SUNRISE INDUSTRIES (INDIA) LTD v PT. OKI PULP & PAPER MILLS & Anor

Facts

Sunrise Industries (India) Ltd agreed in two contracts dated 10 July 2015 to supply, and to supervise and install, pipes, fittings and manholes for a new mill owned by PT. OKI Pulp & Paper Mills on an island in Indonesia. After two amendments the supply contract was worth US$8,324,131 and the installation contract US$1,401,880. Sunrise procured a bank guarantee from Dena Bank Limited, increased to US$832,413.20.

The supply contract required the goods to arrive by dates in November 2015 and January 2016, but they arrived on or about 24 March 2016. OKI had amended its letters of credit to show 29 February 2016 as the last date of shipment. Sunrise's installation team arrived at site but, after disputes over accommodation and payment, it demobilised on 8 March 2016. On 18 May 2016 OKI told Sunrise it had no interest in continuing and engaged another company to complete the installation. OKI called the bank guarantee in October 2016 and received the money in 2019. Sunrise sued in Suit No 8 of 2017; its claim against the bank was later withdrawn, and OKI counterclaimed.

Issues

1. Whether the delivery dates in the supply contract were varied by the amendments to the letters of credit
2. Whether Sunrise otherwise breached the supply contract, and what each side was owed under it, including the final 10% of the price and the bank guarantee
3. Whether Sunrise breached the installation contract and whether OKI was entitled to terminate it
4. What damages OKI could recover under the installation contract

Holding

The court allowed Sunrise's claim in part. OKI was entitled to liquidated damages of US$832,413.20 under the supply contract, which it had already recovered through the bank guarantee, and US$144,154.50 under the installation contract. Sunrise was entitled to the final 10% of the supply contract price. Netting these off, the court awarded Sunrise US$688,258.70 with interest at 5.33% from the date of its writ, and rejected OKI's other counterclaims. Costs were left to further submissions.

Reasoning

Amending the shipment date on a letter of credit does not of itself vary the sale contract. Read against the correspondence, OKI's amendments showed vexed indulgence to get the goods shipped, not agreement to new delivery dates; the contract's written procedure for altering the schedule was not followed, and in any event there was no consideration for a variation. Sunrise was therefore late, by more than six weeks, and OKI was entitled to the maximum liquidated damages without proving loss.

OKI's other complaints failed. The manholes matched drawings its technical team had approved, its claim of overcharging assumed value rose in proportion to size without evidence, and the site office and warehouse had been provided. OKI could not reclaim the price paid, having chosen not to terminate and having paid for the goods. Installation was not Sunrise's obligation under the supply contract, and OKI had accepted the installation as complete with the mill operating, so the final 10% was due.

On installation, accommodation was Sunrise's responsibility, so OKI's terms for providing it did not justify demobilising. Sunrise's email of 17 May 2016, conditioning further work on terms not in the contract, showed it no longer intended to be bound, and the contract also allowed termination once maximum liquidated damages accrued. OKI validly terminated on 18 May 2016. Its general damages failed because the replacement contractor cost less than the installation contract price, so it had avoided loss through mitigation.

From the judgment