Taj Mahal Hotel v. United India Insurance Co. Ltd
- 2022-02-17
Karsandas H. Thacker Vs. Saran Engineering Co. Ltd.
Citation: AIR 1965 SC 1981
Judges: Justice Raghubar Dayal and Justice J.R. Mudholkar,
Facts:
Karsandas H. Thacker
Karsandas H. Thacker, appellant, sued the respondent for the-recovery of Rs. 20,700 for damages for breach of contract. He alleged that he entered into-a contract with the respondent for the supply of 200 tons of scrap iron in July 1952 through-correspondence, that the respondent did not deliver the scrap iron and expressed his inability to comply with the contract by its letter dated January 30, 1953. In the meantime, the appellant had entered into a contract with M/s. Export Corporation, Calcutta for supplying them 200 tons of scrap iron. On account of the breach of contract by the respondent, the appellant could not comply with his contract with M/s. Export Corporation which in its turn, purchased the necessary scrap iron from the open market and obtained from the appellant the difference in the amount they had to pay and what they would have paid to the appellant in pursuance of the contract.
Issues:
Judgement:
The Supreme Court held that when a party commits breach of contract, the other party is entitled to receive compensation for any loss by the damage caused to him which naturally arose in the usual course of business from such breach or which the parties knew when they made the contract to be likely to result from the breach of it. Remote and indirect loss or damage sustained by reason of the breach will not entitle the party complaining breach, to any compensation.
Analysis:
As per Section 73 of the Indian Contract Act the person committing breach of contract has to pay to the other party the difference between the contract price of the articles agreed to be sold and the sum paid by the other party for purchasing another article on account of the default of the first party, but the first party has not to pay the compensation which the second party had to pay to third parties as he had not been told at the time of the contract that the second party was making the purchase of the article for delivery to such third parties.
