Mishra, J.@mdashA private limited company carrying on business as exporters of various goods and claiming to have been appointed as the sole
agent for export of switchgears by the defendant, a public limited company, by letter dated September 2, 1967, has filed a suit for recovery of a
sum of Rs. 2,00,000 by way of damages and for costs. A learned single judge of this court has dismissed the suit, holding that section 294(2A) of
the Companies Act, 1956, operated as a bar to the maintainability of the suit, and that besides the force majeure clause in the agreement
completely answered the suit claim of damages. The plaintiff has preferred this appeal.
2. The plaintiff''s case has been that the defendants who are manufacturers of switchgear equipment, by its letter dated September 2, 1967,
appointed the plaintiff as its sole agents for export of switchgears. The plaintiff was appointed as the sole agent to represent the defendant in the
areas covered by the Middle East, Africa and South East Asia. The plaintiff, by reason of its contacts and influence, was able to obtain, for and on
behalf of the defendant, a contract from the National Electricity Administration of Baghdad for supply of 11 KV switchgears of the value of about
Rs. 15,00,000 (C and F Baghdad). The plaintiff received this order from the National Electricity Administration of Baghdad on August 4, 1969.
The plaintiff thereafter in terms of the arrangement with the defendant, communicated, vide its letter dated August 20, 1969, the order of the Iraqi
buyers to the defendant who had irrevocably and without any reservation accepted the said order which was in all respects and entirely identical
and essentially similar to the terms and conditions of the Iraqi buyer''s order. In terms of the said order, the first consignment should have been
effected by April, 1970, and the remaining balance consignment should have been completed by September 15, 1970. On November 9, 1969, the
plaintiff also received a letter from the tendering authorities by which the plaintiff was informed that a letter of credit had been opened on
November 5, 1969, in its favour for a sum of Sterling Pounds 86,250 being the total C and F Baghdad value of the order the f.o.b. value of the
order being Sterling Pounds 78,003-13-06 (equivalent to Rs. 14,00,550.70). The defendant ought to have shipped the first lot of equipment by
April, 1970, and completed the shipment of the remaining portion of the order by September 15, 1970, as provided in the order and in the letter of
credit unconditionally accepted by the defendant. However, the first shipment was effected by the defendant only on August 3, 1970, and,
thereafter, no shipment was made by the defendant even though the letter of credit was extended by the Iraqi buyers from time to time on the
request of the plaintiff and finally on January 31, 1972. The defendant wrote to the plaintiff on January 21, 1972, furnishing a revised delivery
schedule by which it agreed to complete the order of shipping the remaining items in three instalments, the first one by the end of January, 1972,
the second by the end of February, 1972, and the third by the end of March, 1972, and requested the plaintiff to persuade the foreign buyer to
extend the validity of the letter of credit up to March 31, 1972, by which time it assured the plaintiff that it would definitely be completing the
shipments of the balance portion of the equipment. On the persuasion of the plaintiff, the Iraqi buyers extended the validity of the letter of credit up
to March 31, 1972. The defendant, however, failed to keep up its promise and the undertaking and no shipment was effected even as per the
revised schedule except a part shipment towards the end of March, 1972, leaving a sizeable quantity unshipped as on March 31, 1972. The
foreign buyers, left with no option cancelled the orders for the remaining quantity and invoked the performance guarantee issued by the plaintiff and
the defendant which action was eventually taken by the Iraqi buyers and communicated to the plaintiff by letter dated August 29, 1972, besides
levying a penalty of Sterling Pounds 460.74 and blacklisting the plaintiff from securing any further business from them.
3. The plaintiff has then stated that it was only acting as an export agent of the defendant, though this position is now being disputed by the
defendant. The plaintiff has relied on several circumstances and documents to demonstrate its position as export agent of the defendant. According
to the plaintiff, the total C and F value of the unexecuted portion of the goods as on April 1, 1972, is Sterling Pounds 21375.12 which is equivalent
to Rs. 4,00,020.90 and that of the commission which had been increased by 1 per cent. by the letter of the defendant dated February 22, 1971,
calculated on the f.o.b. value of the unshipped portion of the contract amounted to Rs. 30,403.82. In addition, the plaintiff has claimed, it is also
entitled to receive a sum of Rs. 2,915.32 being the commission due by the defendant to the plaintiff on the shipment already made. The plaintiff
addressed a legal notice to the defendant dated January 31, 1973, claiming a sum of Rs. 5,00,000 inclusive of the commission due to them by
reason of the failure of the defendant to carry out their obligations. By final reply the defendant, through its counsel, refuted the claim of the plaintiff
and pleaded that it was unable to keep up to the terms of the delivery schedule by reason of circumstances beyond its control, and pleaded that
having paid the penalty under the contract for delay in delivery, there could no further liability on the part of the defendant. The defendant also
denied that there was any agreement to refer the matter to arbitration.
4. The defendant, on appearance, stated first as follows :
The alleged appointment of the plaintiff as a sole selling agent of the defendant ought to have been approved by the company at its next general
meeting after September 2, 1967. The company held a general meeting on September 9, 1968. The plaintiff''s appointment as sole selling agent
was not placed before the said meeting and consequently the plaintiff ceased to be the sole selling agent on and after September 9, 1968, and no
commission was payable to the plaintiff thereafter. It is also averred that without prejudice to the foregoing, the defendant does not admit the
averments in paragraph 3 of the plaint that the plaintiff was appointed as the sole selling agent of the defendant for export of switchgear. No
appointment of the plaintiff as sole selling agent in accordance with the provisions of the Companies Act, 1956, was made at any time. The parties
were, therefore, dealing-as principal to principal in respect of this transaction, the defendant having agreed to give the plaintiff a discount of 5 per
cent. on the f.o.b. value of the order placed by the plaintiff with it. The defendant also pleaded that the quotation of the defendant and
communication addressed to the plaintiff would establish that the contract between the parties was subject to the usual force majeure clause in and
by which the defendant was relieved of all the obligations under the contract if the performance thereof was prevented by force majeure. The
defendant denied the other allegations in the plaint and contested practically every item of the claim made by the plaintiff in the suit. On the issue,
however, as to the quantum of damages to be awarded to the plaintiff, in case the defendant is found to have committed breach of the agreement,
the learned single judge has found that the plaintiff is entitled to damages of Rs. 30,403.82 towards the unexecuted portion of the goods as on
April 1, 1972, and Rs. 2,915.32 being the commission due to it in respect of the shipment already made, the total being Rs. 33,319.14.
5. As to the counter-claim made by the defendants in the written statement, the learned single judge has stated as follows :
In view of the admission made by PW-1 in cross-examination and exhibit D-6, the plaintiff is bound to tender account in respect of 2,589 sterling
pounds to the defendant.
6. The learned single judge has also held that the defendant is not entitled to call upon the plaintiff to pay any sum as damages.
7. Learned counsel for the appellant has attacked the findings recorded by the learned single judge on the issue whether the provisions of section
294(2A) of the Companies Act would operate as a bar to the maintainability of the suit on the ground, inter alia, that section 294(1) and (2A) of
the Companies Act read together ceased the validity of the appointment of a sole selling agent for any area with effect from the date of a general
meeting of the company which disapproved the appointment or did not approve the appointment, but operated as no bar to the maintainability of
the suit which in common law and the law of contract were/are available to the plaintiff. He has, for the said purpose, drawn our attention to
section 294(1) substituted by Act 65 of 1960. Section 294(1), (2) and (2A) read :
294. Appointment of sole selling a agents to require approval of company in general meeting - (1) No company shall, after the commencement of
the Companies (Amendment) Act, 1960, appoint a sole selling agent for any area for a term exceeding five years at a time :
Provided that nothing in this sub-section shall be deemed to prohibit the re-appointment, or the extension of the term of office, of any sole selling
agent by further periods not exceeding five years on each occasion.
(2) After the commencement of the Companies (Amendment) Act, 1960, the board of directors of a company shall not appoint a sole selling agent
for any area except subject to the condition that the appointment shall cease to be valid if it is not approved by the company in the first general
meeting held after the date on which the appointment is made :
(2A) If the company in general meeting as aforesaid disapproves the appointment, it shall cease to be valid with effect from the date of that general
meeting.
8. There is no definition of ""sole agent"" under any provision of the Companies Act. But it has been understood to mean any individual (firm or
company) who is given exclusive rights to sell in a particular area the goods of the company concerned to the exclusion of even the company. It is,
however, a legal relationship of principal and agent and not that of employer and employee. The executive power of the company''s board of
directors to appoint a sole selling agent has been subjected to the condition that the appointment shall cease to be valid if it is not approved by the
company in the first general meeting held after the date on which the appointment is made and the invalidity shall be effective from the date of that
general meeting. Courts, however, have construed this condition of approval of the appointment of the sole selling agent at the general meeting as a
mandatory condition in all appointments of sole selling agents and have gone further to say that if any appointment is made without containing such
a clause, the appointment is void ab initio. We, however, do not think it necessary in the instant case to go into any details on this aspect of the law
as engrafted in section 294 of the Act, aforequoted, for whether a sole selling agent''s appointment would fall within the mischief of section 294 of
the Act and when shall it become inoperative, do not appear to be beyond the terms and conditions of the appointment of a certain person as the
agent of another and in case there is a claim of sole selling agency, it would depend upon the fulfilment of the condition of approval by the company
in the first general meeting held after the date on which the appointment is made, upon which would depend whether the appointment would be
valid or cease to be valid.
9. What is noticeable in the instant case is, however, that the defendant has not disputed the de facto transaction of business with the foreign buyers
through the plaintiff and conceded that it did give to the plaintiff the contract which contract, according to the plaintiff, was the plaintiff''s
appointment as the sole agent for export of such orders in the areas covered by the Middle East, Africa and South East Asia. According to the
defendant; the company held a general meeting on September 9, 1968 (after the defendant''s appointment on September 2, 1967), and the
plaintiff''s appointment as the sole selling agent was not placed before the said meeting and consequently the plaintiff ceased to be the sole selling
agent on and after September 9, 1968 and/or there was no appointment of the plaintiff as the sole selling agent in accordance with the provisions of
the Companies Act, 1956, and/or the parties (plaintiff and defendant) were dealing as principal to principal.
10. The learned single judge has stated :
It is not in dispute that the said appointment under exhibit F-1 was not placed in the general body meeting of the company of the defendant and
there is no reference at all about the placing of the same in the general body meeting in exhibit P-1.
11. He also noticed the fact that there was no mention in the agreement that it was subject to the approval of the company in the general body
meeting and that it would cease to be valid if not approved as per section 294(2A) of the Companies Act. He has, on that basis, held :
In exhibit P-1 agreement under which the plaintiffs were appointed as the sole selling agent for the defendant-company, there is no reference at all
about the placing of the said agreement before the next general body meeting of the defendant-company. Further, admittedly it was not so placed
before the general body meeting held on September 9, 1968. The said agreement itself is void ab initio and as such the claim based on that agency
agreement is bound to fail.''
12. Learned counsel for the respondent has supported the aforesaid finding mainly on the ground that once it is found that the agreement is void ab
initio, it is right to contend that no claim can be based on a void contract. The principle that the courts will refuse to enforce an illegal agreement at
the instance of a person who is himself a party to the illegality or fraud is expressed in the maxim in pari delicto potior est conditio defendentis is.
But there are exceptions to that. The Supreme Court, in the case of Sita Ram Vs. Radhabai and Others, , has said :
But as stated in Anson''s Principles of the English Law of Contract, 22nd edition, page 343 : ''there are exceptional cases in which a man will be
relieved of the consequences of an illegal contract into which he has entered-cases to which the maxim does not apply. They fall into three classes :
(a) where the illegal purpose has not yet been substantially carried into effect before it is sought to recover money paid or goods delivered in
furtherance of it; (b) where the plaintiff is not in pari delicto with the defendant; (c) where the plaintiff does not have to rely on the illegality to make
out his claim''.
13. In this judgment, the Supreme Court has further added (at page 537) :
It is settled law that ''Where the parties are not in pari delicto, the less guilty party may be able to recover money paid, or property transferred,
under the contract.
This possibility may arise in three situations.
First, the contract may be of a kind made illegal by statute in the interests of a particular class of persons of whom the plaintiff is one.
Secondly, the plaintiff must have been induced to enter into the contract by fraud or strong pressure.
Thirdly, there is some authority for the view that a person who is under a fiduciary duty to the plaintiff will not be allowed to retain property, or to
refuse to account for moneys received, on the ground that the property or the moneys have come into his hands as the proceeds of an illegal
transaction.'' - See Anson''s Principles of the English Law of Contract, page 346.
14. In the Indian Contract Act, we have in section 64, the consequences of rescission of a voidable contract and in section 65, the obligation of
persons who have received advantage under a void agreement or a contract that became void. Section 64 of the Contract Act says that when a
person at whose option a contract is voidable rescinds it, the other party thereto need not perform any promise therein contained in which he is a
promisor. The party rescinding a voidable contract shall, if he has received any benefit thereunder from another party to such contract, restore such
benefit, so far as may be, to person from whom it was received. Section 65 spells out the obligation of the person who has received advantage
under a void agreement or a contract that becomes void in these words :
When an agreement is discovered to be void or when a 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.
15. The Supreme Court, as in the case in Kuju Collieries Ltd. Vs. Jharkhand Mines Ltd. and Others, , examined the scope of section 65 of the
Contract Act and stated as follows (headnote) :
Section 65 makes a distinction between an agreement and a contract. According to section 2 of the Contract Act, an agreement which is
enforceable by law is a contract and an agreement which is not enforceable by law is said to be void. Therefore, when the earlier part of section 65
speaks of an agreement being discovered to be void, it means that the agreement is not enforceable and is, therefore, not a contract. It means that
it was void. It may be that the parties or one of the parties to the agreement may not have; when they entered into the agreement, known that the
agreement was in law not enforceable. They might have come to know later that the agreement was not enforceable. The second part of the
section refers to a contract becoming void. That refers to a case where an agreement which was originally enforceable and was, therefore, a
contract, becomes void due to subsequent happenings. In both these cases, any person who has received any advantage under such agreement or
contract is bound to restore such advantage, or to make compensation for it to the person from whom he received it. But where even at the time
when the agreement is entered into both the parties knew that it was not lawful and, therefore, void, there was no contract but only an agreement
and it is not a case where it is discovered to be void subsequently. Nor is it a case of the contract becoming void due to subsequent happenings.
16. The Supreme Court has in the case of Kuju Collieries Ltd. Vs. Jharkhand Mines Ltd. and Others, , approved the decision of the Andhra
Pradesh High Court in the case of Kanuri Sivaramakrishnaiah Vs. Vemuri Venkata Narahari Rao (Died), , in which it is stated (at page 1895) :
In order to invoke section 65 the invalidity of the contract or agreement should be discovered subsequent to the making of it. This cannot be taken
advantage of by parties who knew from the beginning the illegality thereof. It only applies to a case where one of the parties enters into an
agreement under the belief that it was a legal agreement, i.e., without the knowledge that the agreement is forbidden by law or opposed to public
policy and as such illegal. The effect of section 65 is that, in such a situation, it enables a person not in pari delicto to claim restoration since it is not
based on an illegal contract but dissociated from it. That is permissible by reason of the section because the action is not founded on dealings which
are contaminated by illegality. The party is only seeking to be restored to the status quo ante. Section 65 also does not recognise the distinction
between a contract being illegal by reason of its being opposed to public policy or morality or a contract void for other reasons. Even agreements,
the performance of which is attended with penal consequences, are not outside the scope of section 65. At the same time, courts will not render
assistance to persons who induce innocent parties to enter into contracts of that nature by playing fraud on them to retain the benefit which they
obtained by their wrong.
17. The Supreme Court has clearly laid down that an agreement on being discovered void and which is not enforceable as a contract can give to a
person a right to restoration or compensation and have all the advantages derived by another if they are parties to the agreement and if the
agreement was not invalid in the sense that it was a valid contract until it ceased to be valid for the reason of statute or otherwise, any person who
has received any advantage under such a contract is bound to restore such advantage or to make compensation for it to the person from whom he
received it. Courts usually in these matters also bear in mind that no one should be allowed to retain the benefit which he obtained by his own
wrong. In other words, no one should be given any premium on his own recalcitrance.
18. In a Full Bench decision of this court in S.M. Kanniappa Nadar Vs. K.K. Karuppiah Nadar, , the respondent who had obtained licence under
the provisions of the Central Excises and Salt Act, 1944, was carrying on business in the manufacture and sale of safety matches under the name
and style of Sarada Match Works, Ramalingapuram. He admitted the appellant as a partner in the business which both agreed to run for a
minimum period of six years. The agreement which was reduced to writing on July 16, 1955, expressly stipulated that the partners were to obtain
an amendment of the existing licence in favour of one of them in their joint names and that the appellant should contribute capital in a sum of Rs.
10,000. The firm was duly registered under the Indian Partnership Act. The appellant advanced on various dates a sum of Rs. 10,000 to the
respondent. The appellant and his son were put in charge of a section of the business. But, by the rules framed under the Central Excises and Salt
Act, a licensee who admits a partner in his business should intimate the fact to the licensing authority within 30 days thereof. The respondent did
not do so and the business continued as before till the parties fell out and the respondent expelled the appellant from the business. The latter
instituted the suit.
19. The principal point for determination in the above case was whether the suit partnership was illegal, in that it contravened the provisions of the
Central Excises and Salt Act, 1944, and whether even if the partnership was illegal, the appellant would be entitled to the alternative relief of
restitution of the moneys paid to him for the business. The trial court as well as the first appellate court accepted the defence that the contract of
partnership which enabled the appellant to join the business without an appropriate licence was prohibited by the statute and, therefore, illegal.
They also negatived the appellant''s prayer for the alternative relief on the ground that it was a mere equitable claim which did not deserve to be
granted in the light of the circumstances that the appellant was put in charge of the business for some time.
20. The two contentions which were before the court, however, were based on the appellant''s claim for accounts in two ways : (1) that the
partnership was not illegal, in that one of the parties had a licence and business could be done under it; (2) further as under that rule the parties had
30 days time to intimate the authorities about the formation of the partnership, the firm should be considered to be legally constituted for that period
of 30 days. The Full Bench observed (at page 241) :
The second of the two contentions cannot be sustained, for the obvious reason that no contract between the parties to have a partnership for 30
days existed and indeed there could be none as what the agreement envisaged was the carrying on of the business by the firm only on obtaining a
joint licence; if the licence was not obtained the contract itself would fail on account of impossibility of performance or the non-fulfilment of the
basic condition thereof.
21. The Full Bench then noticed that the District Judge rejected both the contentions on the authority of the decision in T.S. Govindaraj Vs. A.B.
Kandaswami Goundar and Another, , as also took notice of the reference ordered by a Bench of this court that an earlier Full Bench of this court
in the case of Velu Padayachi Vs. Sivasooriam Pillai, , required consideration and that the decision in the case of T.S. Govindaraj Vs. A.B.
Kandaswami Goundar and Another, , was incorrect and then said as follows (at page 242) :
It can be taken as settled law that if a contract is forbidden by a statute either expressly or by necessary implication or the contract itself is ex facie
illegal or where the contract though legal can be performed only illegally or was intended to be so performed neither party would be entitled either
directly or indirectly to enforce his rights under such a contract. The question then is whether the parties in the present case intended to do anything
which was prohibited by law or was in contravention of the provisions of the Central Excises and Salt Act of 1944 by entering into a partnership
for the sale and manufacture of safety matches. Entering into partnership by a licensee cannot be held to be per se illegal. Rule 178 of the rules
framed under the Central Excises and Salt Act impliedly recognises that when it states that a licensee on entering into such partnership shall report
the fact to the licensing authority within 30 days of his entering thereto. It assumes that the partnership can be entered into even before the licence is
amended under rule 178(4). In the instant case, it was the respondent who under the terms of the contract and under rule 178 was to apply for an
appropriate amendment of the licence; and he failed to do so. He, therefore, committed a breach of the terms of the agreement which disabled
further performance. He will normally be under a duty to restore the benefits received under the contract which had been put an end to.
22. The Full Bench also referred to the judgment of the Privy Council in the case of AIR 1943 34 (Privy Council) to say as follows (at page 243) :
In AIR 1943 34 (Privy Council) Sir George Rankin in delivering the judgment of the Privy Council analysed the various provisions of the Indian
Contract Act and held that money received by a party to a contract in part discharge of the consideration due or to become due, though applied
for defraying the expenses of carrying out this part of the contract and spent for that purpose was nevertheless a benefit or advantage had by him,
liable to be restored u/s 64, on his recission of the contract by reason of breach thereof. It would follow that where an agreement of partnership
like the present one has either become impossible of performance by reason of the fact that no joint licence had been obtained in favour of both the
partners or by reason of the recission by one party or the other to the contract the party in the position of the appellant will be entitled to restitution
of the monies paid by him towards the contract.
23. When we advert to the facts of the instant case, however, we have to say that on the pleadings of the parties, it has to be held that a certain
agreement was entered into between the plaintiff and the defendant in which, according to the former, the latter appointed it as the sole agent for
export of switchgears and according to the latter, the former''s appointment as sole selling agent of the defendant ought to have been approved by
the company at its next general meeting which meeting was held, but the appointment of the plaintiff as the sole selling agent was not placed before
the said meeting and consequently the plaintiff ceased to be the sole selling agent on or after the said meeting and/or there was no appointment of
the plaintiff as the sole selling agent in accordance with the provisions of the Companies Act, 1956, the parties were, therefore, dealing as principal
to principal in respect of the transaction.
24. We have already noticed in the judgment of the learned single judge a reference to this controversy between the parties and said that in exhibit
P-1 agreement under which the plaintiff was appointed as the sole selling agent for the defendant, there was no reference at all about the placing of
the said agreement before the next general body meeting of the defendant company and admittedly it was not so placed before the general body
meeting held on September 9, 1968. Thus, the said agreement itself was void ab initio and as such the claim based thereon is void ab initio and is
bound to fail. None of the parties, however, addressed the court on the question whether the kind of invalidity as attached to the agreement will
give to the plaintiff, if no other rights, at least the right to realise the obligations to the extent of the advantages received by the defendant in terms of
section 64 or section 65 of the Contract Act. It appears that, at no stage in the course of the trial, any one took notice of the admitted existence of
the agreement between the plaintiff and the defendant and the exceptions to the rule in pari delicto potior est conditio defendentis, so that the court
could test the facts and circumstances of the case to find out, whether actually the plaintiff and the defendant were in pari delicto, for if the
defendant was to perform a certain act and did not do so, the defendant is the wrong-doer and the plaintiff was wronged by what it did in the
sense that the defendant failed to bring on the agenda of the meeting of the company after the agreement was entered into, the question of approval
thereof.
25. Dealing with the clause ""delays due to causes beyond control (force majeure) will not be liable to penalties, provided, however, that such
causes will have been immediately notified by registered letter"", exhibit P-2 purchase order and the mention under exhibit P-3 that the same general
conditions will equally apply to the pay order and other evidence in this behalf, the learned single judge has stated :
It must be noted that even though details of the circumstances under which the defendants were prevented from fulfilling the contract are not
mentioned, yet the defendants have been consistently urging that it was only because of the reasons beyond their control, they are relying on the
force majeure clause and that they could not fulfil the agreement and in support of the same, they can certainly rely on the document produced by
the plaintiffs. It is not in dispute that time has been periodically extended on a number of occasions till March 31, 1972, and even after March 31,
1972, the plaintiffs themselves have admitted in the correspondence under exhibit D-15 that the same situation continued. In exhibit D-15 they
have given details of various circumstances, which were responsible for the non-fulfilment of the agreement. They have stated that the
circumstances are beyond the control of the defendants and sought for extension of time till August, 1972. For all these reasons, I am of the view
that the defendants have satisfactorily established that they can rely on the force majeure clause in the agreement as a complete answer to the suit
claim and accordingly this issue is answered in favour of the defendants.
26. We are not required to go into many details, either of the facts or the principles of law in this behalf, as, according to the pleadings of the
defendant, its failure to perform its part of the contract was occasioned for reasons beyond its control, meaning thereby it was not possible for it to
fulfil its obligations under the contract/agreement. In S.M. Kanniappa Nadar Vs. K.K. Karuppiah Nadar, , the Full Bench of this court has also
gone into this aspect and said if it is a case of the agreement becoming impossible of performance for the reasons beyond the control of the
defendant, still the law will protect the plaintiff to the extent of the obligations of the defendant as in sections 64 and 65 of the Contract Act. It is
surprising how without asking the defendant whether it notified by registered letter to the plaintiff the causes as contemplated in the agreement, the
learned single judge has accepted the case of the defendant that the force majeure clause in the agreement is a complete answer to the suit claim.
Since we have good reasons to interfere with the findings of the learned single judge that the provisions of section 294 of the Companies Act
operate as a bar to the maintainability of the suit and for the reason that there has been no examination by the learned single judge of the question
falling under sections 64 and 65 of the Indian Contract Act, and exceptions to the rule, in pari delicto potior est conditio defendentis and whether
the plaintiff and the defendant are in pari delicto for which specific issues are necessary, we propose to remand the case. We do not proceed to
examine the evidence on the question whether the defendant can rely on the force majeure clause in the agreement as a complete answer to the suit
claim ourselves. We think our recording that the finding in this behalf by the learned single judge in the judgment is without sufficient consideration
of the principles of law and the evidence on the subject will be enough for the limited purpose of remand. There are findings recorded in the
impugned judgment with respect to certain claims and a certain quantum of damages has also been determined by the learned single judge. The
learned single judge, as we have already noticed, has also examined the counter claim of the defendant and found that the claim of accounting is
justifiable but not any damages on account of penalty levied for the delayed delivery and collected by the foreign buyers. The case of the parties in
this regard, however, will have to be redetermined as damages for the alleged breach of contract and compensation in terms of sections 64 and 65
of the Contract Act create different kinds of obligations and require different kinds of evidence. Since we are interfering with the impugned
judgment and remitting the case for a fresh hearing, after reframing the issues in the light of the observations made above, we think it proper to
reopen the determination of the issues as to the quantum of compensation to either side or accounting, as the case may be.
27. In view of what has been found by us, we have no hesitation in setting aside the impugned judgment and remitting the case to the trial court for
rehearing in accordance with law after reframing the issues and if necessary affording opportunity to the parties to adduce evidence, if any.
28. In the result, the appeal is allowed, the impugned judgment is set aside and the case is remitted for trial and disposal in the light of the
observations made above. There shall be no order as to costs. Court fee paid on the memorandum of appeal will be refunded in accordance with
law.
