Madanlal Sohanlal vs Bhagwandas Agarwalla

Deb, J.—This suit was filed against three Defendants as partners of a firm at Bankura, but the first Defendant had no connection with this firm. He died before the institution of this suit and therefore, this action cannot be prosecuted against him.

The Plaintiff is a firm of Calcutta and has claimed Rs. 75,000 as damages on the material pleas that on May 25, 1943, the Plaintiff agreed to buy and the Defendant firm agreed to sell 6,000 mds. of rice at the rate of Rs. 16 per maund, out of which 3,000 mds. were to be delivered at Sambalpur and the other 3,000 mds. at Sakti and on the same day by a telegram confirmed the oral agreement and requested the Defendant firm to deliver 3,000 mds. of those goods to Ganeshiram Gopiram at Sakti and the other 3,000 mds. to Ganpatrai Todi at Sambalpur and then on July 2, 1943, the Plaintiff again in writing requested the Defendant firm to deliver those goods to those agents of the Plaintiff against payment to be made by those agents, but about the middle of July 1943 the Defendant firm committed a breach of this agreement by non-delivery of those goods.

The contesting Defendants in their joint written statement have denied all the averments made in the plaint and have craved reference to a letter of August 4, 1943, which is wrongly typed as August 3 to which reference will be made later on. Their material defence is that the alleged agreement and its performance were wholly illegal because the Plaintiff had no licence to buy those goods under the Food-Grains Control Order, 1942, which was promulgated under the Defence of India Rules, 1939.

The following issues, raised by the learned Counsel Mr. Bachawat, appearing for the contesting Defendants and accepted by the learned Counsel Mr. Tibrewal, appearing for the Plaintiff, were settled by me:

(1) Was there any contract as alleged in paras. 1 and 2 of the plaint?

(2) Did the Plaintiff make any demand on July 2, 1943, in writing as alleged in para. 3 of the plaint?

(3)(a) Was there any breach of contract as alleged in para. 6 of the plaint?

(b) If so, did the Plaintiff suffer any damages for breach of contract as, alleged in para. 6 of the plaint?

(4) Had the Plaintiff any licence under the Food-Grains Control Order, 1942?

(5) Was the alleged contract illegal as stated in para. 6 of the written statement?

(6) Docs the Court any jurisdiction to try this suit?

(8) To what relief, if any, is the Plaintiff entitled?

Issue No. (6) was later on deleted at the joint request of the counsel for both the parties. Mr. Sohanlal Jajodia, a partner of the Plaintiff, gave evidence for proving the formation of the agreement and its breach, whereas Mr. Moujiram Agarwalla, a merchant of Sambalpur, was examined by the Plaintiff on Commission at that place for proving the market price. The contesting Defendants have also given evidence on Commission at Bankura.

Maj. Whitburn was a Labour Liaison Officer of the Central Public Works Department and he was posted at Calcutta. Exhibit B. corroborates the evidence of Mr. jajodia that the Plaintiff was to procure 1,80,000 mds. of rice from the Provinces of Bihar, Orissa, Assam and Bengal and to store them in those provinces on the Major''s account. Mr. Jajodia had said that in order to fulfil this contract the Plaintiff entered into the agreement in suit with the Defendant firm. He had further said that he represented the Plaintiff and the second Defendant represented the Defendant firm and the agreement in suit was entered into by trunk-telephone from Calcutta to Bankura, which was totally denied by the second Defendant in his evidence including this trunk-call.

Signature of Maj. Whitburn on two letters (Exs. D and E) both dated June 26, 4943, was proved by Mr. Jajodia. These two letters were sent by Maj. Whitburn to the Plaintiff after he was informed by Mr. Jajodia that Mr. Ganpatrai Todi had told Mr. Jaja dia that the Defendant firm, had refused to deliver those, goods, but no attempt was made to prove the truth of the contents of these two exhibits and therefore, Mr. Bachawat is right in saying that the contents of these two exhibits cannot be looked at, but still I will deal with their contents of the unjustified assumption'' that I can do so.

Sakti was then an independent sovereign State and was governed by an Indian Ruler. Exhibit D relates to Sakti delivery and it shows that the agents of Mrj. Whitburn were to take delivery of the rice from Sadhuram Deepchand of Sakti and the Dewan Saheb of Sakti was requested to make necessary order for enabling those agents to take the delivery and export them after paying the duties of that State.

Exhibit E relates to Sambalpur delivery and it is addressed to Mr. A. Jha I.C.S. of Sambalpur. Someone had written on it : "Original copy given to Ganpat Todi while he was going to Sambalpur to see Mr. Jha on 16.7.43", but nothing was said on these writings by Mr. Jajodia. This exhibit shows that Maj. Whitburn had purchased those rice from the Defendant firm, but this transaction was denied by the Defendant firm and the agents of Major were to take their delivery from Chhaganlal Bishendayal of Sambalpur and the Deputy Commissioner of Sambalpur was demanding 25% of those food-grains at a low rate, but Major was not willing to give them. In this exhibit the Major requested Mr. Jha to release those food-grains so that his agents could take delivery from Chhaganlal Bishendayal and stated that for this purpose those agents would meet Mr. Jha on July 3 at Sambalpur.

Mr. Bachawat says that this action is not maintainable by the Plaintiff in view of the relation between Maj. Whitburn and the Plaintiff as principal and agent, but this defence was not taken in the written statement and furthermore, Mr. Jajodia had said that the Plaintiff on its own account and as principal entered into the agreement in suit and therefore, I overrule this contention of Mr. Bachawat.

The trunk call was denied by the second Defendant, but I am unable to accept it because his pleader had admitted it in the Plaintiff as principal and agent, but this defence was not taken in this letter it was said and was repeated in the letter of August 26, 1943 by his pleader that the bargain between the Plaintiff and the Defendant firm was not concluded because the Plaintiff did not pay Rs. 24,000 which was a condition precedent for purchasing those food-grains. This defence was not taken in the written statement and was specifically abandoned by the second Defendant in his evidence. This change of front leads to an irresistible conclusion that there was an agreement as pleaded in para. 1 of the plaint which was proved by Mr. Jajodia. In these circumstances, though the telegram mentioned in para. 2 of the plaint was not proved still my answer to the first issue is ''yes'' because it was not a term of their bargain that their agreement was to be confirmed by a telegram.

According to para. 6 of the plaint the breach of this agreement took place about the middle of July 1943, but Mr. Jajodia had said that the agreed date of delivery was either one month or one and a half months from May 25, 1943. In view of this state of evidence Mr. Bachawat says that the case made out in the plaint is not proved. Mr. Tibrewal does not accept this position and says that, as the agreed date of delivery is not proved by Mr. Jajodia, a reasonable date from May 25, 1943, should be the date of delivery u/s 46 of our Contract Act and in the facts and circumstances of the case, it must be held that the middle of July was the date of breach of this agreement.

Where no date of delivery is agreed upon at all and the seller has undertaken to deliver the goods without the buyer''s application there cannot be any doubt that the seller must give delivery and the buyer must take delivery within a reasonable time from the date of their agreement. Moreover, when the delivery and the payment are concurrent, the buyer must be ready and willing to pay for the goods simultaneously with the delivery. And the Court will ascertain the reasonable date of performance of their agreement from the facts and circumstances existing at the time they have entered into their bargain in order to ascertain whether any one of them has committed a breach of their contract on the date of performance. But, where the date of delivery is agreed upon and the buyer is to apply for and lake delivery upon payment then their mutual obligations must be simultaneously performed on the agreed date.

An agreed date relating to the delivery, whether originally agreed upon or is extended by a further agreement later on, is always regarded as an essential term of the bargain because the rights and obligations of the parties have to be determined on the basis of their agreed date. It is true that the Court always leans in favour of upholding a commercial contract and if necessary, fills in the gap by supplying a term which the parties have in view but have not expressly provided for in their agreement, be it oral or written. But, this power of the Court docs not extend in making a new contract for them and the Court cannot exclude an express term for giving business efficacy to their bargain by invoking Section 46 of the Act and thereby holding that they have impliedly agreed to perform their obligations within a reasonable time which they have never intended.

Here, it is pleaded, that the Defendants having failed to deliver those goods have committed a breach of the agreement about the middle of July 1943 and furthermore, compensation is claimed on this basis. In these circumstances, the question of performance of their mutual obligations within a reasonable time cannot arise at all. Mr. Jajodia had given a go-bye to this date and he came out with an express term, firstly, by saying that those goods were to be delivered within one and half month and then abridged it to a month and then kept both the dates. He had gone against his own pleadings and had himself disproved the date of the alleged breach of this agreement.

Nothing was said in the plaint about the extension of the period of delivery, but it was said by Mr. Jajodia that his employee Mr. Ganpatrai Todi was asked by the second Defendant to come from time to time for taking delivery of these goods and the date of delivery was thus stood extended from time to time. But, Mr. Jajodia did not say upto which date it was extended in this way and therefore, the date of the breach, if any, also remains unproved. But, I will still proceed on the assumption, though unjustified, that middle of July was the date of delivery of those goods as pleaded in the plaint for ascertaining whether any breach was committed by the Defendant firm on that date.

The agreed price of those goods was Rs. 96,000 and according to Mr. Jajodia, his employee went with the money to take delivery of those goods, but he did not come out with the name of this employee. He had said that he did not know when this employee went with the money for this purpose and he had said that the Plaintiff did not even maintain any books of account and the payment of such a large sum to his employee was not recorded anywhere.

In the plaint Mr. Jajodia staled that Mr. Todi was a Sambalpur agent of the Plaintiff and in the copy of the letter of July 2, 1943, (Ex. A) addressed to the Defendant Mr. Japodia wrote that Mr. Todi was a Sambalpur agent who would make full payment on delivery of those goods. In this Court Mr. Jajodia had, firstly, said that Mr. Todi was his employee and then he had admitted that Mr. Todi was the agent of the Plaintiff and then he had retracted from this admission and hence, I am unable to act on his oral statement and hold that Mr. Todi was an agent and not an employee of the Plaintiff.

Mr. Jajodia had said that the Plaintiff had purchased large quantities of rice to fulfil its agreement with Maj. Whitburn. The Plaintiff is a trading concern and it has several partners and therefore, I am unable to accept that the Plaintiff did not maintain any books of account as said by Mr. Jajodia. In my opinion, Mr. Bachawat is right in contending that an adverse presumption for non-production of books should be drawn and by drawing it I hold that the Plaintiff''s employee was not sent with the money for taking delivery of those goods.

Mr. Jajodia was informed by Mr. Todi that the Defendants had refused to give delivery of those goods. Mr. Todi is dead, but no attempt was made to record his evidence during his life-time. It is true that u/s 32 of the Evidence Act what Mr. Todi had said to Mr. Jajodia is admissible in evidence, but it has lost its evidential value as the contesting Defendants were deprived of testing its truth. Assuming, however, this information of Mr. Todi has some evidential value, still there is no material on record to show on which date the Defendants refused to deliver those goods to Mr. Todi.

In Ex. E, Maj. Whitburn requested Mr. Jha to release those food-grains, but Mr. Jajodia had admitted that he did not know whether those food-grains were released by Mr. Jha. This exhibit shows that the Plaintiff was to take delivery of those goods from Messrs Chhaganlal Bishendayal of Sambalpur, but there is no evidence to show that after Maj. Whitburn had sent this exhibit to the Plaintiff any attempt was made by the Plaintiff to take delivery of those goods from that party and furthermore, Mr. Jajodia had no information as to what Mr. Todi did in this matter.

Ganeshiram Gopiram were the agents of the Plaintiff at Sakti which was admitted by Mr. Jajodia, but they were not called to say what they did in the matter. Exhibit D is the first, documentary evidence relating to Sakti delivery and in this exhibit it was however stated that the Defendants had refused to deliver those goods. On the contrary, it shows that those agents of Maj. Whitburn were to take delivery from Sadhuram Deepchand after paying the State duties to the Dewan Saheb of Sakti. There is nothing on record to show that any attempt was ever made by them to take delivery of those goods from that party and Mr. Jajodia had no information about this matter.

Exhibit A is a copy of the letter dated July 2, 1943, addressed by the Plaintiff to the Defendants. In this letter the Defendants were asked to deliver those goods immediately to the agents of the Plaintiff who were to make payments to the Defendants, but Mr. Jajodia had admitted that the Plaintiff was not entitled to their immediate delivery. His evidence does not even show that the Plaintiff''s agents went to Sambalpur or to Sakti for taking delivery of those goods by making the payment as stated in this exhibit.

The letter of July 20, 1943, written by the Plaintiff''s Solicitors to the Defendants does not show that after the letter of July 2, 1943, was written, the agents of the Plaintiff went to Sambalpur or to Sakti for taking delivery of those goods. On the other hand, in this letter the Plaintiff asserted that the Defendants had committed the breach of the said agreement by not giving any reply to the letter of July 2, 1943. Those food-grains were urgently required by the Plaintiff as said by Mr. Jajodia, but not a single letter was written by the Plaintiff to the Defendants prior to July 2. The agreement was entered into by trunk-telephone and still no trunk-cell was made by Mr. Jajodia to the Defendants for giving delivery of those goods. Furthermore, the endorsement made on Ex. E conclusively shows that its original was handed over to Mr. Todi on July 16, 1943, while he was going to Sambalpur to meet Mr. Jha and still Mr. jajodia did not say anything as to what Mr. Todi did with this letter.

The second Defendant had said that he did not receive the original of Ex. A. The fact that no reply was given to this letter, as said by the Plaintiff''s Solicitors, supports this oral testimony of the second Defendant coupled with the fact that the posting of the original letter was not proved by Mr. Jajodia. The delivery and payment in this case were concurrent and therefore, the parties were to perform their mutual obligations simultaneously. It has not been proved to my satisfaction that the Plaintiff''s men, in fact, went to take delivery of those goods at Sakti or at Sambalpur between July 2 and the middle of July or with the money and in my opinion, the Plaintiff has failed to prove that the Defendants have committed the breach of the agreement as pleaded in the plaint. Therefore, my answer is ''no'' to issues Nos. (2) and (3)(a).

The suit must fail in view of my above findings, but in deference to the counsel for both the parties, I will deal with other questions involved in this action. The Food-Grains Control Order was promulgated under the Defence of India Rules, 1939 and it was in force in the Province of Orissa at the relevant time. Rice is one of the items of food-grains which comes within the ambit of this Order. Mr. Bachawat has told me that this Order was also in force in the Province of Bengal and it was notified in the Calcutta Gazette of June 25, 1942, but this gazette is no longer available. It is a common case that at the time of entering into the bargain the Defendant firm had a licence to sell rice in wholesale quantities in Bankura issued under this Order and therefore, I accept what Mr. Bachawat has said from the Bar and hold that this Order was in force in the Province of Bengal at the time the agreement in suit was entered into.

Clauses 2(c) and 2(d) of this Order define purchase and sale in wholesale quantities of food-grains by saying that they mean purchase and sale in quantities exceeding 20 mds. in one transaction and include purchase or sale by any person on behalf of another as a commission agent or as an (sic). Proviso to Clause 3 of this Order is only set out below:

No person shall engage in any undertaking which involves the purchase, sale, or storage for sale, in wholesale quantities of any food-grains except under and in accordance with a licence issued in that behalf by the Provincial Government or by an officer authorised by the Provincial Government in this behalf.

The Plaintiff had no licence under this Order to purchase rice in wholesale quantities either in the province of Orissa or in the Province of Bengal and therefore my answer is ''no'' to issue No. (4).

Statutory licence specifics the food-grains and the place where the licensee may carry on licensed undertaking. The fifth condition of the licence expressly forbids sale of any food-grain in quantity exceeding 20 mds. in one transaction to any person, who docs not hold a licence under the Order, nor who is otherwise authorised to purchase food-grains in wholesale quantities. Clause 6-of the Order empowers the Provincial Government or its authorised officer to cancel the licence in the event of an infringement of any of the conditions of the licence by the licensee without prejudice to the rights of the Provincial Government to proceed against the licensee for such infringement.

The contesting Defendants had a licence to sell rice in wholesale quantities under this Order, but this licence was solely confined to Bankura as said earlier. Mr. Jajodia Had admitted that he knew that a licence was required to purchase rice under this Order in wholesale quantities, but he had said that the Plaintiff required no such licence because the Plaintiff was authorised to purchase those goods by Maj. Whitburn. This explanation is wholly unacceptable to me. The Provincial Government and its authorised officer were the sole licensing authorities. Maj. Whitburn was an employee of the Central Government and was not an authorised officer under this Order. Moreover, nothing was produced to show that Major had any licence to purchase wholesale quantities under this Order or under any other enactment.

To meet the defence as to the illegality of the agreement pleaded in the written statement, Mr. Tibrewal cited the judgment of the Nagpur High Court in Balkissen Nathani v. Laxman Rao AIR 1951 Nag. 187. There a scheme for settlement of the debts of the debtor was framed under the Relief of Indebtedness Act, 1939 and under that Act any transfer of the debtor''s property without the sanction of the Deputy Commissioner was void. The debtor agreed to sell his property without obtaining such sanction and pleaded illegality of the agreement which was overruled on the reasoning that the agreement was not forbidden by the Act though an actual sale would have been void. The Nagpur High Court, further, applying the principles laid down by the Judicial Committee in AIR 1930 287 (Privy Council) observed that the debtor should be presumed to have agreed to obtain such sanction for the proposed transfer of that property before the actual sale was to take place and therefore, the agreement was not void.

The next case relied on by Mr. Tibrewal is the judgment of the Bombay High Court in Southarn Chemical Works Vs. Mohamed Husein Fakruddin Maniar, . There the Plaintiff company were the manufacturers of drugs and had a licence under the Drugs Act, 1940, to sell their products in wholesale quantities, but the Defendant had no licence to purchase drugs in wholesale quantities as required by that Act. The Defendant repudiated the agreement on the plea of illegality, but the Court overruled it and held that though an actual sale would have been void, but the Defendant having repudiated the agreement before the actual sale was liable to pay damages was not entitled to get rid of the agreement by not applying for a licence under that Act.

Mr. Tibrewal says that the contesting Defendants should have obtained a licence to sell 3,000 mds. of rice at Sambalpur from the appropriate authorities under this Order and not having done so they have broken their promise. But this very submission is equally applicable to the Plaintiff who has no licence to buy those food-grains and has never applied for it. The Plaintiff must not only show its willingness to perform its obligation but must also show its readiness to perform it.

Their position being equally balanced, the onus lies on the Plaintiff to prove affirmatively that the Plaintiff was ready to take delivery of those goods. The Plaintiff was not at all entitled to obtain delivery of those goods without a licence and was, therefore, not ready to perform its part of the bargain at any point of time. And it is elementary that no action for damages for a breach of a contract can lie unless a Plaintiff can positively show his readiness to perform his own contractual obligations on the date the breach is complained of.

Mr. Tibrewal then says that these two decisions have laid down the principle that an agreement for sale or purchase of a commodity is not unlawful when a statute forbids an actual sale or purchase of that commodity. But, can there be a lawful agreement when its very object is to defeat the provisions of any law? And can there be any breach of an agreement for non-performance of an obligation when to perform it, it will amount to an infringement of a mandatory provision of any law? The answers must be in the negative because Section 23 of the Contract. Act says so. These two decisions relied on by Mr. Tibrewal should be understood in the context they were decided and on the actual terms of those enactments. Furthermore, propositions laid down therein are not of universal application and in any event, with due respect to the learned Judges who have decided those two cases, I am unable to share J heir views.

In Yeleswarapu Lakshmi Suryanarayana v. Kudaravlli Venkataratnam AIR (1945) Mad. 512 the Plaintiff lent and advanced diverse sums of money to the Defendant under several agreements on the terms that those loans would be discharged by delivery of paddy, but none of them had any licence to buy or sell paddy and it was held that the object and real nature; of their agreements were to sell and purchase paddy and were, therefore, unlawful under Clause 3 of the Food-Grains Control Order, 1942. Mr. Tibrewal says that this case was not correctly decided and contends that the making of an agreement was not prohibited by this Order, but the actual sale and purchase of rice in wholesale quantities were forbidden in view of the words "undertaking which involves the purchase, sale or storage for sale" used in Clause 3 of the Order and those words should be strictly construed; but I am unable to accept his contentions.

Sub-rule (1) of Rule 81 of the Defence of India Rules, 1939, says that an "undertaking means any undertaking by way of trade or business" and therefore, it should not be construed strictly but liberally and in a commercial sense. The commercial relation between two persons arises out of their contract and there cannot be any trade or business between, them in absence of an agreement in this behalf. Any dealing in rice in wholesale quantities in its commercial sense must necessarily come within the expression ''by way of trade or business''. Furthermore, the term ''undertaking'' having been expressly equated with the terms ''by way of trade or business'' any commercial transaction in wholesale quantities in rice must necessarily come within the meaning of those expressions.

Sub-rule (2) of Rule 81 of the Defence of India Rules, 1939, empowered the Central Government to promulgate Orders, inter alia, for maintaining supplies and services essential to the life of the community and for regulating and prohibiting the disposal and acquisition of articles or things of any description whatsoever and in particular for prohibiting and withholding from sale either generally or to specified persons of articles or things kept for sale and for requiring articles or things kept sale to be sold either generally or to specified persons.

Sub-rule (2)(f) of Rule 81, inter alia, empowered the Provincial Government to grant or issue licences to persons or undertakings so as to have effect either generally or in any particular area. Sub-rule (4) of Rule 81 made any contravention of the Orders an offence punishable with imprisonment or with fine or with both. An attempt to contravene or an act preparatory to a contravention of any of the, provisions of the Rules or of any Order was made a contravention of the provisions of the Rules or of the Orders by Rule 121 of the Rules and thereby entailing the same penal consequences as those of direct infringements.

It is a common knowledge that the supplies from the foreign countries were cut off to a considerable extent during the Second World War and the output of our food-grains was sufficiently low to meet the requirements of our common people. Everyone Knows that the food for human consumption became scarce and the worst part of it was that the bulk of the available food-stuff vanished from the open market. The prices shot up beyond the reach of the common people. Hoarding and black-marketing in food-stuff were rampant and those who could afford to buy were left at the mercy of the dishonest and unscrupulous hoarders and profiteers. Life of the entire community was in great peril and in this background the Food-grains Control Order, 1942 and the like social welfare measures were enforced.

An agreement may be illegal from its inception or it may become illegal at the time of its performance. A statutory prohibition may be express or it may be implicit in the Act. Prohibition is express and absolute where its infringement is punishable as an offence with imprisonment or fine. Infringement of or non-compliance with a mandatory provision of a statute strikes at the root of an agreement and no action lies for its non-performance. Similarly, where the performance of a lawful agreement has become unlawful, no action can be maintained against the defaulter because he is no longer legally bound to perform it. These are the elementary principles of the law of contract.

Rules of the Defence of India Rules discussed above have made it an offence to infringe any provision of the Orders promulgated under the Rules and further made that offence punishable with imprisonment or fine or with both. Even an attempt to contravene any provision of an Order or any act preparatory to such a contravention was made an offence punishable with imprisonment or fine or with both. This Order expressly prohibited sale and purchase of rice in wholesale quantities except with and in accordance with the terms of the licence to be obtained under the Order and its contravention was made an offence by the Rules referred to above.

An agreement for sale and purchase of rice in wholesale quantities is nothing but an attempt preparatory to sale and purchase of rice in wholesale quantities and therefore, it is an act preparatory to a contravention of this Order and accordingly, it must come within its prohibition. Furthermore, the sole object in entering into an agreement for sale and purchase of rice in whatever quantities is to sell and buy them. There cannot be any sale or purchase of any rice without a pre-existing agreement in this behalf. The agreement, sale and purchase are the continuous process of the one and the same transaction. They cannot be severed from each other and therefore, they must come within the prohibition of Clause 3 of the Order.

Statutes do not always speak in the same terms. Their meaning has to be gathered from their own objects, languages and in the context they were enacted and as interpreted by the Courts. A precedent on one statute is not an authority on any other statute unless both are in pari materia and arc enacted with the same objects and in like situations. Two enactments which were the subject-matters before the Nagpur and the Bombay High Courts respectively and relied on by Mr. Tibrewal are not in pari materia with the enactments which are the subject-matters before me. Furthermore, they were enacted in wholly different situations and therefore, they cannot be taken into consideration at all in ascertaining the meaning of the enactments before me. On the other handy the decision, of the Madras High Court, relied on by Mr. Bachawat, is a direct authority on this Order and I find no justification to differ from it.

During the First World War the Defence of the Realm Regulation of the United Kingdom made it a summary offence to infringe the provisions of any Order promulgated under the Regulation. In 1919, the Seeds, Oil and Fats Order was promulgated under the Regulation and it forbade any sale or purchase of linseed oil except with and in accordance with the terms of the licence to be obtained in that behalf and In the Arbitration between Mahmoud and Ispahani (1921) 2 K.B. 706 (731) the seller had a licence to sell but the buyer had no licence to purchase linseed oil and the buyer refused to accept delivery of those goods on the plea that he had no licence. His defence that the agreement was void due to illegality and that he had no liability to pay damages to the Plaintiff were upheld by the Court of Appeal unanimously and Atkin L.J., in his separate judgment, said:

When the Court has to deal with the question whether a particular contract or class of contract is prohibited by statute, it may find an express prohibition in the statute, or it may have to infer the prohibition from the fact that the statute imposes a penalty upon the person entering into that class of contract...here it appears to me to be plain that this particular contract was expressly prohibited by the terms of the Order which imposes the necessity of a compliance with the licence. With great respect to the learned Judge, I think the underlying fallacy in his judgment is that he has not directed his attention to the terms of the licence or to the terms of the order which says that no sale shall be made unless it complies with the terms of the licence. When one looks at the licence one finds an express prohibition against the Plaintiff selling to the Defendant as the latter had not a licence. I do not think it is necessary to pursue the matter any further so far as the statutory prohibition is concerned.

The Order before Lord Atkin and the Order before me are in pari materia. Their provisions are substantially the same and the terms of their licences are identical and therefore, the law laid down by Lord Atkin is directly applicable in the instant case before me. This Order was in force in the Province of Bengal and the agreement in suit was made in this Province. The Plaintiff had no licence at all to purchase those food-grains in wholesale quantities. The contesting Defendants had a licence to sell them but to sell them only at Bankura. No one should sell or purchase rice in wholesale quantities except under and in accordance with the licence was the mandate of this Order and they have violated this mandate because the sole object of their agreement was to effect sale and purchase of rice in wholesale quantities which could only be achieved by defeating this mandatory provision of law. And if the proper law of this agreement is lex loci contractus, there can be no doubt that this agreement is void due to illegality.

Their agreement was partly to be performed in the "Province of Orissa, that is to say at Sambalpur, where this order was in force. They had no licence to sell or purchase those food-grains in that Province and therefore, this part of their agreement including its performance was illegal from the very beginning and if not, at least on the date of its performance it was am illegal agreement on the principles laid down by the Supreme Court in Boothalinga Agencies Vs. V.T.C. Poriaswami Nadar, provided, however, the proper law of this agreement is lex loci solutionis. Sakti was then governed by an Indian Ruler and was, therefore, a foreign State. The other part of the agreement was to be performed at Sakti. The law of Sakti is not before me and therefore, Mr. Tibrewal says that at least this part of the agreement was not illegal, but I am unable to accept it.

It is true that the law of Sakti is not before me, but the presumption is that the law in both the countries are same and the party saying it to be different is to prove it. In Halsbury''s Laws of England (2nd ed., vol. VI, p. 364) it is stated:

Foreign law is presumed to be the same as English and therefore when reliance is placed by a party to an action upon difference between the law of England and the foreign law, the onus of proof is upon him to show that such a difference exists.

The above statement of law is again reiterated in vol. XIII of Halsbury''s Laws of England (2nd ed., p. 614) in the following terms:

Where, reliance is placed by any party upon a difference between law of England and any foreign law, the burden of proving such a difference lies upon the party who asserts its existence and in the absence of such proof the foreign law must be assumed, to be the same as the English.

The above statements are based on the judgment of the House of Lords and two opinions of the Judicial Committee of the Privy Council referred in the same page of vol. XIII of the treaty In England and in India foreign law is to be proved as a fact, but in both the countries the law regarding presumption is the same. The Plaintiff has not shown that the law of Sakti was different from the law of these two Provinces and therefore, this part of the agreement cannot be saved from illegality because it must be assumed that the law in Sakti is not different from the law of these two Provinces and therefore, the performance of this part of the agreement is also illegal. Assuming, however, that this presumption only applies to cases governed by the Common Law and therefore, it cannot be applied in this case, still there are other difficulties in the way of the Plaintiff on this aspect of this case.

No doubt, two different parts of a contract may be governed by two different proper laws and in extreme cases a contract may be split up, but it shall not be ''readily'' done. There must be a ''good reason'' and ''somewhat unusual'' and ''compelling circumstance'' for adopting this course as said by Lord Mac-Dermott in Kahler v. Midland Bank Ltd. (1950) A.C. 24 (42). This principle is lucidly explained in Dicey''s Conflict of Laws (7th ed., p. 721) where it is stated:

There is no rule of law to compel the Court to do so in the absence of a clear indication of an intention of the parties to this effect and the mere fact that the parties have to perform their obligations in different countries or that one party has, at the option of the other, to perform in one of several countries, is no such indication.

I do not find any ''good reason'' for splitting up this agreement. Furthermore, there is no ''unusual'' or ''compelling circumstances'' for doing it. The parties have not expressly done so, nor there is any material on record for implying that they have intended to do so. It is true that the Court may sometimes act on the maxim ul res magis valeat quan pereat to save a contract from the illegality, but this principle cannot be invoked here. Mr. Jajodia knew that this Order was in force in the Province of Orissa where the other part of this agreement was to be performed. He knew that a licence was required for purchasing rice in whole quantities in that Province which shows that he had applied his mind to this Order. The contesting Defendants had a licence to sell rice in whole quantities at Bankura and not at Sambalpur. They knew this Order was in force in these two Provinces and they have set up the plea of illegality of this agreement in their written statement. In these circumstances, it can reasonably be inferred that both the parties must have envisaged the possibility of performance of that part of their agreement at Sambalpur might turn out to be illegal. They have foreseen this contingency and still they did not split up their agreement and hence the only inference that can reasonably be drawn is that their intention, was not that the Sakti part of their agreement would remain valid and enforceable notwithstanding the illegality of the Sambalpur part of the agreement. And in any event, merely because a part of this agreement was to be performed at Sakti is not an "indication of am intention of the parties to this effect" and therefore, this agreement cannot be splitted up.

Further more, unless the proper law of this agreement is lex loci solutionis it must be held that the Sakti part of this agreement is also illegal. No doubt, the parties can expressly or impliedly agree that their contract is to be governed by a particular system of law, but they are not "free to stipulate by what law the validity of their contract is to be determined" : Vide Lord Denning in Boissevain v. Weil (1949) 1 K.B. 482 (490) because the Court

will not necessarily regard that as being the governing consideration where a system of law is chosen which has no real or substantial connection with the contract looked upon as a whole as said by Upjohn J. (as he then was) in Re Helbert Wagg and Co. Ltd. (1956) 1. All. E.R. 129 (136). In these circumstances, the validity of this agreement including this part depends solely on its proper law.

In Lloyd v. Guibert (1865) 1 Q.B. 115 (122-23) Willes J. said:

It is, however, generally agreed that the law of the place where the contract is made is prima facie that which the parties intended, or ought to be presumed to have adopted as the footing upon which they dealt and that such law ought therefore to prevail in the absence of circumstances indicating a different intention, as for instance, that the contract is to be entirely performed elsewhere.

The parties before me, have not expressly chosen the proper law of ''their agreement'' and it was not ''to be entirely performed'' either at Sambalpur or at Sakti and therefore, their intention as to the proper law is not revealed in their agreement. The commercial intercourses arc no longer confined within the territory of a particular country. They have vastly increased and have become more complex iii their nature and character. The Victorian presumptions of lex loci contractus and lex loci solutionis are still there, but they now ''play a secondary role''. Where the traders enter into a contract in one country and it is partly to be performed in one country and partly in another, their whole contract must be looked at in the light of all the facts and the surrounding circumstances at the time they have entered into their bargain for finding out their intention as to the legal system by which they have intended to be governed when there is no express term providing for its proper law.

In delivering the opinion of the Judicial Committee in Mount Albert Borough Council v. Australasian Temperance and General Mutual Life Assurance Society Ltd. (1937) 4 All E.R. 206 (214-15). Lord Write said:

The proper law of the contract means that law which the English of other Court is to apply in determining the obligations under the contract. English law, in deciding these matters, has refused to treat as conclusive, rigid or arbitrary criteria, such as lex loci solutionis and has treated the matter as depending on the intention of the parties, to be ascertained in each case on a consideration of the terms of the contract, the situation of the parties and generally on all the surrounding facts. It may be that the parties have in terms in their agreement expressed what law they intend to govern and in that case prima facie their intention will be effectuated by the Court. But in most cases they do not do so. The parties may not Have thought of the matter at all. Then the Court has to impute an intention, or to determine for the parties what is the proper law which, as just reasonable persons, they ought to or would have intended if they had thought about the question when they made the contract. No doubt there are certain prima facie rules to which a Court, in deciding on any particular contract may turn for assistance, but they are not conclusive. In this branch of law the particular rules can only be stated as prima facie presumptions.

In ascertaining the presumed intention of the parties it is not permissible to start with a presumption of law and then to see whether it is rebutted because their intention is to be gathered not only from the ''terms of the contract'' and ''the situation of the parties'' but also by taking into consideration ''all the surrounding facts'' as stated by Lord Write bearing in mind that that law is the proper law "with which the transaction has the closest and most real connection" as laid down by Lord Simond''s Bonthyon v. Commonwealth of Australia (1951) A.C. 201 (219). Professor Cheshire says:

Where it has not been expressly chosen the proper law depends upon the localization of the contract. The Court imputes to the parties an intention to stand by the legal system which having regard to the incidence of the connecting factors and of the circumstances generally the contract appears most properly to belong. In short, the proper law as Westlake stressed is the legal system with which the contract has the most substantial connexion. This principle has now been finally and unanimously endorsed by the House of Lords. Tomkinson v. First Pennsylvania Banking and Trust Co., reported in (1960) 2 W.L.R. 969, affirming in this respect the decision of the Court of Appeal, sub nom. In re United Railways of the Havana and Regla Warehouses Ltd., (1960) Ch. 52, at pp. 91-92. (See Private International Law, 6th ed. at page 218).

It is further stated at pages 219-220 of this treaty:

On this view of the matter, every term of the contract, every detail affecting its formation and performance, every fact that points to its natural seat is relevant. No one fact is conclusive. It is doubtful, even, whether any useful purpose is served by the traditional practice of regarding certain facts, such as the locus contractus, the locus solutionis or, in the case of a contract of affreightment, the nationality of the flag, as presumptive evidence of the governing law...presumptions...now play but a secondary role and can be taken into consideration only when the circumstances, viewed as a whole, fail to reveal with reasonable certainty the law to which the contract naturally belongs.

The Court must take into account, for instance, the following matters : the domicil and even the residence of the parties; the national character of a corporation and the place where its principal place of business is situated; the place where the contract is made and the place where it is to be performed; the style in which the contract is drafted as, for instance, whether the language is appropriate to one system of law, but inappropriate to another; the fact that a certain stipulation is valid under one law but void under another; the matrimonial domicil in the case of a marriage settlement contract; the nationality of the ship in maritime contracts; the economic connexion of the contract with some other transaction; the fact that one of the parties is a sovereign State; the nature of the subject-matter or its situs; the head office of an insurance company, whose activities range over many countries; and in short, any other fact which serves to localize the contract.

These guiding facts enumerated above for ascertaining the proper law are based on judicial decisions noted in the footnotes of this treaty and as the proper law of this agreement was not expressly chosen by the parties, I will deal with the relevant facts and circumstances and weign them for ascertaining their intention, if any, as was done in ''The Assuzione'' reported in 1954 (p. 150).

The partners of these two firms were Indian citizens and were domiciled in India and not at Sakti. The Plaintiff is a firm of Calcutta and the contesting Defendants are the partners of a firm at Bankura. These two places were in the then Province of Bengal. The Plaintiff carries on business in Calcutta and the contesting Defendants carry on business at Bankura as stated in the cause title of the plaint. Their agreement was entered into in the Province of Bengal. The Plaintiff entered into this agreement for fulfilling its obligations under the contract with Maj. Whitburn whose office was situate at Calcutta. These are facts which are on the one side of the scale and the only fact which is on the other side is the performance of this agreement, but that too is not an undivided one, that is to say, it was not to be performed entirely in a single place. The weight is much heavier on the side of lex loci contractus and it tilts against the side of lex loci solutionis and therefore, the presumed intention of the parties was that the proper law of their agreement should be the law of the Province of Bengal and if the intention of the parties as to the proper law of their agreement cannot be ascertained ''with reasonable certainty'' from the facts and circumstances ''viewed as a whole'', then the ''secondary role'' of presumption of lex loci contractus must come into play and this agreement must be held to be governed by the law of the Province of Bengal.

In whatever way the matter may be approached, there cannot be any doubt that this agreement was either void ab initio due to its illegality or it became illegal at the date of its performance and my answer is ''yes'' to issue No. (5).

I will now deal with issue No. (3)(b) on the assumption that the contract in suit was lawful and the contesting Defendants have broken it. Mr. Moujiram Agarwalla was a wholesale dealer in rice at Sambalpur, but he had no licence under the Order to sell or purchase rice in wholesale quantities. His accounts book does not show that any rice was purchased by him between June 9 and June 29, 1943. I have mentioned this period because Mr. Jajodia had said that the date of delivery was one month from May 25 and therefore, the market price on the date of this breach was not proved. Similarly, no purchase was made by Mr. Agarwalla between July 11 and July 19 and it must be held that there is no evidence of the market price on the date of the breach as pleaded in the plaint.

Mr. Jajodia had further said that the date of delivery was one and a half month and it brings me to July 10, on which date a transaction was effected by Mr. Agarwalla at the rate of Rs. 24 per maund at Sambalpur but this purchase was made on the terms and conditions agreed upon by him and his sellers and therefore, this rate cannot be taken into consideration for ascertaining the market price of that day because it comes directly within the mischief laid down by our Court of Appeal in Pratapmull Rameswar v. Manick Chand Durgaprosad 64 C.W.N. 992 (1006).

Mr. Agarwalla had said that he had regularly visited the godowns of the rice-dealers at, Sambalpur and was acquainted with the trend of the market rate which was going up and therefore, he is a competent witness to speak on the market rate of Sambalpur as laid down in Pratapmull''s case (Supra). But Mr. Jajodia did not say anything about the quality of the rice which was the subject-matter of the agreement in suit and similarly, Mr. Agarwalla was silent as to their qualities and he admitted that there were numerous qualities of rice in the market and their rates varied according to their qualities, but he did not give their prices.

There must be some evidence as to the quality of the contracted goods and of the market price of the like quality, otherwise no damages can be assessed. No evidence was given as to the agreed quality of the rice and therefore, it is impossible to find out what was the market price of those goods or their like quality for the whole period either at Sambalpur or at Sakti. As the matter stands, the Plaintiff has totally failed to prove the market price of the contracted goods or their like quality during the relevant period.

Faced with these difficulties Mr. Tibrewal takes the aid of Section 16(2) of our Sale of Goods Act and says that because various qualities of rice were in circulation in the market and the parties being wholly silent as to the agreed quality of rice the Court should imply that they have agreed to the lowest and the merchantable quality and therefore, the compensation should be assessed on the basis of the lowest grade of rice. He said that this law was laid down by Lord Reid in Henry Kendell and Sons v. William Lillico and Sons. (1968) 2. All E.R. 444 (449-50) on the corresponding section of the English Sale of Goods Act in the following terms:

Merchantable can only mean commercially saleable. If the description is a familiar one, it may be that in practice only one quality of goods answers that description then that quality and only that quality is merchantable quality, or it may be that various qualities of goods are commonly sold under that description, then it is not disputed that the lowest quality commonly so sold is what is meant by merchantable quality ; it is commercially saleable under that description.

Above observation was made in connection with a breach of warranty of merchantable quality of the goods which were the subject-matter before the House of Lords after their delivery, but I am concerned with a case where the goods were not delivered and the parties were wholly silent on the agreed quality of rice though various qualities of rice were in circulation in the market. Furthermore, the agreed price was Rs. 16 per maund, but it does not appear s that the lowest quality of rice was sold in the market at that price when their bargain was concluded. The lowest grade of rice may be of different types, descriptions, qualities and prices and furthermore, there is no evidence on record to show at what rate the lowest quality of rice was sold.

Mr. Agarwalla had also said that coarse quality of rice was also sold at Sambalpur and Mr. Tibrewal says that I should at least award damages at the rate the coarse quality of rice was sold, but there is nothing on record to show that all coarse qualities of rice Were of the same type, description and price. The market price of the rice, on the date of the breach, must be on the quality agreed or the like quality under illus (a) to Section 73 of our Contract Act and no evidence being adduced in this direction, I am unable to hold that the Plaintiff had suffered any damages due to the non-delivery of those goods.

I am also unable to imply a term in this behalf as said by Mr. Tibrewal. Section 16(2) of our Sale of Goods Act says about merchantable quality of the goods and I can go up to that limit and no further. The dictum of Lord Reid has no application before me. Here the parties were dealers in rice. To their knowledge various qualities of rice were in circulation in the market. They did not say anything as to the quality of rice agreed upon. In these circumstances, it can reasonably be inferred that they did not apply their mind in this direction and therefore, no term as to the quality of the rice can be implied : vide Satyabrata Ghose Vs. Mugneeram Bangur and Co. and Another, and The Naihati Jute Mills Ltd. Vs. Khyaliram Jagannath, .

There are also three serious impediments on the way of the Plaintiff. The first one is that Mr. Agarwalla had no licence under the Order for purchasing rice in wholesale quantities at Sambalpur and all his purchases were, therefore, wholly illegal. The Court cannot take into consideration those illegal transactions in awarding damages to the Plaintiff. The second impediment on the way of the Plaintiff is that it is an admitted fact that the price of rice was controlled at that time and therefore, the controlled price was the only price at which the rice could lawfully be sold in the market. When Mr. Agarwalla said that the price of rice was going up at Sambalpur, it must be the illegal and blackmarket price and the Court cannot award damages on the blackmarket price, but on the controlled price of which no evidence was laid by either party. The last, but not the least, impediment on the way of the Plaintiff is that Mr. Agarwalla did not purchase any rice from Sakti and I am unable to rely on his evidence that he was acquainted with the market price of Sakti. The Plaintiff, in my opinion, has failed to prove the market price of those goods on the date of the breach and is, therefore, not entitled to any compensation and my answer is ''no'' to this issue and to issue No. (8).

The question of jurisdiction of this Court to try this suit now remains to be considered. This action was commenced with leave under Clause 12 of the Letters Patent of this Court and it was obtained on the plea that the agreement was entered into in Calcutta within the jurisdiction of this Court. Mr. Jajodia had said that their bargain was concluded by trunk-telephone from Calcutta to Bankura and it is clear from his evidence that the offer to sell those rice was made by the second Defendant from Bankura and it was accepted by Mr. Jajodia at Calcutta and therefore, my answer is ''yes'' to issue No. (7) and I do so on the principle laid down by the Supreme Court in Bhagwandas v. Giridharlal AIR 1960 S.C. 543.

In view of my main findings this action must fail and therefore, the suit is dismissed with costs. Certified for two counsel. The contesting Defendants will get the costs incurred by them in connection with the Commission held at Sambalpur from the Plaintiff including the fees paid to the counsel, but they will bear their own costs of the Commission held at Bankura.