TMI Blog1942 (12) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... n of this, you will pay us a sum of Rs. 1750 towards the cost of each print supplied to you. Such payments to be made to us on demands and the prints to be delivered to you within four to five weeks from the date of the payment. The exact price of the print to be adjusted on the delivery of the print and to be reckoned by adding the actual duty as would be payable on the footage together with the costs of the positive print and other incidental charges (shippers, freights, etc.). 2. This was followed by a provision whereby the plaintiff was to retain 25 per cent, of the revenue received on the exhibition of the film until he had recovered half of his investment on the prints or print cost, the balance being divided between the parties equally: thereafter, the whole revenue was to be divided equally. The prints were to be returned to the defendants after the exploitation was over. The correspondence between the parties which followed upon the contract and continued until January 1987, need not here be described in detail, but it shows that two films only--Shipmates o' Mine and Annie Laurie--were offered to and accepted by the plaintiff. On 2nd July 1986, the plaintiff p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 expenses incurred. The defendants by their written statement of 22nd April 1937, denied that they had committed any breach of contract, and averred that they bad all along been ready and willing to perform their part. They alleged that the plaintiff had broken the contract and that they had suffered damages for which they were advised to bring a separate suit. As the plaintiff's whole case was that the defendants had broken the contract in essential particulars, the defendants could hardly be expected to plead by way of equitable set-off that they were entitled to recover damages by reason that they had rightly rescinded the contract on account of the plaintiff's breaches. 4. At the trial before Panckridge J. in January 1939 it was found by the learned Judge--and rightly found, as the plaintiff by his learned counsel, Mr. Bagram, now admits--that the plaintiff failed to prove any breaches by the defendants entitling him to repudiate the contract as he had done by his letter of 1st December 1936. But at the end of the trial Mr. P.C. Ghose, learned counsel for the plaintiff, contended that even if the plaintiff had broken the contract and the defendants were justified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strong objection to the informality with which it has in this case been raised. While a rigid practice of refusing leave to amend pleadings is far from commendable, to entertain a case of which the pleadings contain no suggestion is another matter altogether. It is unfortunate that a proper application for leave to amend was not insisted on by the High Court and a formal order made thereon duly safeguarding the rights of the defendants, and ensuring that the basis in fact of the new case made should be set forth with particularity and exactness by the plaintiff. The desirability of a direction as to pleading will be referred to later in this judgment. The first question is whether under the Contract Act a party who has put an end to a contract Under Section 39 is liable to restore any benefit received by him under the contract from another party? Relevant sections are as follows: 2. In this Act the following words and expressions are used in the following senses, unless a contrary intention appears from the context: ************* (g) An agreement not enforceable by law is said to be void; (h) An agreement enforceable by law is a contract; (i) An agreement which is enforc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it. Illustration. (c) A, a singer, contracts with B, the manager of a theatre, to sing at his theatre for two nights in every week during the next two months, and B engages to pay her a hundred rupees for each night's performance. On the sixth night, A wilfully absents herself from the theatre, and B, in consequence, rescinds the contract. B must pay A for the five nights on which she had sung. 66. The rescission of a voidable contract may be communicated or revoked in the same manner, and subject to the same rules, as apply to the communication or revocation of a proposal. 75. A person who rightly rescinds a contract is entitled to compensation for any damage which he has sustained through the non-fulfilment of the contract. Illustration. A, a singer, contracts with B, the manager of a theatre, to sing at his theatre for two nights in every week during the next two months, and B engages to pay her 100 rupees for each night's performance. On the sixth night, A wilfully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t he too treats the contract as at an end, except for the purpose of bringing an action upon it for the damages sustained by him in consequence of such renunciation (per Lord Esher, p. 467). The rights of the parties under the contract must be regarded as culminating at the time of the wrongful renunciation of the contract, which must then be regarded as ceasing to exist except for the purpose of the promisee's maintaining his action upon it (per Bowen L.J., p. 473). 9. Though the Indian Act is to be interpreted according to the meaning of the words used in it, such passages help to show that Section 39 and Section 64 cannot be read together as a matter of course if they do not appear by the mere force of their own language to link up. The question must therefore be whether there is elsewhere in the Act sufficient to show that the contract which may be put an end to is voidable ? To this question their Lordships think the answer must be yes. The presence of illust. (c) to Section 65 cannot be made consistent with any other view. The effect of Section 89 is explained by the example there given of a singer who wilfully absents herself from the theatre. The same example serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at a plaintiff could not declare upon a contract as being void, cannot be taken as a guide to the use of the words void and voidable in the Indian statute. Nor can the clauses of Section 2, which would seem intended to explain those words by use of the phrase enforceable by law, be taken as showing that a contract which one party is entitled by reason of the other's default to rescind is not voidable . 12. It may be suggested that a case under Section 39 or under para. 1 of Section 55 comes readily under the phrase voidable contract as explained by Clause (i) of Section 2, but that even after rescission it never becomes void in the sense of Clause (j). It is, it may be said, enforceable at the option of the party not in default, but it never ceases to be enforceable even if put an end to, because the right to damages remains. But this account of the matter has its own difficulties. The option which characterises a voidable contract is an option either to say it shall not be enforceable at all or to leave it as a good contract enforceable by any party on the usual conditions. This is certainly so in any case under Section 19; it is enforceable at the option of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re may well have thought that his just claims have been met. The fact that a party to a contract is in default affords good reason why he should pay damages, but further exaction is not justified by his default. Where a payment has been made under a contract which has--for whatever reason--become void the duty of restitution would seem to emerge. A cross claim for damages stands upon an independent footing, though it arises out of the same contract and can be set off. 14. It was contended for the defendants that even if Section 64 of the Act applied to the case, restitution could not properly consist in the return of the Rs. 4,000. The contract was referred to as showing that what the plaintiff had to pay to the defendants was intended to reimburse the defendants for the expense of producing the print which they had to deliver, the import duties, port charges, censor's fee, etc. Hence it was contended that the defendants had received no benefit or advantage or at least that the Rs. 4,000 represents no benefit or advantage in the defendants' hands. The learned Chief Justice gave some countenance to this argument, saying that if the rescission had been an issue at the tria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld set forth that these are claimed by way of set-off against the plaintiff's claim to recover Rs. 4000 which has been allowed upon the footing that he wrongfully repudiated the contract and that the defendants lawfully put an end to the contract by their letter of 21st January 1937. 16. Their Lordships think that this appeal should be allowed; that the decrees of the High Court dated 10th January and 14th July 1939 should be set aside; that it should, be declared that the plaintiff is entitled to recover from the defendants Rs. 4000 paid under the contract of 8th May 1936 subject to the right of the defendants to set off the amount due to them as damages for the plaintiff's repudiation and breaches of the said contract; that the defendants should have leave within two months of the receipt by the High Court of the Order in Council to be made on this appeal or within such further time as may be allowed by the High Court to file in the High Court particulars of their claim for damages as aforesaid; and that this case should be remitted to the High Court in its original jurisdiction to assess such damages and thereafter to pass a decree for such sum as may be due on balan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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