P L D 1959 (W (PLP)

A. R. CHANGEZ, J.--‑This first appeal is directed against the judgment and decree, dated the 18th of February 1953, of 'the Senior Civil Judge, Gujranwala. The facts giving rise to this appeal are these : The Plaintiff‑respondent Firm Inayat Ullah and Company brought a suit for the recovery of Rs. 40,

000. It was alleged in the plaint that the plaintiff Company had entered into a contract with Roberts Cotton Association Limited (defendant No. 1). through its agent Firm Khan Brothers (defendant No. 2) for the purchase of 10,000 bags of 4‑F cotton seed (Roller) at Rs. 14‑10‑0 per bag and had paid Rs. 10,000 to defendant No. 2, on the 8th of February 1951, as advance money in connection with the said contract, that the defendants had failed to supply the cotton seed within a reasonable time as a result of which the plaintiff had suffered a loss of Rs. 30,

000. Accordingly the plaintiff claimed the refund of Rs. 10,000, which had been paid to the defendants as advance and Rs. 30,000 by way of damages. Defendant No. 2 supported the claim of the plaintiff, but defendant No. 1 traversed the plaintiff's allegations and pleaded that it had not entered into any contract with the plaintiff, and had not received any money from it as advance ; that in fact a contract had been entered into through defendant No. 2 with an undisclosed Indian buyer on the 14th of December 1950, but as the terms of the contract had not been fulfilled by the buyer that contract had fallen through, and then defendant No. 2, in collusion with the plaintiff, had sent a form of contract signed by the plaintiff, along with a letter for completion of the contract, but defendant No. 1, did not accept the substitution and did not sign the form. It was, however, admitted that a cheque for Rs. 10,000 had been received from defendant No. 2, but it was alleged that it had been credited to his account. On the pleadings of the parties, the following issues were framed :‑ (I) Whether defendant No. 1 entered into an oral contract through defendant No. 2 with the plaintiff as an Agent of an undisclosed Indian buyer and what was that contract ? (2) Whether the plaintiff advanced Rs. 10,000 to defendant No. 2 for defendant No. 1 under the contract and whether the contract was confirmed by defendant No. 1 ? (3) Whether defendant No. 1 appropriated the amount of Rs. 10,000 towards his own account due from defendant No. 2, and whether he could do so ? (4) Whether the undisclosed Indian buyer is a necessary party to this suit and whether the suit cannot proceed without his permission ? (5) Whether defendant No. 1 has committed the alleged breach of contract and so he is liable to pay damages ? If so, to what extent ? (6) Whether the alleged Indian buyer fulfilled the conditions of his part of the contract ? (7) Whether defendant No. 2 has substituted the plaintiff in place of the alleged Indian buyer ? (8) In case issue No. 7 is proved, whether the defendant No. 2 could substitute the plaintiff for the Indian buyer ? (9) Whether defendant No. 2 has been deceiving defendant No. 1 by putting up a fictitious ‑Indian buyer for his own benefit and what is its effect ? (10) Is the suit collusive as between the plaintiff and defen dant No. 2 and what is its effect ? (11) In case the advance of Rs. 10,000 is proved to have been made by the plaintiff to defendant No. I in pursuance of the alleged contract, then is defendant No. 1 etitled to retain it ?. (12) What relief is the plaintiff entitled to and against whom ?

2. The trial Court held that defendant No. 1 had agreed to sell 10,000 bags of 4‑F cotton seed (Roller) to the plaintiff at the rate of Rs. 14‑10‑0 per bag and had received Rs. 10,000 as advance money from the plaintiff through defendant No. 2 for the fulfilment of the contract. The trial Court further held that as the plaintiff had failed to send the despatch instructions to defendant No. 1, before the date fixed for the purpose, therefore, defendant No. 1 was not at fault if it did not deliver the goods, and that even if the despatch instructions had been sent within time, the plaintiff was not entitled to any damages, as it had failed to prove that it had suffered any damage. It was, however, held that defendant No. 1 was not entitled to retain Rs. 10,000 which had been advanced as earnest money. The trial Court accordingly decreed the plaintiff's suit for the recovery of Rs. 10,000 against defendant No.

1. Being dissatisfied with this decree, defendant No. 1 has come up in appeal before this Court.

3. Learned counsel for the appellant did not contest the findings of the Court below on any other issue except issue No.

11. He maintained that having found that the plaintiff respondent was himself guilty of the breach of contract the trial Court should not have decreed the refund of the earnest money. In support of his contention, he placed reliance on Ramchand v. Central Flour Mills of Kasur and others (A I R 1935 Lah. 192) where the learned Judges of the Lahore High Court followed with approval, the principle laid down in Roshan Lal v. Delhi Cloth and General Mills Co. (I L R 33 All. 166) that when a plaintiff repudiated the contract into which he had entered with the defendants, he would not be entitled to recover that portion of the earnest money which he had paid. He also relied on Muhammad Habibullah v. Muhammad Shafi (I L R 41 All 324) where it was held by a Bench of the Allahadad High Court that "where a plaintiff has advanced money by way of earnest and as a guarantee for the fulfilment of the contract, he cannot recover the earnest money where it is found that the breach of the contract is due to his own default". These authorities undoubtedly support the case for the appellant but in both these cases it was found by the respective High Courts that the plaintiff had been guilty of the breach of the contract. In the present case, however, there is no such finding given by the Court below. In fact, no issue had been framed on that point. It is true that while dealing with issues Nos. 5 and 6, the learned Senior Civil Judge arrived at the conclusion that the delivery of the goods was to begin after the 15th of March 1951, or at any time at the sellers' option throughout the season which had to last till May 1951, on receipt of the despatch instructions before 15th March 1951, but as the plaintiff did not send the despatch instructions before the date fixed for the purpose, defendant No. 1, was not at fault if it did not deliver the goods. In our opinion, this finding does not necessarily imply that the plaintiff had repudiated the contract or had committed the breach of the contract.

4. Learned counsel for the plaintiff‑respondent argued that defendant No. l had not taken up this plea that it had not delivered the goods as it had not received the despatch instruc tions from the plaintiff before 15th March 1951, either in its reply Exh. D. 46 to the notice Exh. P. 3 given by the plaintiff or in the written statement, and it had, in fact, maintained throughout the trial of the ease, that it had not accepted the substitution of the plaintiff in place of the Indian buyer and for that reason had not signed the contract form Exh. D. 1 which had been sent by defendant No. 2 for the purpose. One of the terms mentioned in this contract form is to be the effect that the plaintiff had to send the despatch instructions to defendant No. 1 before March 15th, 1951. It is important to note that according to defendant No. 1, the terms of this contract form had never been accepted by it. This form bad reached defendant No. 1, on or about the 9th or 10th February, therefore, the question of receiving the despatch instructions from the plaintiff before the 15th of March 1951, did not arise at all, and defendant No. 1 cannot be allowed to take advantage of this fact at this late stage. Besides, no penalty was provided in the contract form for the breach of this duty, although it was provided what the consequences would be in the event of the breach of the contract. It was found by the trial Court that defendant No. 1, had to supply the cotton‑seed between March 15th and May 1951. The question arises, whether the sending of the despatch instructions before March 15th was the essence of the contract. The mere fact that it is mentioned in Exh. D. 1 is not by itself sufficient to establish that it was the essence of the contract. It was held by their Lordships of the Privy Council in Jamshed Codaram v. Burjorji Dhanjibhai (43 I A 26) that "the mere fact that time is specified for the performance of a certain act is not by itself sufficient to prove that time is of the essence of the contract. The Court has to look at the sub stance and not merely at the letter of the contract and ascertain whether the parties really arid in substance intended more than the act should be performed within a reasonable time". Section 55 of the Contract Act also provides that when a party to a contract promises to do a certain thing at or before a specified time, and fails to do it at or before that time the contract becomes voidable at the option of the promisee "if the intention of the,, parties was that time should be of the essence of the contract". The question whether time is or is not of the essence of the contract has to be determined on the facts of each case. In the present case, we find that no penalty was provided for the breach of the duty to send the despatch instructions before the 15th of March 1951. The cotton seed had to be supplied up to the end of May 1951. Defendant No. 1 did not take any steps to repudiate the contract on or about the 15th of March. In its reply Exh. D. 46, and in its written statement, defendant No. 1, never made any grievance of the fact that the despatch instruc tions had not been received before the 15th of March 1951. The defence set up in the lower Court was altogether on a different footing. Having regard to all these facts, we hold that sending of the despatch instructions before 15th March was not the essence of the contract. Besides, we find that there is sufficient material on the record in support of the contention of the plaintiff‑respondent that the despatch instructions had been sent by the plaintiff to defendant No. 1, before 15th March 1951. Learned counsel for the appellant, however, objected to this contention of the plaintiff‑respondent on the ground that in the absence of any cross‑objections, the plaintiff‑respondent was debarred from questioning the finding of the lower Court on this point. We do not agree with this contention. We are of the opinion that Order XLI, rule 22, C. P: C. clearly provides that without filing any cross‑objections a respondent may support the decree on any of the grounds decided against him in the Court below. Learned counsel for the appellants, however, relied on Cheda Lal v. Badullah (I L R 11 All. 35) where it was held that in the absence of any appeal or cross‑objection by the defendant the Appellate Court could not set aside that part of the decree which was favourable to the plaintiff. No exception can be taken to the principle laid down in this ruling, but it in no way comes into conflict with the view that the repondent may support the decree on any of the grounds decided against him without filing any appeal or cross‑objection. A similar point came up for decision before a Full Bench of the Madras High Court in Venkata Rao v. Satyanarayanamurthy (A I R 1943 Mad. 698). The question referred to the Full Bench was as follows :‑ "Whether under Order XLI, rule 22, C. P. C. it is open to a defendant‑respondent who has not taken any cross‑objections to the partial decree passed against him, to urge in opposition to the appeal of the plaintiff a contention which if accepted by the trial Court would have necessitated the total dismissal of the suit" ? The answer to this question was given in the affirmative. Krishanaswami Ayyanger, J. has very clearly set out the legal implications of Order XLI, Rule 22, in his separate judgment and the following passage from his judgment may be quoted with advantage :‑ "I also agree but would like to add a word or two on the true nature of the privilege given to a respondent by O. XLI, r. 22, Civil P. C. When an appeal is preferred, the appellant is, generally speaking seeking to get rid of an adverse decision, adverse to him wholly or in part, which means that the opposite party had succeeded wholly or in part. That success might be the result of a decision in his favour on one or some only of several grounds urged by him ; the Court negativing the other or others. As regards these latter grounds, he cannot and need not appeal, however erroneous the decision, because there is no right of appeal to a party, who has succeeded. But when the opposite party prefers an appeal, he may find himself in a difficult situation if he is obliged to remain content with supporting the decision on the only point or points on which he had succeeded without resorting to the others on which he had failed. For instance it may turn out on examination that some or all of these other grounds are good, while those accepted by the lower Court are unsub stantial. It is to provide for such a contingency, and to avoid injustice to the respondent in such a case that the rule has been enacted giving him liberty to support the decree if necessary by relying on any of the grounds decided against him in the Court below. The use of the word 'support' makes it plain that the right given is limited to the sustaining of the decree in so far as it is in his favour, and does not extend beyond so as to enable him to obtain an alteration, giving him a further advantage. This he can secure only by an appeal or cross‑objection. Where a. suit is wholly dismissed or wholly decreed it is open to the respondent to support the decision, by re‑agitating grounds negatived by the lower Court. This is simple enough, and the language of the rule is easily under stood and applied. Where however the suit is decreed in part and dismissed as to the rest, we have in reality what may be described as a double or composite decree. There is a decree for the plaintiff in respect of the part decreed, and a decree for the defendant in respect of the part dismissed. If the plaintiff appeals, he does so for the purpose of displacing the decree in so far as it is in favour of the defendant. If the defendant appeals, he again does so for the purpose of getting rid of the decree in so far as it has gone in plaintiff's favour. In either case the party who figures as the respondent has a decree in his favour, which he is allowed to support on any of the grounds decided against him by the Court which passed the decree. When he does this and no more, he is only, supporting and not attacking the decree". We are in respectful agreement with the views expressed by Ayyanger, J. We accordingly overrule the objection raised on behalf of the appellant and hold that the plaintiff‑respondent is within his rights to support the decree granted in its favour on any of the grounds decided against him in the Court below, without filing any appeal or cross‑objections.

5. In its notice Exh. P. 3 to defendant No. 1, dated the 24th of April 1951, the plaintiff alleged that it had approached the General Manager of Defendant No. 1 for delivery of the goods who, in spite of his promise, had failed to deliver the goods. In reply to this notice, letter Exh. D. 46 was sent by defendant No. 1 to the plaintiff's counsel on the 28th of May 1951. It reads as follows : "Dear Sir, We are in receipt of your notice dated 24‑4‑51 and inform you in reply that facts mentioned in your notice are entirely baseless and your clients have entirely misrepresented you the real situation.

2. As a matter of fact we never authorised Messrs Khan Brothers to sell any cotton seed to your clients, nor we con firmed any such transaction, nor we ever sold any cotton seed to your clients.

3. Under these circumstances if your clients take any steps against us, they will be doing so entirely at their own costs. Yours faithfully, FOR THE R. C. A. LIMITED (Sd.) W. R. WILLIAMS GENERAL MANAGER. (W. R. WILLIAMS)". It is noteworthy that no plea was raised in this letter that the goods could not be supplied as the despatch instructions had not been received from the plaintiff before March 15th, 1951. On the other hand, it was stated that defendant No. 1 had never authorised Messrs Khan Brothers to sell any cotton seed to the plaintiff and it had not confirmed any such transaction and had never sold any cotton seed to the plaintiff. Does it now lie in the mouth of the appellant to say that it could not deliver the goods to the plaintiff because the latter had not sent any despatch instructions within the time fixed for the purpose, or for that reason it is entitled to retain Rs. 10.000 ? It appears from the evidence on the record that after the contract had been entered into, the price of 4‑F cotton seed (Roller) had gone up and according to Mr. W. L. Kohli P. W. I‑C, whom we have no reason to disbelieve, the price of 4 F cotton seed was quoted at Rs. 20‑9‑0 per bag after the 19th of February 1951. We regret to note that a reputed and well established firm of the statuts of defendant No. 1, should have chosen to back out of the contract, because of the rise in prices during the interval. In its notice, Ex. D. 40, dated the 1st of March 1951, Firm Khan Brothers had referred to the contract in question and had asked defendant No. 1, to comply with the terms of the4contract by making deliveries to the plaintiff from the 15th of March 1951. The following passage from the notice may be reproduced here to show the circumstances under which the appellant had not delivered the goods :‑ "As all the above bargains have legally and legitimately been made on your behalf by us, you are bound to give the delivery thereof, but we find that due to sudden rise to rates of these commodities you have been avoiding and are still avoiding to effect the delivery of the goods and are trying to go back to your belated commitments deliberately and are not fulfilling the obligations on flimsy pretexts. "Please take notice that if you fail to tart the delivery of the above mentioned commodities from 15‑3‑51, our buyers will be obliged to take legal action against you and you will be responsible for all their losses, damages, and expenses etc. and also for their harassment". The plea that this notice had not been received by the appellant cannot be accepted in view of the fact that the appellant did not produce before the Court below the correspondence regarding the contract in dispute, although it was asked to do so. In view of the circumstances narrated above, we hold that in fact the plaintiff‑respondent had sent the despatch instructions to the appellant before the 15th of March 1951, and that the plaintiff had not committed any breach of the contract. We further hold that in fact defendant No. 1, itself had committed the breach of the contract and consequently had no justification or right to retain Rs. 10,000 which had been paid by the plaintiff as earnest money, or advance.

6. This concludes the matter, but even if it had been possible for us to agree with the finding of the trial Court, that defendant No. 1, had not supplied the goods because the plaintiff had not sent the despatch instructions before March 15th, then also in the absence of any proof of loss or damage defendant No. 1, could not have retained Rs. 10,

000. In our opinion, the case is not governed by the provisions of section 74 of the Contract Act but aptly falls within the purview of section 73 of the Act. The contract form Exh. D. 1, does not provide that in the event of breach of the contract, the plaintiff would forfeit Rs. 10,000, nor there is any other stipulation by way of penalty. Merely because this amount was deposited as earnest money, is no ground for holding that in the event of the breach of the contract by the buyer, it had to be forfeited. The matter is governed by the terms of the contract, and it is clearly provided in Exh. D. 1 that in the event of the breach of the contract by the buyer the seller shall have the option of clearing and recovering from the buyer, that difference, if any, between the contract price and the price ruling in the market on the next day after expiry of the due date of delivery for such quantity. In view of the clear terms incorporated in the contract form, it cannot be assumed that this amount was to be forfeited. We have, therefore, no doubt that section 74 of the Contract Act is inapplicable to the facts of the present case, and it is only section 73 of the Contract Act, which applies. This section provides that "when a contract has been broken, the party who suffers by such breach is entitled to receive from the party who has broken the contract, compensation for any loss or damage caused to him thereby which naturally arose in the usual course of things from such breach or which the parties knew, when they made the contract to be likely to result from the breach of it". There is no evidence on the record that defendant No. 1, had suffered any loss or damage on account of the breach of the contract. On the contrary, there is evidence that in fact the price of 4‑F cotton seed had risen during the interval. We, therefore, see no force in this appeal and dismiss it with costs. A. H. Appeal dismissed.