Supreme Court rules in favor of appellant in contract dispute, denies damages due to lack of evidence.

The Supreme Court accepted that Babulal acted as the agent of the appellant. Regarding the impossibility of contract performance, the High Court disagreed with the trial court's finding. However, the Supreme Court did not delve into this issue, focusing instead on damages. The Supreme Court held that the respondent failed to prove the market rate of canvas in Kanpur on the breach date, thus not entitled to damages. The appeal was allowed, the High Court decree was set aside, and the trial court judgment was restored, dismissing the respondent's claim for damages. Costs were awarded to the appellant.

---

---

Issues Involved:
1. Agency of Babulal
2. Impossibility of performance of the contract
3. Entitlement to damages and the measure of damages

Detailed Analysis:

1. Agency of Babulal:
The trial court determined that Babulal had acted as the agent of the appellant in the matter of the contract, thereby binding the appellant to the contract. This finding was not contested in the appeal to the Supreme Court, and thus, it was accepted that Babulal acted as the agent of the appellant.

2. Impossibility of Performance of the Contract:
The appellant contended that the contract had become impossible to perform due to the closure of booking from Kanpur to Calcutta. The trial court agreed with this contention, holding that the contract had indeed become impossible of performance. However, the High Court reversed this finding, holding that the contract had not become impossible of performance as it had not been proven that the booking between Kanpur and Calcutta was closed at the relevant time. The Supreme Court, however, found it unnecessary to decide on this point, as the appeal could be decided on the issue of damages.

3. Entitlement to Damages and the Measure of Damages:
The central issue before the Supreme Court was whether the respondent was entitled to damages and, if so, how those damages should be measured. The contract stipulated delivery f.o.r. (free on rail) Kanpur, and the appellant failed to deliver the railway receipt by the agreed date, constituting a breach of contract.

The respondent claimed damages based on the market rate of canvas in Calcutta on the date of the breach, arguing that the goods were intended for resale in Calcutta. The Supreme Court, however, emphasized that the measure of damages in such cases is governed by Section 73 of the Indian Contract Act, 1872. According to this section, damages are to be calculated based on the loss that naturally arose in the usual course of things from the breach or which the parties knew, when they made the contract, to be likely to result from the breach.

The appellant contended that the respondent needed to prove the market rate of similar canvas in Kanpur on the date of the breach to claim damages. The Supreme Court agreed with this contention, stating that where goods are available in the market, the measure of damages is the difference between the market price on the date of the breach and the contract price. The respondent failed to provide evidence of the market rate of canvas in Kanpur on the date of the breach. Consequently, the Supreme Court held that the respondent was not entitled to any damages, as there was no basis for calculating the quantum of damages.

The Supreme Court further clarified that the present case did not fall within the special circumstances where the measure of damages could be based on what the parties knew to be likely to result from the breach. The contract was an ordinary commercial contract for the sale of goods, and the measure of damages was to be determined by the market rate at the place of delivery (Kanpur) on the date of the breach.

Conclusion:
The Supreme Court allowed the appeal, set aside the decree of the High Court, and restored the judgment of the trial court, dismissing the respondent's suit for damages. The respondent was not entitled to any damages due to the failure to prove the market rate of canvas in Kanpur on the date of the breach. The appeal was allowed with costs to the appellant throughout.

---