsignifying  assent  to a contract of sale or  the  like,  by
\ngiving\tto the vendor a nominal\t sum  (e.g.  a shilling)  as
\na  token  that the parties are in earnest or  have  made  up
\ntheir  minds.”\t As  observed by  the\tJudicial   Committee
\nin Kunwar Chiranjit Singh v. Har Swarup(1):\n<\/p>\n
    “Earnest money is part of the purchase price when\t the
\ntransaction   goes  forward:   it  is  forfeited  when\t the
\ntransaction falls through, by reason of the fault or failure
\nof the vandee.”\n<\/p>\n
In  the\t present case the deposit was made not of a  sum  of
\nmoney by the purchaser to be applied towards part payment of
\nthe  price when the contract was completed and till then  as
\nevidencing an intention on the part of the purchaser to\t buy
\nproperty  or  goods. Here the plaintiff\t had  deposited\t the
\namounts claimed as security for guaranteeing due performance
\nof the contracts.Such deposits cannot be regarded as earnest
\nmoney.\n<\/p>\n
  Section 74 of the Contract Act provides:\n<\/p>\n
\t\t   “When  a contract has been  broken, if  a
\n\t      sum  is named in the contract as the amount to
\n\t      be paid in case
\n\t       (1) A.I.R. 1926 P.C. 1
\n\t      932<\/span>
\n\t\tof such breach, or if the contract  contains
\n\t      any other\t  stipulation by way of penalty, the
\n\t      party  complaining of the breach is  entitled,
\n\t      whether or not actual damage or loss is proved
\n\t      to  have been caused thereby, to receive\tfrom
\n\t      the   party  who\thas  broken   the   contract
\n\t      reasonable  compensation\tnot  exceeding\t the
\n\t      amount  so named or, as the case may  be,\t the
\n\t      penalty stipulated for.\n<\/p><\/blockquote>\n
\t       ………………………….”
\n\t      There  is authority, no doubt coloured by\t the
\n\t      view  which  was taken in English cases,\tthat
\n\t      s. 74 of the Contract Act has  no\t application
\n\t      to  cases of deposit for due performance of  a
\n\t      contract\twhich is stipulated to be  forfeited
\n\t      for    breach:   Natesa\tAiyar\tv.    Appavu
\n\t      Padayachi(1); Singer Manufacturing Company  v.
\n\t      Raja  Prosad(2); Manian Patter v.\t The  Madras
\n\t      Railway Company(a). But this view is no longer
\n\t      good law in view of the judgment of this Court
\n\t      in Fateh Chand’s case(4).\t This Court observed
\n\t      at p. 526:\n<\/p><\/blockquote>\n
\t\t    “Section  74 of the Indian Contract\t Act
\n\t      deals  with  the\tmeasure of  damages  in\t two
\n\t      classes  of   cases  (i)\twhere  the  contract
\n\t      names a sum to be paid in case of breach,\t and\n<\/p><\/blockquote>\n
\t      (ii)  where  the contract contains  any  other
\n\t      stipulation  by way of penalty.\tThe  measure
\n\t      of  damages  in  the  case  of  breach  of  ‘a
\n\t      stipulation  by  Way of penalty is  by  s.  74
\n\t      reasonable  compensation\tnot  exceeding\t the
\n\t      penalty stipulated for.”\n<\/p><\/blockquote>\n
\t      The Court also observed:\n<\/p><\/blockquote>\n
\t\t    “It was urged that the section deals  in
\n\t      terms with the right to receive from the party
\n\t      who   has\t broken\t the   contract\t  reasonable
\n\t      compensation and not the right to forfeit what
\n\t      has   already  been  received  by\t the   party
\n\t      aggrieved.   There is however no\twarrant\t for
\n\t      the assumption made by some of the High Courts
\n\t      in  India,  that s. 74 applies only  to  cases
\n\t      where  the  aggrieved  party  is\tseeking\t  to
\n\t      receive some amount on breach of contract\t and
\n\t      not  to cases whereupon breach   of   contract
\n\t      an  amount  received  under  the\tcontract  is
\n\t      sought  to be forfeited.\tIn our judgment\t the
\n\t      expression  “the contract contains  any  other
\n\t      stipulation by way of penalty” comprehensively
\n\t      applies\tto  every  covenant   involving\t   a
\n\t      penalty whether it is for payment on breach of
\n\t      contract\tof money or delivery of property  in
\n\t      future, or for forfeiture of right to money or
\n\t      other  property  already delivered.  Duty\t not
\n\t      to enforce the penalty clause but
\n\t      (1) [1913] LL.R. 38 Mad. 178.\n<\/p><\/blockquote>\n
\t      (2) [1909] I.L.R. 36 Cal. 960.
\n\t      (3) [1906] I.L.R. 19 Mad. 188.
\n\t       (4) [1964] 1 S.C.R. 515.\n<\/p><\/blockquote>\n
\t      933<\/span><\/p>\n
\t\t     only  to award reasonable\tcompensation
\n\t      is  statutorily imposed upon courts by s.\t 74.
\n\t      In  all cases,. there fore,\twhere  there
\n\t      is a stipulation in the nature of penalty\t for
\n\t      forfeiture of an amount deposited pursuant  to
\n\t      the   terms   of\tcontract   which   expressly
\n\t      provides\t for  forfeiture,  the\t court\t has
\n\t      jurisdiction  to\taward such sum\tonly  as  it
\n\t      considers\t reasonable  but not  exceeding\t the
\n\t      amount specified in the contract as liable to.
\n\t      forfeiture.”, and that,
\n\t\t      “There is no. ground for holding\tthat
\n\t      the  expression “contract contains  any  other
\n\t      stipulation by  way  of penalty” is limited to
\n\t      cases  of\t stipulation  in the  nature  of  an
\n\t      agreement to. pay money or deliver property on
\n\t      breach and does not comprehend covenants under
\n\t      which amounts paid or property delivered under
\n\t      the  contract,  which   by the  terms  of\t the
\n\t      contract\texpressly  or by  clear\t implication
\n\t      are liable to be forfeited.”\n<\/p><\/blockquote>\n
     Forfeiture\t of earnest money under a contract for\tsale
\nof   property-movable  or  immovable–if  the\tamount\t  is
\nreasonable,  does  not\tfall within s. 74.   That  has\tbeen
\ndecided\t  in  several cases: Kunwar Chiranjit Singh v.\t Hat
\nSwarup (t); Roshan Lal v. The Delhi Cloth and General  Mills
\nCompany\t Ltd.,\tDelhi(2); Muhammad  Habibullah\tv.  Muhammad
\nShafi(3);  Bishan Chand v. Radha Kishan Das<\/a>(4); These  cases
\nare easily explained,  for forfeiture of a reasonable amount
\npaid  as  earnest  money  does not  amount  to.\t imposing  a
\npenalty.  But if forfeiture is of the nature of penalty,  s.
\n74 applies.  Where under the terms of the contract the party
\nin breach has undertaken to pay a sum of money or to forfeit
\na  sum\tof  money which he has already\tpaid  to  the  party
\ncomplaining of a breach of contract, the  undertaking is  of
\nthe nature of a penalty.\n<\/p>\n
     Counsel  for  the\tUnion, however, urged  that  in\t the
\npresent case Rs. 10,000\/- in respect of the potato  contract
\nand  Rs.  8,500\t in respect of the  poultry  contract\twere
\ngenuine\t preestimates of damages which the Union was  likely
\nto  suffer  as\ta  result of breach  of\t contract,  and\t the
\nplaintiff was not entitled to any relief against forfeiture.
\nReliance in support of this contention\twas placed upon\t the
\nexpression  (used in s. 74 of the Contract Act), “the  party
\ncomplaining of the breach is entitled, whether or not actual
\ndamage\tor loss is proved to have been caused there  by,  to
\nreceive\t  from\tthe  party  who\t has  broken  the   contract
\nreasonable compensation”.  It is true that in every case  of
\nbreach of contract the person aggrieved by the breach is not
\nrequired  to  prove actual loss or damage  suffered  by\t him
\nbefore\the can\tclaim a\t decree, and the Court is  competent
\nto award reasonable compensation in
\n   (1) A.I.R. 1926 P.C. 1.\t     (2) I.L.R. 33 All. 166.
\n   (3) I.L.R. 41 All. 324.\t     (4) I.D. 19 All. 490.\n<\/p>\n
934<\/span><\/p>\n
case  of breach even if no actual damage is proved  to\thave
\nbeen suffered in consequence of the breach of contract.\t But
\nthe  expression\t “whether or not actual damage\tor  loss  is
\nproved\tto  have been caused thereby” is intended  to  cover
\ndifferent   classes   of  contracts which  come\t before\t the
\nCourts.\t  In  case  of breach of some contracts\t it  may  be
\nimpossible for the Court to assess compensation arising from
\nbreach, while in other cases compensation can be  calculated
\nin  accordance with established rules.\tWhere the  Court  is
\nunable\tto  assess the compensation, the sum  named  by\t the
\nparties\t if it be regarded as a genuine preestimate  may  be
\ntaken  into  consideration  as\tthe  measure  of  reasonable
\ncompensation, but not if the sum named is in the nature of a
\npenalty. Where loss in terms of money can be determined, the
\nparty claiming compensation must prove the loss suffered  by
\nhim.\n<\/p>\n
    In the present case, it was possible for the  Government
\nof  India  to lead evidence to prove the   rates  at   which
\npotatoes, poultry, eggs and fish were purchased by them when
\nthe  plaintiff failed to deliver “regularly and\t fully”\t the
\nquantities  stipulated under the terms of the contracts\t and
\nafter  the   contracts\twere terminated.   They\t could\thave
\nproved\tthe   rates at which  they had to be  purchased\t and
\nalso  the  other  incidental charges  incurred\tby  them  in
\nprocuring the goods contracted for.  But no such attempt was
\nmade.\n<\/p>\n
    Counsel  for the Union, however, contended that  in\t the
\nTrial Court the true position in law was not appreciated and
\nthe  parties proceeded to trial on the question whether\t the
\nGovernment was entitled in the circumstances of the case  to
\nforfeit under cl. 8 the terms of the contracts the  deposits
\nmade for securing  due performance of the contracts.   Since
\nthere  was  no\tpleading and no issue  on  the\tquestion  of
\nreasonable  compensation, an opportunity should be given  to
\nthe  parties  to lead evidence on this point. But  with\t the
\nsuit out of which this appeal arises was tried another\tsuit
\nfiled  by  the plaintiff Maula Bux against the Union  for  a
\ndecree for Rs. 53,000 odd being the price of goods  supplied
\nunder the terms of another contract with the  Government  of
\nIndia.\t In that suit the Union claimed that it had set\t off
\nthe amount due to the plaintiff, amounts which the plaintiff
\nwas  liable  to pay as compensation to the  Union  for\tloss
\nsuffered because of the plaintiff’s failure to carry out the
\nterms of the contracts C\/74 and C\/120.\tThe Trial Court held
\nin  that case that the Union failed to prove that  any\tloss
\nwas  suffered by it in consequence of the default  by  Maula
\nBux to supply potatoes, poultry, eggs and fish as stipulated
\nby him.\t Against the judgment of that Court Appeal No.\t2001
\nof  1966 is filed in this Court and is\tdecided today.\t The
\nHigh  Court  of\t Allahabad  having   confirmed\t the  decree
\npassed by the Trial Court, no useful purpose will be  served
\nby  directing a fresh enquiry into the question whether\t the
\nUnion
\n935<\/span>
\nof  India  is  entitled to recover from\t the  plaintiff\t any
\nreasonable compensation for breach of contracts and  whether
\nthat  compensation  is\tequal  to  or  exceeds\tthe  amounts
\ndeposited.   Evidence on that question has already been\t led
\nand findings have been recorded.  In dealing with the Appeal
\nNo.  2001 of 1966 we have held that the Union has failed  to
\nestablish by evidence that  any damage or loss was  suffered
\nby  them  which arose out of the default  committed  by\t the
\nplaintiff.    We   decline  therefore  to   afford   another
\nopportunity for leading the evidence as to the loss suffered
\nby  the Union on account of the failure on the part  of\t the
\nplaintiff to carry out the contracts.\n<\/p>\n
    On\tthe view taken by us it must be held that  the\tHigh
\nCourt was in error in disallowing the plaintiff’s case.
\n    The\t High  Court  has held that  the  plaintiff  is\t not
\nentitled to any interest prior to the date of the suit.\t  No
\nargument has been advanced before us challenging that  view.
\nSince  interest\t was not recoverable under any\tcontract  or
\nusage or under the provisions of the Interest Act, 1838\t the
\nHigh  Court allowed interest at the rate of 3% per annum  on
\nRs.  416.25 from the date of the suit, the rate of  interest
\nallowed\t on the claim decreed also should not exceed  3\t per
\ncent per annum.\n<\/p>\n
    We\tset  aside the decree passed by the High  Court\t and
\nsubstitute the following decree:\n<\/p>\n
      “The  Union of  India  do\t pay to\t the  plaintiff\t Rs.
\n18,500\/- with interest at the rate of 3% per annum from\t the
\ndate of the suit till payment.”\n<\/p>\n
The  plaintiff\twas  guilty  of\t breach\t of  the  contracts.
\nConsiderable  inconvenience  was  caused  to  the   Military
\nauthorities  because  of  the failure on  the  part  of\t the
\nplaintiff  to\tsupply\tthe  food-stuff\t contracted  to\t  be
\nsupplied.  Even though there is no evidence of the rates  at
\nwhich  the goods were purchased, we are of the view,  having
\nregard\tto the circumstances of the case, that the   fairest
\norder is that each party do bear its own costs throughout.\n<\/p>\n
y.p.\t\t\t\t\t    Appeal allowed.\n936<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Maula Bux vs Union Of India on 19 August, 1969 Equivalent citations: 1970 AIR 1955, 1970 SCR (1) 928 Author: S C. Bench: Shah, J.C. (Cj) PETITIONER: MAULA BUX Vs. RESPONDENT: UNION OF INDIA DATE OF JUDGMENT: 19\/08\/1969 BENCH: SHAH, J.C. (CJ) BENCH: SHAH, J.C. (CJ) RAMASWAMI, V. GROVER, A.N. CITATION: […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-129322","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nMaula Bux vs Union Of India on 19 August, 1969 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/maula-bux-vs-union-of-india-on-19-august-1969\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Maula Bux vs Union Of India on 19 August, 1969 - 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