TaxTMI 
TaxTMI 
2000 (2) TMI 851
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....ricity within the State of Maharashtra. 3. In the discharge of its duties under the Supply Act, the appellants frames schemes for generation, distribution and supply of electricity in accordance with the policy of the State and its schemes include rural electrification for the purpose of spreading the benefit of electricity to the rural areas in the State of Maharashtra. The schemes are implemented in the phased manner from year to year. The implementation of such schemes for rural electrification and development of rural areas is a continuous process forming part of the five-year plans of the State. The appellants require supplies of material and equipments of different kinds for their schemes which include conductors of different kinds needed for transmission distribution and supply of electricity. Such conductors were needed in large quantities and the appellants have to place orders according to their estimated requirements every year and from time to time during a year. 4. The appellants had floated tenders for purchase of conductors for its rural electrification schemes sometime in 1982. The respondents (1) M/s. Sterlite Industries (India) Ltd., and (2) M/s. Pravin Trad....
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....nductors and 50 M.T. 7/10 S.G.W. Stay Wires. The said respondent did not supply the balance quantity of goods, whereas in the case of M/s. Pravin Trading Corporation, the said respondent supplied in phased manner 13219 kms. of different kinds of conductors by the month of June 1986, i.e. much beyond the contractual period of delivery as against 21000 kms. of different kinds of conductors which had to be delivered by the end of June 1985 and in any event, by 31st May, 1987 till time for completion had been extended. The respondent did not supply any of the goods after June 1986. 6. When it became apparent to the appellants that the respondents were unwilling to perform their respective obligations, under the respective contracts despite repeated requests made by the appellants, the appellants after due notice to the respective respondents terminated their contract in exercise of the powers under the contract reserving their right to recover from the respondents damages and/or compensation for non-supply of balance quantities of the goods under respective contracts." The appellant claimed that they were entitled to receive the said balance quantity of goods under the terms and con....
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....e Act were opened and assigned to the file of the learned Single Judge. 9. The appellants challenged respective majority awards before the learned Single Judge for adjudication in accordance with law, proceedings and prayed that the respective awards of two arbitrators out of three be set aside and respective minority awards rendered by minority arbitrators be made rule of the Court. 10. Mr. Rustomji, the learned Counsel for the appellant contended that it is a well settled law that measure of damages for failure or refusal to supply goods under the contract is the difference between contract price and the market price prevailing at or around the date of breach of contract. This principle according to him, is clearly enunciated in illustration (a) to section 73 of the Contract Act itself. The learned Counsel further submitted that sub-clause (ii) of Clause 14 of the contract, right was reserved in favour of the appellants to purchase upon such terms and in such manner as the appellants deemed appropriate, equipments similar to that terminated and the respondent were to be held liable to the appellants for any additional costs for such similar equipments and/or for liquidated ....
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....aterials and equipments from the market, and right to claim damages from the respondents under section 73 of the Indian Contract Act has been excluded. It was open for the parties to include any terms or conditions in the contract of sale and create for themselves any special rights and obligations, such as providing for any special measure for damages in case of contract of purchase and indeed, provisions of section 62 of the Sale of Goods Act recognises such a right of the parties. 12. Alternatively, he further argued that if section 73 of the Indian Contract Act is attracted, then, in order to succeed on the basis of that section, the appellants need to prove damages and loss suffered by them. Learned Counsel further contended that even otherwise, it was incumbent on the part of the appellants under Clause 14(ii) of the Contract to actually purchase the goods, not supplied, from the open market after termination of the contract in order to claim damages. As such, the claim of the appellants was rightly rejected by the two Arbitrators. Mr. Bharucha contended that the approach adopted by the arbitrators cannot be challenged in proceedings under section 30 of the Act. He, theref....
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....bsp; * * "Section 73 Contract Act prescribes the method of assessing compensation due to a plaintiff suing upon a breach of contract." It says ; * * * * * "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 on damage caused to him thereby, which naturally arose in the usual course of things for such breach." * * ....
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....racts for computation of the damages. It is not disputed that ordinary measure of damages upon breach of the contract for sale of goods is the difference between the contract price and the market price on the date of breach. It is, however, open to the parties to lay down a different rule. It is quite possible for the business people to reach to an agreement that in the event of a seller failing to complete his contract the purchaser shall not be entitled to ordinary remedy of law, but in lieu thereof, he shall, subject to certain allowances referred to in the terms of the contract be entitled to retain, only a sufficient portion of the purchase money to enable him to obtain from elsewhere the commodity, the subject matter of the contract, and that he must pay over any balance of purchase price to the vendor. In other words, it is open to the parties to the contract to agree for themselves to any special rights and obligations as they may please, such as providing for measure of damages in case of breach of the contract and specially exclude any of the terms and conditions which law attaches to the contract of sale of goods. In fact, section 62 of the Sale of Goods Act is a statuto....
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.... learned Counsel for the respondents hold that section 73 of the Contract Act is inapplicable to the facts of the present case in view of the special provision of Clause 14(ii) incorporated in the contract. As such the damages sought to be claimed by the appellants on the basis of section 73 cannot be awarded. The view taken by the majority of Arbitrators and the learned Single Judge in this behalf is correct. 15. In the light of the above view taken by us, it is really not necessary to go into the second question as to whether appellants proved the alleged loss suffered by them. However, both the learned Counsel have advanced arguments on this aspect as such we are dealing with the same. It is a well settled law that where loss in terms of money is payed for, the party claiming compensation must prove such loss suffered by it. The concept of compensation is linked up with loss or damages that result from breach of contract and where no loss or damage is ensued, there would be no question of awarding compensation. Section 73 of the Contract Act does not give any cause of action unless and until damages are actually suffered, otherwise section 73 will become nugatory and party wo....