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Case Analysis: Sujanmal v/s Radhey Shyam Agrawal

The laws relating to contract of sale of goods in contained in The Sale of Goods Act, 1930. Earlier, it was a part of Indian Contract Act, 1872. But over the years the conditions relating to trade and commerce changed tremendously and therefore it was needed to modify the then existing act. So, in the year 1930, The Sales of Goods Act was implemented. It is mainly based on the (English) sales of Goods Act, 1893. The act contains 66 Sections and has a wide scope. It was the Section 65 of this act which repealed the Indian Contract Act.

The act contains provisions regarding formation of contract of sale, subject matter of sale, price, conditions and warranties, transfer of property as between buyer and seller, transfer of title, performance, rights and duties of buyer and seller, and suit for breach of contract.

Chapter IV of the act provides for performance of the contract and Section 32 of the said chapter deals with the conditions of payment and delivery. It states "Payment and delivery are concurrent conditions.- Unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions, that is to say, the seller shall be ready and willing to give possession of the goods to the buyer in exchange for the price, and the buyer shall be ready and willing to pay the price in exchange for possession of the goods". This is an essential condition for the performance of the contract of sale unless any other clause is provided in the contract.

This is also based on the fact that if the contract is to perform reciprocal promises simultaneously, one party need not fulfill his promise if the other one is not doing so. If this condition is not fulfilled, the contract cannot be performed. Similarly, Section 33 to 44 deals with the provisions of delivery including the mode of delivery, effect of part delivery, delivery of wrong quantity, risks where goods are delivered at wrong place etc.

This was the point of focus in the case of Sujanmal v. Radhey Shyam Agrawal. This project will explain in detail the mentioned case along with the background, issues in the case and judgement by the court. It will also analyze the efficacy of judgement in resolving the issue and try to find out its substantial contribution of the law of contracts.

Background Of The Case
Sujanmal and Manmal (father of Sujanmal), the appellant, was the proprietor of the firm M/s Dhoolchand Manmal which was a firm of Hindu Undivided Family in Chhoti Sadri. On 27/12/63, he entered into a contract with proprietor Radhey Shyam Agrawal (defendant), the owner of Hindu Undivided Family firm M/s Jainarayan Radhey Shyam, to purchase 200 tins of Rasada Vanaspati @ Rs.41 per tin. The contract neither mentioned any time period for the delivery of tins nor contained the provisions as to the time of payment. On 02/02/64, the defendant sent a notice to the plaintiff asking for the payment in advance.

The price of Rasada Vanaspati was controlled by the Central Government. On 13/02/64, the government issued a notification to change the price of the commodity with effect from 14/02/64. The plaintiff then sued the defendants, Radhey Shyam and Jainarayan (father of Radhey Shyam) in the Munsif Court, Chhoti Sadri for breach of contract and claimed nominal damages of Rs. 500, loss on profit amounting to Rs. 870 and Rs. 1.25 in giving notice.

It was contended that Radhey Shyam was the sole proprietor of the firm and Jainarayan had nothing to do with it. It was also contended by the defendants that advance payment was already stipulated in the contract and on 26/01/64, the plaintiff had himself came to him to cancel the deal. However, there was no evidence to prove it. It was also contended that as the notification for change of price came on 13/02/64, there was no loss of profit to the plaintiff for the alleged breach of contract.

The trial court decreed the case in favor of the plaintiff. It ordered the defendant to pay Rs. 870 to the plaintiff but disallowed the claim for nominal damages. It contended that the contract was breached on 15/02/64.

The defendants challenged the decree in the District Court. Here the court relying on the pleadings of plaintiff declared that the contract was breached not on 15/02/64 but on 02/02/64 when the defendant had sent the letter asking for advance payment. As the notification for change of price had come on 13/02/64, the plaintiff had not suffered any loss due to breach of contract. Therefore, the plea to pay the loss of profit was dismissed by the Court.

The plaintiff then reached the High Court of Rajasthan to claim the damages.

Issues Of The Case
After going through the details of the case, Jain J. observed the following issues in the case:
  • Whether the defendants committed breach of contract and
  • If the breach had been committed, what is the date of such breach?

Judgement
The judge referred to following Sections of the Sales of Goods Act, 1930 to understand the case. 

S.11 - "Stipulation as to time.- Unless a different intention appears from the terms of the contract, stipulations as to time of payment are not deemed to be of the essence of the contract of sale. Whether any other stipulation as to time is of the essence of contract or not depends on the terms of contract".

S.31 - "Duties of seller and buyer.- It is the duty of the seller to deliver the goods and of the buyer to accept and pay for them, in accordance with the terms of contract of sale".

S.32 - "Payment and delivery are concurrent conditions.- Unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions, that is to say, the seller shall be ready and willing to give possession of the goods to the buyer in exchange for the price, and the buyer shall be ready and willing to pay the price in exchange for possession of the goods".

S.33 - "Delivery.- Delivery of goods sold may be made by doing anything which the parties agree shall be treated as delivery or which has the effect of putting the goods in the possession of the buyer or of any person authorized to hold them on his behalf".

S.35 - "Buyer to apply for delivery.- Apart from any express contract, the seller of goods is not bound to deliver them until the buyer applies for delivery".
S.36 - "Rules as to delivery.- (1)..

(2) Where under the contract of sale the seller is bound to sell the goods to the buyer, but no time for sending them is fixed, the seller is bound to send them within a reasonable time".
S.57 - "Damages for non-delivery.- Where the buyer wrongfully neglects or refuses to accept and pay for the goods to the buyer, the buyer may sue the seller for damages for non-delivery".

The court found that the contract of sale between Sujanmal and Radhey Shyam did not have any clause regarding time of delivery and payment. Therefore, the court referred to Section 36(2) of the Sales of Goods Act and declared that the delivery was to be made in a reasonable time. The reasonable time here depends on the facts of the case. Before estimating that reasonable time, the court first the time of payment.

Although Radhey Shyam contended that the payment was to be made in advance but he had no evidence to support the claim. Therefore, this contention of the respondent was not accepted. However, referring to the provisions of law in contract of sale, the court said that the contract of sale involves reciprocal promises. In case, there is not any provision with regards to the time of performing such promise, the promises are to be performed simultaneously and "both parties should be ready and willing to perform his promise before calling upon other to perform his".

The court cited the case of Firm Birdhi Chand v. Ramdeo where it was held that "In a contract of sale of goods unless otherwise agreed, delivery of goods and payment of price are concurrent conditions and where the plaintiff in a suit of breach of contract happens to be a seller, he must allege and prove that he was ready and willing to sell and deliver the goods". On the basis of this, it was held by the court that where the buyer happens to be a plaintiff in a suit of breach of contract, he must prove that he applied for delivery and was ready and willing to pay for the goods.

In the present case, the defendant sent the letter to the plaintiff asking for the payment to be made in advance on 02/02/64. But the plaintiff accepted before the court that he did not reply to the letter either in writing or orally. The court said accepted that it was not justified in the part of the defendant to ask for the payment in advance but at the same time it was necessary for the plaintiff to reply that in absence of any contract for the same he will not make advance payment but he is ready and willing to pay at the time of delivery.

By not doing so, "the plaintiffs did not show readiness and willingness to pay the price in accordance with the provisions of Section 32 of the act". It was also found that the plaintiffs had not applied for delivery which is a necessary condition as per Section 35 of the act. Relying on these facts, the court held that the plaintiffs neither showed readiness and willingness to pay nor applied for delivery, therefore, they cannot hold defendants liable for breach of contract.

The court further referred to the decision of trial court which had found the date of breach to be 15/02/64 and found no basis for this as the cause of action arose on 02/02/64. Since there was no increase in price from the date of formation of contract and the cause of action, there is no loss of profit to the plaintiff.

After finding that there was no breach of contract by the defendant and no loss of profit to the plaintiff, the court moved forward to determine the reasonable time for performance of contract. The judge took into consideration the facts of the case. Depending on the availability of stocks and distance between Chhoti Sadri (Place of delivery) and Neemuch (Defendants' firm), the judge found one moth to be the reasonable time for performance of contract.

The appeal was thus dismissed.  

Analysis
The court has accurately applied all the relevant provisions in the present case.
This can be analyzed by dividing it into three different parts:
  1. Reasonable time for performance of contract.
    Though this issue was not raised by the parties to the contract, the court took Suo Moto to determine the time as to the performance. The court depended upon the facts of the case for this. The distance between the defendant's firm and place of delivery was 12 miles and the stock was already available. So, the reasonable time was found to be 1 month. 
    Analysis: Although ignored, but it is a very crucial point as when the contract is not performed within a reasonable time, it might frustrate the whole objective of the contract. If the defendant had not asked for payment in advance, the contract might have been performed after that day. As the price of Rasada Vanaspati increased with effect from 14/02/64, the plaintiff would have suffered huge losses. Therefore, the court took justified step in determining the reasonable time.
     
  2. Breach of Contract
    The court found defendant not guilty for the breach. As it was the plaintiff who did not show their readiness and willingness to pay and neither applied for delivery.
    Analysis: Ordinarily, a contract is breached when it fulfills one of the following conditions:
    • Non-payment- When the buyer denies paying for goods after the delivery.
    • Violation of Condition- If the contract is based on certain condition/conditions and that condition is breached, the contract is said to be breached.
    • Violation of Warranty- Warranty is a stipulation collateral to the main purpose of contract. If the warranty is breached, the contract is deemed to be breached.
    • Installment deliveries- If the delivery is to be made in installment and the buyer refuses to pay for a certain in tustallment or all the installments or the seller makes defective delivery in one or more installments, the contract is breached.
    • Non-acceptance of good- When the buyer refuses or neglects the delivery of goods, the contract is breached on his part.
    • Non-delivery of good- If the seller does not deliver the goods to the buyer after entering into a contract, the contract is breached on his part.

    None of the above conditions is present in the concerned case, therefore it cannot be said that the contract was breached by the defendant. However, if we apply the last condition, i.e., non-delivery of good, it seems that the contract was breached on the part of the seller. But this clause is to be read with Section 32 of the act which says that "Payment and delivery are concurrent conditions". Applying this to the case, it is clearly evident that the buyer was not ready to pay.

    Hence, the court was justified in saying that the contract of sale was not breached and the reasoning was also correct. However, the defendants were nonetheless guilty of asking payment in advance. As per the facts of the case, there was no clause for amendment present. The defendants had no right to escape the contract when the plaintiff did not accept the amendment.
     
  3. Payment and Delivery are concurrent conditions
    The court referred to Section 32 of the act and held that the plaintiffs did not show readiness and willingness to pay.

    Analysis: The plaintiffs can argue against this point by saying that they were ready and willing to pay as if not, they would never have been entered into the contract of sale. The point is nevertheless correct but after receiving the letter asking for payment in advance, they were bound to expressly show their readiness and willingness.

    Had the letter for advance payment not been sent to them, it was not required of them to show express willingness as it was already implied. However, they could still not blame the defendants for breach because they had not applied for delivery which is a necessary condition as per Section 35.
     
Conclusion
The case of Sujanmal v. Radheyshyam Agrawal raises a very important question regarding the payment and delivery. It is important to note that there were various factors influencing this case.  The court however ruled in favor of the defendant and held that "Payment and Delivery are concurrent conditions". Along with this, it highlighted two more important aspects as to breach of contract and reasonable time for performance. Although these seems very simple and common phenomena but were in dispute in the concerned case.

The buyer and seller entered into the contract but no time for delivery and payment was fixed. Therefore, in the absence of any clause to the contrary, the payment and delivery were to be made concurrently and the contract was to be performed in a reasonable time of 1 month. The seller was ready to make the delivery and asked for advance payment. It is to be noted that there was no clause for advance payment in the original contract.

However, had the buyer informed the seller that he was willing to make the payment only at the time of delivery, he would have been treated as the aggrieved party. But merely asking for advance payment does not make the seller guilty as the buyer was silent throughout. Therefore, the court was justified in ruling that there was no breach of contract on the part of the seller.

References
  • The Sale of Goods Act, 1949, 32, No. 3, Acts of Parliament, 1930 (India).
  • Indian Contract Act, 1872 3, No. 9, Acts of Parliament, 1872 (India).
  • Sujanmal v. Radhey Shyam Agrawal, AIR 1976 Raj 98.
  • Firm Birdhi Chand v. Ramdeo, 1970 RLW 148=ILR 1969 19 Raj. 481.
  • Jai Mishra, Breach of Contract under Sale of Goods Act,1930, Legal Services India (Mar. 25, 2022, 12:22 PM), https://legalserviceindia.com/legal/article-4303-breach-of-cpntract-under-sale-of-goods-act-1930.html.

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