To invoke Part 73 of India’s Contracts Act, the applicant should show that harm was attributable to the applicant’s breach of contract
Tap to follow:
To invoke Section 73 of India’s Contract Law, the applicant must provide evidence that the damage was caused by the respondent’s breach of contract, which was written by an Avdhesh Parashar student at Maharashtra National Law University Aurangabad
MAHARASHTRA STATE ELECTRICITY BOARD, BOMBAY vs. STERKITE INDUSTRIES (IND.) LTD. AIR 2000 BOM 204
FACTS OF THE CASE:
Maharashtra State Electricity Board, Bombay (hereafter referred to as MSEB), a legal entity incorporated under the Electricity (Supply Act, 1948) to provide, distribute and supply electricity in the state of Maharashtra. In order to investigate government plans to distribute electricity in the rural area of Maharashtra State, MSEB Bombay needed materials including conductors, wires, etc. The MSEB had launched tenders in 1983 and respondents i) Sterlite Industries and ii) Pravin Trading Corporation accepted the offers and ordered the supply of the necessary materials by the end of June 1985. A general clause, Clause 14 (ii) of the contract, was with respect to the termination of the contract. The buyer reserves the right to cancel such terms and conditions to buy in a manner he deems appropriate and entitled to compensation for damage caused by failure to deliver firm contract material and reserves the right of the complainant to buy the material on the open market. In both contracts, trading with i) Sterlite Industries ii) Pravin was in default of delivery of the relevant material and was not delivering sufficient material at the end of the contract period. When the complainant learned that the respondents were unwilling to fulfill their contractual obligation, they provided Rs with a notice of solicitation. 77,66, 280 / – and Rs. 52,16,945 / – to Sterlite Industries Ltd. or Pravin Trading Corporation for damage caused by the complainant’s respondents. According to Section 30 of the Arbitration Act, the matter went to the Arbitration Bench, where the majority ruled 2: 1 in favor of the respondents and dismissed the lawsuit. The complainant later appealed against the bank’s decision.
Was the complainant entitled to rely on Section 73 of the Indian Contract Law, and if so, whether the complainant can prove that he suffered the loss?
Section 73 of the Indian Contract Act
Section 62 of the Sale of Goods Act
Section 30 of the Arbitration Act
The Hon’ble High Court’s observation was that the complainant could not demonstrate any harm caused by the failure of Sterlite Industries and Pravin Trading Corporation. The court relied on Sitaram Bindraban’s ruling against Chiranjilal Brijlal, which stated that “the parties may exclude or imply any terms and conditions that the law associates with contracts for the particular rights and obligations they desire, for example the provision of their own action for damages in the event of a breach of contract and in fact the provisions of Section 62 of India’s Law on the Sale of Goods recognize the right of the parties to change the normal occurrence of a contract by express provisions of the sales contract between them. Section 62 gives the contracting parties the right to exclude the corresponding conditions at the request of the parties. The High Court therefore considered that Clause 14 (ii) of the Treaty made a special provision for the complainants by reserving the complainant’s right to buy materials and equipment on the open market and to seek damages from the respondents Claiming damages according to Section 73 of the Contract Act was excluded. After the termination of the contract, as mentioned in section 14 (ii) of the contract signed between the parties, the Complainant did not purchase any such material on the open market because of the Respondent. In addition, the court mentioned that Section 73 of the Contract Act does not contain any other cause of action if there is actually damage due to a breach of contract.
The Hon’ble High Court reserved the arbitration board’s decision and dismissed the appellant’s appeal.