Keshavlal Lallubhai Patel and Others v. Lalbhai Trikumlal Mills Ltd.

Judgment

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 78 of 1954. Appeal from the judgment and decree dated April 17, 1950, of the Bombay High Court in Appeal No. 642 of 1949, arising out of the judgment and decree dated July 30, 1949, of the Court of Civil Judge, Senior Division, Ahmedabad in Suit No. 10 of 1946. Purshottam Tricumdas, M. H. Chhatarpati and S. S. Shukla, for the appellants. H. N. Sanyal, Additional Solicitor-General of India aml I. N. Shroff, for the respondent. 1958. March 21. The Judgment of the Court was delivered by Gajendragadkar J. GAJENDRAGADKAR J.-This is an appeal by the plaintiffs against the decree passed by the High Court of Bombay dismissing their suit to recover from the defendant Rs. 1,52,334-8-9 as damages for breach of con'tract for non-delivery of certain cotton goods. 'fhe Plaintiffs' claim had been decreed by the trial court •{ but on appeal it has been dismissed. The appellants are the partners of M/s. K. B. Na vinchandra /§, Co. This partnership had placed an . order with the respondent for 251 bales of printed chints on or about July 4, 1942, antl the said order had been accepted by the respondent by its letters dated ,July 11 and July 20, 1942.

The delivery period for the said goods was fixed for the months of Septem'ber and October, 1942. Another order was pJaccd by the S.C.R. fJUPREME COURT REPORTS app~llants with the respondent .for 31 bales of printed r95S chints on July 24, 1942, and this order was accepted Keshavlal Lalluby the respondent on July 25, 1942. The delivery of bhai Patel these goods was to be given in the month of October 1942. Lalbhai Trikumlal On August 9, 1942, the workers in the respondent Mills Lid. mills went on strike in sympathy with the Quit-India Gajendragadkar J. • movement which had then commenced. In consequence, the respondent wrote to the appellants' firm on August 15, 1942, an_d stated that, in view of the strike and the political situation, the delivery time of all the pending contracts should be automatically understood as extended for the period the working of the mills was stopped and until the normal state of affairs recurred.

The strike came to an end and the mills resumed working on November 22, 1942. On. December 5, 19'12, Jasubhai, who was then in charge of the management of the mills was approached by the appellants, Keshavlal and Ratilal, for obtaining delivery of the goods. He, however, told them that the appellants' contracts were void and so no delivery could be claimed or given. On December 6, 1942, the said Jasubhai wrote to the appellants informing them that their contracts were not binding on the mill~ as they were null and void. It may be mentioned at this stage that, when the contracts were made between the appellants and the respondent, Chinubhai Lalbhai was in charge of the managing-agency of the mills.

Subsequently, on September 18, 1942, as a result of the compromise. between Chinubhai ap.d his brothers Jasubhai and Babubhai, this managing agency of the :qiills fell to the share of Jasubhai and Babubhai. • ~n December 17, 1942, the appellants wrote to the '• respondent that, as.the respondent had extended the time of delivery of all goods by its letter dated August 15, 1942, the respondent was bourfd to deliver the contracted goods and that, if the respondent did not do so, the appellants would be compelled to take legal proceedings against the respondent. In reply, the respondent repeated its earlier contentions by its letter dated December 20, 1942. The appellants then formally demanded the delivery of goods in January [1959] '958 and again in February 1943, and, since the demand Ke<havlal Lalluw~s not complied with, the ap~ellants filed the present bhai Patel smt on January 9, 1946, claiming damages to the extent of Rs. 1,52,334-8-9 with interest and costs.

Lalbhai Trikmnlal In the plaint, it was alleged that the suit w.as in Mill• Ltd. time because the request made by the respondent for G . d-dk 1 extension of time had been accepted by the appellants. "J"' raga ar · Th sw was res1ste y t e respon ent on several • grounds. In particular, the respondent urged that there was no agreement betwee11 the parties with regard to the extension of time and so the suit was barred by limitation. The learned trial judge framed several issues with two of which the present appeal is concerned. These two issues related to the question of extension of time for the performance of the contract and the plea of limitation. On both these points, the learned judge found in fa vqur of the a pptlllants. In the result the appellants' claim was decreed. The respondent then preferred an appeal in the High Court at Bombay and his appeal was allowed.

The learned Judges of the High Court have held that' the oral evidence led by the appellants to show the acceptance of the respondent's proposal for the extension of time could not be treated as true or reliable. They also rejected the appellants' case on the ground that the conduct of the appellants subsequent to the stoppage of the respondent's mills did not show acceptance of the respondent's proposal for extension of time. Besides, in the opinion of the High Court, even if acceptance had been proved, it was not possible to ascribe any certain or definite meaning to the wortls used by the respondent in its letter dated August 15, 1942 (Ex. P. 78), and so this agreement•to extend time was void since it was vague and uncertain. • 1 That is why it was held that the appellants' suit was barred by time. •It is these findings which are challenged before us by the appellants in the present appeal.

It is obvious that the val\ole of the claim in the trial court as well as before us is more than Rs. 20,000 and the judgment of the High Court under appeal has reversed the decree passed by the learrted trial judge. The appellants are thus entitl~d to agitate S.C.R. ~UPREME COURT REPORTS both questions of fact and of law before us in this I958 appeal. Reshavla-; Lallu- The first point which has been urged before us by bhai Patel the appellants is in respect of the finding made by the v. • High Court against the appellants on the question ofLalbhai Trikumlal ' the extension of time for the performance of the Mills Ltd. contract. The argument is that the learned Judges of . -- •the High Court were in error in rejecting the oral Ga;endragadkar f evidence led by the appellants. It would, therefore, be neces.sary to consiil.er the material evidence bearing on this point. The proposal to extend time was made by the respondent by its letter (Ex. P. 78) on August 15, 1942. Ratilal P. W. 1 stated that, four or five days after this letter was received, he went to Ahmedabad where he met and consulted Keshavlal.

Then he saw Chinubhai at the mills and told him that he •accepted the extension of time as per the said letter. In cross-examination, Ratilal added that he met Chinubhai at the office in his mills. He also stated that, besides the subject of extension of time, no other matter was discussed between them at the said meeting. He admitted that no letter had been written by the appellants confirming their acceptance of the respondent's proposal to extend time. · The evidellSJe given by Ratilal is corroborated by the testimony of Keshavlal. It appears on the evidence of both· these witnesses that, after the mills reopened, they had gone to J asubhai and demandtid delivery of the bales according to the contracts. The appellants argued that there is really no reason why the evidence of these two witnesses should be disbelieved.

It is significant that the main plea raised by the responden~against the appellants' claim in the present suit '•was that the contract itself was invalid and not binding on it and that the letter written by Laxmidas on August 15, 1942, was likewise unautllorised and not binding on it. These pleas have been negatived in the courts below. •It is fairly clear from the record that the attitude adopted by the respondent in the present dispute. was actuated µiore by · Jasubhai's prejddice against Chinubhai and it niay be safely 28 ,. SUPREME COURT REPOR~S [1959] asserted that some of the pleas taken by the respondent were known to the respondent to be untenable. [(eshavlal Lallu- 11 bhai Patel The appe ants rely upon t is con uct o the respondent and suggest that the oral testimony of Ratilal and Lalbhai Trikumlal Keshavlal is consistent with probabilities and should Mills Ltd. be believed. Chinubhai also gave evidence in the case.

He stated that the proposal to extend time had Gajendmgadkar f. been conveyed by Laxmidas under his instructions. ltis common ground that similar request was made to all the constituents of the mills. both in Ahmedabad and outside Ahmedabad. Chinubhai did not remember whether he had got any written reply to the letter of August 15, 1942, from the appellant!' but the effect of some of the statements made by him would generally appear to be that he had received oral acceptance of the said proposal from.the appellants. However, in answer to further questions put to him in cross-examina~on, Chinubhai stated that he did not remember whether the appellants accepted the offer or not. It is, however, clear that the evidence of Chinubhai is not at all ·inconsistent with the statements made by Ratilal and Keshavlal.

It is common ground that the prices of· the goods were rising at the material time and so it is · more likely that the appellants were willing to extend time because they would naturally be keen on obtaining delivery of the goods under the contract. In both the courts below an argument appears to have been urged by reference to tht) sauda books kept by the respondent. Shri Dharamasi Harilal had brought the sauda books in the court but neither party got the books exhibited in the case. The learned trial judge took the view that, since the sauda books were not produced and proved by the respondent, it led to" the inference that, if the books had been produced, they•' would have shown an endorsement made against the suit contracts that· the extension of time had been agreed upon by the appellants.

On the other hand, the learned Judges of the High Coart were inclined to draw the inference that, since the appellants did not want the said sauda books ,to be exhibited, it would appear that the said books did not contain any 'note about the extension. In our opinion: it would be S.C.R. unsafe.to draw either of these two inferences in the Present case. T.herefore, the decision of the question Keshavlal Lalluwould depend upon the appreciation of oral evidence bhai Patel considered. in the light of probabilities and other v. • relevant circumstances in the case. On the whole, we Lalbhai Trikumlal are disposed to take the view that the evidence' given Mills Ltd. by Ratilal and Keshavlal is true. G . d dk l~t. ' Besides, the conduct of the parties also points to the a;en raga ar f. sam~ conclusion.

If the period for the delivery of the goods had .not been ~xtended by mutual consent, we would normally have expected the appellants to make a demand for delivery of the goods on due dates as fixed under the original contracts. It is conceded that no such demand was made. On the other hand, it is only after the mills reopened that Ratilal and Keshavlal saw Jasubhai and discussed with him the question abobt the delivery of the goods. This is admittea by the respondent in its letter dated December 6, 1942, (Ex. P. 62). The appellants were, however, told by the respondent that the saudas of their firm were not binding on the respondent and that the/same were void. It is somewhat remarkable that thdugh this document disputes the validity of the sauda, even alternatively it does not suggest that the period of extension h~d not been agreed to by the appellants.

It may be that, since J asuhhai then wanted to challenge the validity of the contracts themselves, he did not care to make any alternative plea. But ltowever that may be, the conduct of the appellants is, in our opinion, consistent with their case that they had agreed to the extension of time. The true legal position in regard to the extension t>f time •for the performance of a contract is quite cleat ' •under s. 63 of the Indian Contract Act. Every promisee, as the section provides, may extend time for the performance of/the contract. The que~tion as to how extension of time may be agreed upon by the parties has been the subject1-matter of some argument at the Bar in the present appeal. There can be no doubt, we think, that both the buyer and the seller must agree to extenB. time for the delivery of goods. It would not be open to the promisee by his unilateral act to extend .[1959] '958 the time for performance of his own accord for his own Keshav-;:;; Lallubenefit.

It is true that the agreement to extend time bhai Patel need not necessarily be reduced to writing. It may be • v. proved by oral evidence. In some cases it may be Lalbhai Trikumlal proved by evidence of conduct. Forbearance on the Mills Ltd. part of the buyer to make a demand for the delivery Gajendragadkar J. of goods on the due date as fixed in the original contract may conceivably be relevant on the question• of the intention of the buyer to accept the seller's' proposal to extend time. It would be.difficult to lay down any hard and fast rule about the requirements of proof of such an agreement. It would naturally be a question of fact in each case to be determined in the light of evidence adduced by the parties.

Having regard to the probabilities in this case, and to the conduct of the parties at the relevant time, we think the appellants are•entitled to urge that their oral evidence about.the acceptance of the respondent's proposal for the extension of .time should be believed and the finding of the learned trial judge on this question should be confirmed. The finding in favour of the appellants on this point is not, however, decisive of the dispute between the Pl!'rties in the present appeal. It still remains to be considered whether the agreement between the parties a bout the extension of time suffers from the infirmity of uncertainty and vagueness. The learned Judges of the High Court have con1e to the conclusion that the letter of August 15, 1942, which is the basis of the agreement for the extension of time is so vague and uncertain that the agreement as to extension of time itself becomes void and unenforceable.

The correctness of this conclusion must now be considered. •The , basis of the agreement is the letter and so it is the• ". construction of this letter which assumes considerable importance. 'rhis is how the letter reads : " Dear Sirs, Your goodselves are well itware of the present political situation on account of which entire working of our Mills is closed. · At present, it is difficult to say as to how.long this state of affairs will continue and as .such we regret 1l S.C.R. we cannot fulfil the orders placed by you with us in r9ss time. Under the circumstances, please note that the Kesliavlal Lalludelivery time of all your pending contracts with u~ bhai Patel shall be automatically understood as extended for the v. • period the working is stopped and till the normal state Lalbhai Trikumlal of affairs recurs." Mills Ltd. It would be noticed that the letter begins by making a G . d -~dk t l't'

1 't h' h 1 d ra;en raga ar ]. re erence to t ~ curren po I ica s1 uat10n w ic e to the closure of ithe mills and it adds that it was vary difficult to anticipate how long the said state of affairs would continue. It is common knowledge that, at the material time, the whole country in general and the city of Ahmedabad in particular was in the grip of a very serious · political agitation and nobody could anticipate how long the strike resulting from the said agitation would last. It is in that atmosphere of un~ertainty that the respondent requested the appellants to note that the time for delivery would be automatically extended "for the period the working is stopped and till the normal state of affairs recurs". The first condition does not present any difficulty. As soon as the strike came to' an end and the closure of , J • the mills was terminated, th'e first condition would be satisfied. It is the second condition that creates the real difficulty.

What exactly was meant by the introduction of the second condition is really difficult to determine. So many factors would contribute to the restoration of the norm!tl state of affairs that the satisfaction of the second condition inevitably introduces an element of. grave uncertainty and vagueness in the said proposal. If the normal state of affairs contemplated by the second condition refers· to • the• normal state of affairs in the political situation in the country that would be absolutely and patently uncertain. Even if this normal state of affairs is construed favourably to the appellanM and it is assumed that it has reference to the working of the mills, that again does not appreciably help to remove the elements of uncertainty and yagueness. When can norpial working of the mills be deemed to recur? For the normal working of the mills several factors are essential. T]J.e full complement of workmen should be [1959] present.

The requisite raw material should be available and coal in sufficient quantities must be in stock. Kesltavlal Lallubhai Patel Some other conditions also may be necessary to make the working of the mills fully normal. Now, unless Lalbhai Trikumlal all the constituent elements of the normal working of Mills Ltd. the mills are definitely specified and agreed upon, the G . d-dk general expression used in the letter in that behalf a;m raga ar 1 · cannot \bel:construed as showing anything definite or • certain. Therefore, even if the appellants' evidence about the acceptance is believed,.that only shows in a very general and loose way the acceptance of the proposal contained in the letter. It does not assist us in determining what was understood between the parties and agreed upon by them as constituting the normal state of affairs mentioned in the letter. In this connection, it would be relevant to ref~r to the material allegations in the plaint itself. In para. 7, the plamt has averred that the plaintiffs agreed to the said extension of time for the delivery of the said goods as suggested by.the defendant, that is by a period during which the said mills would remain closed.

In other words, the whole of the plaint proceeds on the assumption that the extension of the period for the delivery of goods had reference only to the stoppage of the mills. Indeed, it was sought to be argued a.tone stage that the second condition in the letter should be treated as a meaningless surplusage and the extension of time agreed upon betweerf the parties should be read in the light of the first condition alone. In support of this argument reliance was placed on the decision in Nicolene Ld. v. Simmonds('). In that case, a contract for the sale of a quantity of reinforcing steel bars was expressed as subject to "the usual conditions of acc~pt­ ance ". The seller repudiated the contract whereupon the buyers claimed and were awarded by the trial judge damages ftir the breach of contract. On appeal, the seller conten\led that the contract was not concluded there being no consensus ad idem in regard to the conditions of acceptance.

It was held that, there being no " usual conditions of acceptance ", the condition was meaningless and should be ignored, and that 1;he (1) [19,3] 1 Q. B. 513• 55'- S.C.R. liUPREME COURT REPORTS contract was complete and enforceable. Dealing with the relevant clause, Denning L. J. observed, "that l J(eshavlal Lalluclause was so vague an uncertam as to incapab e bhai Pat,z of any precise meaning. It is clearly severable from v. • the rest of the contract. It can be rejected without Lalbltai Trikumlal impairing the sense or reasonableness of the contract Mills Ltd. as a whole, and it should be so rejected. The contract •should be held good and the clause ignored". Then Gajendragadkar f. the learned Lord Justice pointed out that " the parties themselves treated t)ie contract as subsisting. They regarded it as creating binding obligations between them and it would be most unfortunate if the law should say otherwise ".

"You would find ", observed the learned Lord Justice," defaulters all scanning their contracts to find some meaningless clause on which to ride free".· In our opinion, this decision can be of no assfStance to the appellants' case before us. The second .condition in the letter in question constitutes a clause which had to be agreed upon by the parties since it formed one of the conditions of the respondent's proposals for the extension of time. The respondent's proposal was to extend time for the performance of the contract subject to two conditions and unless both the conditions were agreed upon between the parties th~re would be no valid or binding extension of time under s. 63 of the Indian Contract Act. The fact that the second condition introduced by the respondent is vague and uncertain, does not neoossarily show that the said condition was intended by the,. respondent to be the addition of a di.eaningless surplusage.

If that be the true position, then the material allegations in the plaint itself demonstrably prove that there has been 'no acceptance by the appellants of the second condition · •mentioned by the respondent in its proposal to extend time for the performance of the contract. Besides, as we have already indicated, it is really ctifficult to hold that the respondent had a clear and precise notion as to the constituent elements of the second condition mentioned in its letter and that the appellants were duly apprised of the said constituent elements and agre~d with the said condition with thatknowledge. In this connectio~, we may usefully refer to the decision [1959]/ r958 of the House of Lords iri Scammel (G.) And Nephew, K b I I L I Ld. v. (Ouston) (H. 0. And J. G.) {1).

In this case, the esava alubhai Patel respondent had agreed to purchase from the appellant a new motor-van but stipulated that this order was Lalbbai frikumlal given on the understanding that the balance of Mills Ltd. purchase price can be had on the hire-purchase terms over a period of two years. The House of Lords held Gajendragadkru ]. h l t at t e c a use as to n·e-purc ase terms was so vague• I that no precise meaning could be attributed to it and consequently there was no ej,lforceable contract between the parties. In his speech, Lord Wright observed that " 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 at mere form ...... But the test of intention is to be found in the w<frds used.

If these words, considered however broadly and untechnically and with due 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''. Then the learned Law Lord added that his reason for thinking that th!l clause was vague was not only based on the actual vagueness and unintelligibility of the words used but was confirmed by the startling diversity of the explanations tendered by those who think there was a bargain of what the barga~1 was. We would like to add that, when the appellants attempted .to explain the true meaning of the second condition, it was discovered that the explanations given by the appellants' counsel were diverse and inconsistent.

We must, therefore, hold that the learned Judges of the High Court ~ere right in coming to the conclusion that the conditions • ' mentioned by the respondent in its letter asking for ·extension of titne were so vague and uncertain that it is not possible to ascertain definitely the period for which the time for the performanoo of the contract was really intended to be extended. In such a case, .the agreement for extension must be held to be vague and (I) [1941] A.G. 2,t. I S.C.R. uncertain and as such void under s. 29 of the Indian Contract Act. Th h' h Keshavlal Lalluere is one more pmn w IC mus cons1 ere . It was strongly urged before us by the appellants that, b ai v~at•I in the trial court, no plea had been taken by the Lalbhai Trikumlal respondent that the agreement for the extension of Mills Ltd. time wa·s vague and uncertain.

No such plea appears •to have been taken even in the grounds of appeal pre- Ga;endragadkar J. ferred by the respondent in the High Court at Bombay; but apparently the plea was allowed to be raised in the High <'ourt and the appellants took no objection to it at that stage. It cannot be said that it was not open to the High Court to allow such a plea to be raised even for the first time in appeal. After all, the plea raised is a plea of law based solely upon the construction of the letter which is the basis of the case for"the extension of time for the performance of the contract and so it was competent to the appeal court to allow such a plea to be raised under 0. 41, r. 2, of the Code of Civil Procedure. If, on a fair construction, the conditio'n mentioned in the document is held to be vague or uncertain, no evidence .can be admitted to remove the said vagueness or uncertainty. The provisions of s. 93 of the Indian Evidence Act are clear on this point.

It is the language of the document al~ne that will decide the question. It would not be open to the parties or to the court to attempt to remove the defect of vagueness or uncoctainty by relying upon any extrinsic evidence. Such an attempt would really mean the making of a new contract between the parties. That is why we do not think that the appellants can now effectively raise the point that the plea of -tagueness should not have been entertained in the • High Court. The result is we confirm the finding of the High Court on the question of vagueness or. uncertainty of the agreement to extend time and that must inevitably lead to the dismissal of the present appeal. We are, however, free to state that we have reached this conclusion with some reluctance because we are sat:ft;fied that there are no bona fides in the attitude 29 I [1959] • x95B adopted by the respondent in the present litigation.

The main pleas raised by the respondent against the K8'havlal Lallubinding character of the contracts themselves as well bhai Patel t th th •t t as agarns ·. e au or1 yo axm1 as o write t e etter Lalbhai Trikumlal for extension of time have been rejected by both the Milfa Ltd. courts below, and the only ground on which the respondent succeeds before us was made on behalf of the Gajendragadkar J. respondent for the first time in appeal. Under these• circumstances we think the fair order as to costs would be that parties should bear their own costs throughout. The result is the appeal fails and is dismissed but there would be no order as to costs throughout. x958 klarch ,4• Appeal dismissed . CHANDRANATH MUKHERJEE TUSHARIKA DEBI AND OTHERS (B. P. SINHA, JAFER IMAM and SuBBA RAO, JJ.) • Permanent Tenure-Right of successor to recover arrears of rent by suit-Notice of sitccession to landlord within six months, if mandatory-Mutation in landlord's rent roll-Mode of proof- Bengal Tenancy Act (Act VIII of.,r885) as amended by Bengal Act JV· of r928, ss. r5, r6.

The time limit of six months provided by s. 15 of the Bengal Tenancy Act within \vhich a tenure-holder has to give notice of his succession to the landlord or have his name mutated in his rent-roJI is not mandatory but directory in character and the,l)nly effect which non-observance of that time-limit can have under • s. 16 of the Act, is to postpone his remedy to recover arrears of rent by way of suit till such time when he performs the duty cast upon him by s. 15 .,f the Act, but it cannot, by itself, bar the remedy for all time to come., Section 16 is a penal provision and must be subjected to its statutory limitation and the penalty it • imposes cannot be extended by implicati<'m. Consequently, in a case where the sepatnidar resisted the durpatnidars' suit for recovery of arrears of rent ou the ground, inter alia, that they had not got themselves mutated in the fand- )ord's records under s. 15 of the Bengal Tenancy Act and as such I