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Judgment
George Vadakkel, J.—The Plaintiff-firm is a manufacturer of packing cases. The 1st Defendant-firm is a dealer in those goods. The 2nd Defendant has taken over the assets and liabilities of the 1st Defendant. The Plaintiff-firm claims a sum of Rs. 9,557 being the value of packing cases manufactured by it as ordered by the Defendants on the basis that the Defendants repudiated the contract and failed to give instructions to the Plaintiff as regards the despatch thereof. It is the case of the Plaintiff that the Defendants failed to give instructions regarding despatch of 350 cases of the size 28"�12"�12" which were manufactured as per orders placed by the Defendants. The Plaintiff claims Rs. 875 on this score under item 1 in the valuation statement in the plaint. Plaintiff''s further case is that under a contract entered into between the parties in September 1962, the Plaintiff was to supply one wagon load of casts of the sizes and specifications contained in the Defendants'' order, dated 28th September 1962 and that no instructions as regards despatch of the cases manufactured pursuant to this contract have been given by the Defendants. The plaint-claim under items 3 to 7 in the valuation statement is for the value of the cases said to have been in manufactured under this contract. Under item 2 in the valuation statement the Plaintiff''s claim is for Rs. 1,800 as value of 1,010 cases of the size; 7 � .4 � 28 cm. Both the lower courts dismissed this claim and this claim is the subject-matter of the cross-appeal. In all these instances what the Plaintiff claims is the value of packing cases alleged to have been manufactured pursuant to the above said contracts stated to have been made by the Defendants with the Plaintiff for their supply on the ground that Plaintiff was always ready and willing to send the goods but they could not be sent due to want of despatch-instructions.
The Defendants deny their liability. They also dispute the allegation that they failed to give despatch instructions as regards any of the goods for the supply of which they placed orders with the Plaintiff. The Defendants also contend that packing cases were not manufactured by the Plaintiff for supply to the Defendants, and if any has been manufactured for that purpose, it was without any justification, It is further contended by them that the Plaintiff is not entitled to recover the value of the packing casts ''the trial court decided the suit holding that the Plaintiff is entitled to get from the Defendants a sum of Rs. 7,757.30. That court, as already mentioned, disallowed the Plaintiff�s claim for Rs. 1,800 is value of 1,000 cases of the size 37 � 24 � 28 cm. under head No. 2 in the valuation ''statement. The lower appellate court dismissed the appeal profaned by the Defendants and the cross-appeal filed by the Plaintiff. The Defendants have come up to this Court the Plaintiff has tiled a cross-appeal also.
As per Ext. P-1 letter, EX/2925/62 of 26th March 1962, the 1st Defendant placed an order with the Plaintiff for parking cases of three different sizes inducing 1,000 cases of the size 18"�12"�12". Referring to Ext. P-1 letter, the 1st Defendant sense Ext. P-4 letter, dated 23th May 1962 whereby the Plaintiff was requested to despatch 1,500 cases of the size 18"�12"�12" instead of 1,000 cases. Under Ext. P-6 invoice the Plaintiff despatched 360 cases of that size; under Ext. P-7 invoice the Plaintiff despatched 420 cases more of that size; and under Ext. P-10 invoice the Plaintiff sent another consignment of 580 packing cases of the same size. The invoices show that these goods were sent in execution of Ext. P-1 order. Thus in all die Plaintiff sent 1,360 cases of the size 18" �12"�12" against Ext. P-1 order. What remained to be despatched thereunder is 240 cases of that size.
The case of the Plaintiff appears to be that in respect of the 350 cases of the size 18"�12"�12" mentioned in Ext. P-12 (office copy of a letter, dated 22nd August 1962 sent by the Plaintiff to the 1st Defendants) no despatch instructions have been given by the 1st Defendant. This Utter is with reference to four orders, namely, B � /2605/62, dated 29th January 1962, B � /2811/62, dated 13th March 1962 and Exts. P-1 and P-4 orders. As seen from the discussion in the preceding paragraph as against Exts. P-1 and P-4 orders what remained to be despatched is only 240 packing cases of the size 18" � 12" � 12". The other two orders mentioned in Ext. P 12 (B � /2605/62, dated 29th January 1962 and B � /2814/62, dated 13th March, 1952) are not in evidence in this case.
In the absence of evidence it cannot be presumed that the 1st Defendant placed any other order for packing cases of the abovementioned size. The Plaintiff has succeeded in establishing only that 240 packing cases of that size could not be sent by it to the 1st Defendant as per the orders placed with the Plaintiff-firm by the 1st Defendant-firm.
The trial court has proceeded on the basis that Ext. P-12 reply of the Plaintiff relates to Exts.P-1 and P-2 orders. By Ext. P-2 order (B � /2939/62, dated 29th March 1962) the Defendant requested the Plaintiff to arrange to despatch 1,000 packing cases of the size 18" � 12" � 12" and another 1,000 cases of another size. Ext. P-2 has not been referred to in Ext. P-12. On the above basis the trial court concluded the 350 cases of the size 18 � 12 � 12 mentioned in Ext. P-12 are those that remain to be despatched in execution of Exts. P-1 and P-2 orders, and it is the 350 cases of that size stated therein that is shown as item 1 in the valuation statement in the plaint. The premise on which the above conclusion is arrived at is erroneous and therefore this conclusion is unsustainable.
In view of the case advanced by the Plaintiff that the 350 cases shown as item 1 in the valuation statement in the plaint are those covered by Exts. P-1 and P-2 orders, there arose a controversy between the parties as to whether they are two separate orders placed by the Defendant with the Plaintiff as contended on behalf of the Plaintiff or not. The defence case was that Exts. P-1 and P-2 were consolidated into one order as per Ext. P-4 already adverted to. In the light of what is stated in the preceding paragraph it is not necessary to examine this question any further.
Ext. P-12 says that the cases of different sizes mentioned therein which includes 350 cases of the size 18" � 12" � 12" are in ready stock and that they have been manufactured as ordered by the Defendant. Therefore, it may be taken that the 240 cases of that size that remained to be despatched as per Ext. P-1 order as modified by Ext. P-4 letter were manufactured by the Plaintiff and as on Ext. P-12 date (22nd August 1962) they remained as ready stock with the Plaintiff. The Defendant-firm has no case that any despatch-instructions were given by it to the Plaintiff-firm as regards these cases.
As averred in the plaint the contract price is F.O.R. Bombay and the Plaintiff''s complaint is that though the Plaintiff firm has always been ready and willing to'' send the goods, they were not sent for want of despatch instructions. The subject of the contract of sale was future goods, that is to say goods to be manufactured by the seller (Plaintiff) after the making of the contract of sale evidenced by Ext. P-1 order as modified by Ext. P-4 letter. See the definition of "future goods" in Section 2(6) of the Sale of Goods Act, 1930. u/s 6(3) three of, where by a contract of sale the seller purports to effect a present sale of future goods, the contract would operate only as an agreement to sell the goods. Section 23(1) of that Act says that where there is a contract for the sale of future good is by description (as in this case) the property in the goods would pass to the buyer only when goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the absent of the buyer or by the buyer with the assent of the seller. But, such assent, may be express or implied and may be given either before or after the appropriation is made. Sub-section (2) of Section 23 provides that where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee for the purpose of transmission to the buyer, and does not reserve the right of disposal, it will be deemed that the seller has unconditionally appropriated the goods to the contract. The pleadings in this case suggest that the appropriation of the manufactured goods was to be by putting them on rail pursuant to despatch-instructions to be given by the 1st Defendant-firm. Therefore, in so far as the case of the Plaintiff-firm is that no despatch-instructions were received and that, therefore, the goods were not despatched this is a case where the goods, if any, manufactured pursuant to Ext. P-1 order.(as modified by Ext. P-4 letter) have not been unconditionally appropriated to the contract. If so the property in the goods has not passed to the buyer, the Defendant.
The suit as indicated at the beginning of this Judgment is for value of goods (less railway freight) and loading and transporting charges because the goods have not been despatched. Section 55 of the sale of Goods Act, 1930, reads:
(1) Where under a contract of sale the property in the goods has passed to the buyer and the buyer wrongfully neglects or refuses to pay for the goods according to the terms of the contract, the seller may sue him for the price of the goods.
(2) Where under a contract of sale the price is payable on a day certain irrespective of delivery and the buyer wrongfully neglects or refuses to pay such price, the seller may sue him for the price although the property in the goods has not passed and the goods have not been appropriated to the contract.
The case on Hand does not fall under Sub-section (2) of section. 55 which, as stated in Pollock and Mulla on Sale of Goods Act and Partnership Act, 3rd Edition (1966) page 219, is based on the following rule of general application:
If a day be appointed for payment of money, or part of it or for doing any other act, and the day is to happen, or may happen, before the thing which is the consideration of the money, or other act, is to be performed, an action may be brought for the money, or for not doing such other act before performance: for it appears that the party relied upon his remedy, and did not intend to make the performance a condition precedent.
No day certain for payment of price has been fixed be the parties for payment of price, and therefore Sub-section (1) of Section 55 governs this case. Thereunder the seller may sue the buyer for the price of the goods only where the property in the goods has passed to the buyer and the buyer wrongfully neglects or refuses to pay for the goods according to the terms of the contract. Hence the suit for value or price of goods is misconceived.
The real remedy of the Plaintiff, so far as the 240 packing cases remaining with it on account of the refusal of the Defendants to accept the goods and pay for them, is that provided by Section 56 of the Sale of Goods Act, 1930, where under the seller may sue the buyer for damages for non-acceptance. There is no claim for damages much less any proof thereof. It is well settled that where the subject of the contract for sale is goods which can be bought or sold in the market, the proper measure of damages as laid down by Tindal, C.J., in Barrow v. Arnaud (1846) VIII Q.B. 604 in general for non-acceptance of the goods is the difference between the contract price and the market price of such goods at the time when the contract is broken, for the seller may take his goods into the market and obtain the current price for them. No doubt this is only a rule of presumption. However, even where this rule of presumption is rebutted or does not arise, the seller can recover only the amount of his actual loss and that too subject to the rules as to remoteness of damages and as to avoidable loss or mitigation of the loss. I will here usefully read the following passage from McGregor on Damages, 13th Edition, Para, 209 at page 148:
The Extent of the damage resulting from a wrongful act, whether tort or breach of contract, can often be considerably lessened by well-advised action on the part of the person wronged. In such circumstances the law requires him to take all reasonable steps to mitigate the less consequent on the Defendant''s wrong, and refuses to allow him damages in respect of any part of the loss which is due to his neglect to take such steps. Even persons against whom wrongs have been committed are not entitled to sit back and suffer loss which could be avoided by reasonable efforts or to continue an activity unreasonably so as to increase the loss. This well-established rule finds its most authoritative expression in the speech of Viscount Haldane L.C. in. the leading case of British Westing house Co. v. Underground Ry. (1912) A.C. 673, 689, where he said: The fundamental basis is thus compensation for pecuniary loss naturally flowing from the breach; but this first principle is qualified by a second,-which imposition a Plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps.
So for as a claim for damages is concerned it is also well-settled that it is a claim to be pleaded and that the onus probandi is upon the Plaintiff who claims damages. Here again 1 will with advantage quote the following passage from McGregor on Damages, paragraph 1400 at page 935:
The Plaintiff has the burden of proving both the fact and the amount of damage before he can recover substantial damages. This follows from the general rule that the burden of proving a fact is upon him who alleges it and not upon him who denies it, so that where a given allegation forms an essential part of a person''s case the proof of such allegation falls on him. Even if the Defendant fails to deny the allegations of damage or suffers default, the Plaintiff must still prove his loss.
When the Plaintiff has established both the fact of loss and the amount of damage, and only then, would the burden of proof shift to the Defendant to establish circumstances that the Plaintiff failed to avail of in order to mitigate the loss by taking all reasonable steps in that behalf.
As already stated there is neither pleading nor even a claim for damages nor proof of the factum of actual loss nor of the quantum thereof. In that view the Plaintiff is not entitled to a decree for recovery of damages for non-acceptance by the Defendants of 240 packing cases of the size 18" � 12" � 12".
This takes me to the second part of this second appeal concerning items 3 to 7 in the valuation statement in the plaint. The claim is as follows:
The lower courts have proceeded on the basis that items 3 to 7 in the plaint valuation statement are covered by items 1 to 5 in Ext. P-23 order. There is no dispute about this before me. Items 3 to 5 and 7 in the valuation statement correspond to items 1 to 4 in Ext. P-23 and item 6 in the valuation statement to item 5 in Ext. P-23. The question for consideration is, therefore, whether the goods mentioned in Ext. P-23 were accepted by the Defendants. It is better to read item; 1 to 5 in Ext. P-23 and follow the serial numbers in it in examining this question:
Exts. P-27 and P-28 are the invoices in respect of the goods mentioned in Ext. P-23. Under these invoices the Defendants accepted 400 cases of the size mentioned as item 1 in Ext. P-23 against 500 cases ordered; 500 cases of the size mentioned as item 2 therein against 500 cases ordered; 800 cases of the size stated as item 3 therein against an order for 200 cases of that size; 200 cases of the size mentioned as item 4 therein against an order for 200 cases of that size; and 200 cases of the size mentioned as item 5 therein, again, against an order of only that much number of cases. There is one more invoice, Ext. P-30, referring to Ext. P-23 order and thereunder the Defendants accepted 255 cases of the size mentioned in item 1 in Ext. P-23; 400 cases of the description in item 2 therein; 100 cases falling under item 3 therein; 150 cases falling under the 4th item there in; and 150 cases of the seize mentioned in the 5th item therein. Therefore, the Defendants accepted all the goods mentioned in Ext. P-23 and more.
The Plaintiff''s case as stated in paragraph 6 of the plaint is that there was an agreement between the Plaintiff and the Defendants that the former should load one wagon every month of the sizes and specifications contained in Ext."P-23 order with one modification, namely that instead of jungle wood the Plaintiff is to use rubber-wood and that plaint-claim advanced as items 3 to 7 in the valuation statement concerns goods manufactured pursuant to an agreement. The trial court has not considered this case of the Plaintiff concerning such an agreement. The lower appellate court relying on Ext. P-25 held than here was such an agreement. It is contended that this finding is erroneous.
To understand Ext. P-25 it is necessary to advert to the correspondence that led to Ext. P-25 and that followed it. By Ext. P-22 letter of 24th September 1962 the Defendants asked for quotations of lowest rates for wooden packing cases manufactured out of � thick planks of jungle-wood with 12 battens of 2" � � one side planed of different sizes. The sizes of items 1 to 5 therein are the same as in items 1 to 5 in Ext. P-23. Even before they received the quotation asked for, as per Ext. P-23 dated 28th September 1962 the Defendant placed orders for the packing cases mentioned therein also showing the rates at which the Defendants were prepared to take the goods. In other words, Ext. P-23 was not an unconditional order Ext. P-24 dated 3rd October 1962 is the reply to Ext. P-23 order. This shows that the Plaintiffs were not agreeable to the rates offered by the Defendants. Therein the Plaintiff gave the quotation of rates. The Plaintiff also therein asked whether it can except regular order from the Defendant for these sizes. In answer thereto the Defendants sent Ext. P-25 letter of 6th October 1962 showing rates different from those stated in Ext. P-24 by the Plaintiff herein the Defendants also stated that they ''will be needing a wagon load every month of these sizes in almost the same ratio as ordered''. To this the Plaintiff sent Ext.D-2 reply of 9th October 1962. Therein the Plaintiff inter alia said:--''In your abovementioned letter you have informed us that you require one wagon load of that size every month. Kindly enlighten us how much wagon loads you require altogether and whether we can make necessary arrangements for a regular supply'' No reply 10 this quarry is in evidence. The contention of the Defendants-Appellants is that no contract of the nature pleaded in paragraph 6 of the plaint could be inferred from the above adverted to evidence.
The lower appellate court relied on the statement in Ext. P-25 that the Defendants will be needing a wagon load every month of these sizes in almost the same ratio as ordered to find that there was such a contract between the parties. The above statement in Ext. P-20 was in answer to the Plaintiffs inquiry in Ext P-24 wherever the Plaintiff can expect regular order'' from the Defendant for the ''above sizes. Apart from the fact that the language is such that it cannot be said that the parties were of the same mind on any definite number of cases-parties speak of wagon load of cases in almost the same ratio--Exts P-24 and P-25 would suggest that the Defendants were only ex pressing their ex petition without placing any order for goods of any particular specification. That this is how even the Plaintiff understood these documents is clear from the Plaintiff''s EX t D-2 letter asking for further enlightenment as regards the number of wagon leads and as regards making arrangements ''for a regular supply''.
The case on hand, so far as this part of the case is concerned falls within the principles started by Lord Wright in Scammell (G) and Nephew Ltd. v. Ousion H.C. and J.G. (1941) A.C. 251 at 268-69, Therein it was stated as follows:
The first is that the language used was so obscure and so incapable of any definite or precise meaning that the court is unable to attribute to the parties any particular contractual intention. The object of the court is to do justice between the parties, and the court will do its best, if satisfied that there was an ascertainable and determinate intention to contract, to give effect to that intention, looking at substance and not mere form. It will not be deterred by mere difficulties. of interpretation. Difficulty is not synonymous with ambiguity So long as any definite meaning can be extracted. But the test of intention is to be found in the words used. If these words considered however broadly and unethically and with duo regard to all the just implications, fail to evince any definite meaning on which the court can safely act, the court has no choice but to say that there is no contract. Such a position is not often found. But I think that it is found in this case. My reason for so thinking is not only based on the actual vagueness and unintelligibility of the words used, but is confirmed by the startling diversity of explanations, tendered by those who think there was a bargain, of what the bargain was, I do not think it would be right to hold the Appellants to any particular version. It was all left too vague. There are many cases in the books of what arc called illusory contracts, that is, where the parties may have thought they were making a contract but failed to arrive at a definite bargain. It is a necessary requirement that an agreement in order to be binding must be sufficiently definite to enable the court to give it a practical meaning. Its terms must be so definite, or capable of being made definite without further agreement of the panics, that the premises and performances to be rendered by each party are reasonably certain. In my opinion that requirement was not satisfied in this case.
But I think the other reason, which is that the parties never in intention nor even in appearance reached an agreement, is a still sounder reason against enforcing the claim. In truth, in my opinion their agreement was inchoate and never get beyond negotiations. They did, indeed, accept the position that their should be some form of hire-purchase agreement, but they never went on to complete their agreement, by settling between them what the terms of the hire-purchase agreement were to be.
The language used by the parties in the case on hand do not spell out any definite common intention as regards the subject matter on which they were corresponding. The correspondence evidences only an inchoate agreement at the stage of negotiations. Perhaps, the Defendants induced the Plaintiff to believe and expect that the former would be requiring a wagon load of packing cases every month, but they did not enter into a contract for monthly supply of packing cases of any particular description. Material and vital questions on which parties should be of one mind to form a contract have been left out. ''We will be needing a wagon load every month of these sizes in almost the same ratio as ordered,'' ''we will be needing every month'' for how - long--parties have not settled; ''in almost the same ratio as ordered''--to what ex tent the ratio can be changed and who is to decide upon such variation--parties are not definite; ''we will be needing--is the Plaintiff, therefore, to send monthly consignments--not certain. No doubt the courts shall endeavour to implement reasonable expectations induced by one party in the mind of the other but cannot invent and make a contract for the parties. Where the parties are not agreed on substantial arid material matters concerning the subject matter of the contract and where matters left out are not such non-essentials as can be gathered by calling in aid the commercial practice or the previous course of dealings between the parties (on these two aspects there is precious little evidence in the case on hand), then, it can only be held that there is no contract. The case on hand is one such.
This question can be considered from another angle as well. By Ext. P-22 the Defendants railed for quotations of lowest rates. By Ext. P-24 the Plaintiff gave the quotations and asked whether the Plaintiff ''can expect regular orders from the Defendants for the sizes of cases mentioned in Ext. P-24. The Defendants by Est. P-25 said that ''they will be needing a wagon load every month of these sues almost in the same ratio as ordered''. Ext. P-25 can be construed only as, what is, known in commercial law, as an invitation for a Standing offer by the Plaintiff. The Defendants have by Ext. P-25 and in answer to the query in Ext. P-24 said that they ''will be needing a wagon load every month'' of the size mentioned in Exts. P-22 and P-23. There is nothing in evidence to show that this invitation has been accepted by the Plaintiff. Even if the Plaintiff has accepted, the same would not constitute a binding contract but only a standing offer by the Plaintiff whereby the Plaintiff would only informing the Defendants that until revocation the Plaintiff is ready and willing to deliver goods when orders are placed in that behalf. The law on this aspect is lucidly stated in the Law of Contract, Cheshire and Filoot, 7th Edition page 38 as follows:
First the corporation may have stated that it will definitely require a specified quantity of goods, no move and no less, as, for instance, where it advertises for 1,000 tons of coal to be supplied during the period January 1st to December 31st. Here the ''acceptance'' of the tender is an acceptance in the legal sense, and it creates an obligation. The reader is bound to deliver, the corporation is bound to accept, 1,000 tons, and the fact that delivery is to be by instalments as and when demanded does not disturb the existence of the obligation.
Secondly, if the corporation advertises that it may require articles of a specified description up to a maximum amount, as, for instance, where it invites tenders for the supply during the coming year of coal not exceeding 1,000 tons altogether, deliveries to be made if and when demanded the effect of the so-called "acceptance" of the tender is very diffident. The trader has made what is called a standing offer until revocation he stands ready and willing to deliver call up to 1,000 tons at the agreed price when the corporation from time to time demands a precise quantity. The "acceptance" of the tender, however, does not convert the offer into a binding contract, fur a contract of sale implies that the buyer has agreed to accept the goods. In the present case the corporation has not agreed to take 1,000 tons, or indeed any quantity of coal. It has merely stated that it may require supplies up to a maximum limit.
Further, even assuming there was a contract on the lines pleaded by the Plaintiff in paragraph 6 of the plaint, still, for the same reasons as those discussed in relation to the claim for value of goods shown as item I in the valuation statement in the plaint, the Plaintiff is not entitled to sue for the price of goods mentioned in items 3 to 7 in the valuation statement but is entitled only to sue for damages. There is neither pleading nor even a claim for damages nor proof of actual loss nor of the quantum thereof also in respect of items 3 to 7 in the valuation statement.
The result of the foregoing discussion is that the suit should fail as regards plaint claim in items 3 to 7 in the valuation statement also.
The cross-objections relate to the plaint claim shown as item 2 in the valuation statement. Both the lower courts considering the correspondence relating to this item of claim held that before the contract was concluded by acceptance by the Plaintiff, the Defendants withdrew the counter-offer they put forward in reply to the offer by the Plaintiff. Exts. P-52, D-1, P-53 and P-54 relating to this claim have been correctly construed by the lower courts. I see no reason to interfere with the concurrent finding entered by the lower courts on this point.
In the result the Defendant-Appellant''s appeal is allowed, and the cross-objections are dismissed. I set aside the judgments and decrees of the lower courts so far as they are against the Defendants-Appellants and dismiss the suit in toto. The parties shall suffer their costs throughout.