When there is a breach of contract, there will be compensation

Barathkumar K M | Sastra Deemed to be University Thanjavur | 23rd June 2020

M. Lachia Setty & sons Ltd Vs The Coffee Board

Facts:

The respondent was the Coffee board at Bangalore is a statutory body incorporated under the coffee act. The various quantities of coffee were put up for sale by the respondent called ‘pool auctions’ (wholesale) held at Bangalore, Mysore, Coimbatore and Chennai. The two appellants (M. Lachia Setty & Sons Ltd. and M/s Giri Coffee Works) have participated in the auction at Coimbatore. The two appellants were declared to be the successful bidders. But the appellants’ were failed to pay for the sale and to take the delivery within the stipulated period of 17 days. After issuing the notice of re-sale to the appellants and others, the respondent filed a case against the appellant by claiming Rs.34,570 as compensation for the re-sale. The trial court ordered the appellant to give compensation to the respondent. Then the appellant approached the Madras High Court to quash the order of the trial court but the High Court ordered the appellant to give compensation. The present appeal has been filed by the appellant for challenging the Madras High Court order.

Issue:

1. Whether the bidders are liable to pay the compensation?

Observation:

It was observed that according to the contract between the seller and the bidders, the bidders should pay the amount for the sale within the stipulated period. The failure of the respondent to pay the amount will lead to a breach of contract. So the appellant may be liable to pay the compensation. Thus, the damages awarded to the non-defaulting party to a contract will be determined and measured as though that party had made reasonable efforts to avoid the losses resulting from the default. Here, due to the omission of the appellant, the respondent suffered damages.   

Judgment:                    

The Hon’ble Supreme Court held that the bidders should pay the amount for the sale within the stipulated period; the failure of the payment will lead the bidders to be held. Thus the Hon’ble Supreme Court dismissed the appeal with the cost.