Skip to content


N. Buch and Co. Vs. Gordhandas Mavji - Court Judgment

LegalCrystal Citation
SubjectContract
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 5095 of 1921
Judge
Reported inAIR1923Bom92; (1922)24BOMLR991
AppellantN. Buch and Co.
RespondentGordhandas Mavji
Excerpt:
indian contract act (ix of 1872), section 118-contract-sale of goods-appropriation-acceptance of goods-property in the goods pasting to the purchaser-default in payment-damages.;the defendants contracted to buy from the plaintiffs live cases of venetian cloth. under the contract the goods were to be shipped 'in two lots monthly from october approximately.' the first lot of two cases arrived in bombay in august 1920, and the second lot of three cases in october 1920. due intimation of the arrival of the goods was given by the plaintiffs to the defendants. the defendants paid the customs duty and clearing charges in respect thereof and also paid godown rent in respect of the first lot. the defendants did not pay for and take delivery of the goods. the plaintiffs sold the first lot of two..........first part of section 118 is as follows:-where here has been a contract, with a warranty, for the sale of goods which, at the time of the contract, were not ascertained or not in existence, and the warranty is broken, the buyer may accept the goods or refuse to accept the goods when tendered.16. the word 'warranty' is used in this section in the wide sense of condition, that is, a stipulation, the breach of which may give rise to a right to treat the contract as repudiated, as distinguished from a stipulation, the breach of which may give rise to a claim for damages. in connection with this section it is important to observe that the question of acceptance does not arise when the property in the goods has passed to the buyer. this, as stated in benjamin on sale (6th edition p. 853),.....
Judgment:

Mulla, J.

1. This suit arises out of a contract (Ex. B), dated January 31, 1920, whereby the plaintiffs agreed to sell and the defendants agreed to buy five cases of black and coloured and worsted Venetian at the price of 8 Section 6d. per yard f.b.h. The goods were to be shipped 'in two lots monthly from October approximately.' The suit is to recover the loss on re-sale of two out of the five cases and damages for breach of the contract in respect of the remaining three cases.

2. The plaintiffs carry on business as commission agents and merchants in piece goods. The defendants at all times material to this suit carried on business in partnership in piece-goods in the name of Laxmidas Gordhandas. Two out of the said cases arrived in Bombay per s. s. City of London on August 10, 1920. On August 17, 1920, the plaintiff sent an invoice and also shipment samples in respect of the said two cases to the defendants. On September 28, 1920, the plaintiffs sent an invoice and shipment samples in respect of the remaining three cases to the defendants. On October 22, 1920, the said three cases arrived in Bombay per s.s. Baronjedburgh. The defendants admit receipt of shipment samples in respect of all the five cases, but none of them was produced in Court at the hearing of the suit. The defendants had instructed the plaintiff's to put the initials of their firm, namely, L.G., on the cases, and the same was done accordingly. The invoices (Exhs. C and D) show the mark put on the bales.

3. The contract being f.b.h., the defendants had to pay customs duty and clearing charges and to clear the same at their expense. As is usual, however, in such cases, the defendants requested the plaintiffs' muccadam to clear the goods on their behalf. They paid customs duty and clearing charges to the muccadam, and the goods were cleared by him and they were subsequently placed in the duty paid ware-house of the Bombay Port Trust.

4. The plaintiffs were entitled under Clause (c) of the contract (Ex. B) to fix the rate of exchange at any time within thirty days from the date of the arrival of the steamer. The defendants requested the plaintiffs to wait as they thought the exchange would turn in their favour within a short time and the plaintiffs waited accordingly. On October 23, 1920, the plaintiffs at the request of the second defendant fixed the rate of exchange in respect of the two cases that arrived per s.s City of London. On the next day the plaintiffs sent a bill in rupees (Ex. G) to the defendants in respect of the said two cases.

5. On December 4, 1920, the plaintiffs sent a bill to the defendants for Port Trust rent in respect of the two cases that arrived per s.s. City of London and the defendants paid the bill on December 27, 1920 (see Ex. F ).

6. Thereafter the plaintiffs repeatedly requested the defendants to pay for and take delivery of the said five cases, but the defendants asked for time and the plaintiffs gave time to the defendants. As the defendants did not pay for and take delivery of the goods, the plaintiff's through their attorneys addressed a letter to them on August 10, 1921, stating that though the defendants had repeatedly promised to pay for and take delivery of goods, they had failed to do so, and intimating that unless the goods were paid for within two days from the receipt thereof the plaintiffs would sell the said goods on account and at the risk of the defendants. In the said letter the plaintiffs also stated that though the rate of exchange in respect of the first lot of two cases was fixed with defendant No. 2 the rate in respect of the remaining three cases had been kept open at the request of the defendants.

7. The plaintiffs thereafter got the said five cases advertised for sale and the sale was fixed for August 25, 1921. On that date a little before the auction commenced, defendant No. 1 requested the plaintiffs to postpone the sale stating that he would arrange to sell the goods privately at better rates. Defendant No. 1 denied having requested the plaintiffs to stop the sale, but his denial is false; for, on the same day, that is, August 25, 1921, the plaintiffs addressed a letter to the defendants recording the fact that the sale had been stopped at the defendants' request and this was not denied by the defendants. Subsequently the defendants asked the plaintiffs to procure them samples of the goods to enable them to sell the goods by private contract and the plaintiffs sent samples accordingly. Defendant No. 1 denied that he asked for samples of the goods in suit and said that the samples were of other goods. I hold that this denial is false. Defendant No. 1 asked for samples both of goods comprised in the said contract and of other goods. The plaintiffs waited for four weeks, but as nothing was done by the defendants in the matter, the plaintiffs wrote to the auctioneers on September 23, 1921 (See Ex. S) to advertise for sale the two cases that arrived by s. s. City of London. The two cases were advertised for sale, and they were sold by public auction on October 3, 1921. The auctioneers' memo is Ex. L in the case. The plaintiffs claim the loss on re-sale in respect of the said two cases and damages on the basis of the rate realised at the auction sale in respect of the remaining three cases.

8. At the hearing of the suit counsel for the defendants raised inter alia the following issues:-

(1) Whether the property in the goods passed to the defendants ?

(2) Whether the goods offered to the defendants were of the quality and shipment agreed upon ?

9. As there was no objection taken by the defendants on the score of shipment either in the correspondence before suit or in their written statement, counsel for the plaintiffs objected to issue No. 2 so far as it related to shipment. Thereupon counsel for the defendants asked for leave to amend the written statement and leave was granted to them on the defendants paying the costs of the day and the costs of the amendment. The defendants have since then amended the written statement.

10. The defence so far as it related to quality was given up by the defendants at the subsequent hearing of the suit, not a word having been said about it by the defendants or their counsel.

11. At the hearing of the suit it was contended on behalf of the defendants that the goods were not of the contract shipment, that the property in the goods had not passed to the defendants, and that, even if the property did pass, the goods were not accepted by them within the meaning of Section 118 of the Indian Contract Act and the defendants were justified in refusing payment for the goods.

12. As regards shipment, the contract (Ex. B) provides that the goods should be 'in two lots monthly from October approximately.' The first lot of two cases arrived in Bombay on August 10, 1920, and the second lot of three cases on October 21, 1920. Due intimation of the arrival of the goods was given by the plaintiffs to the defendants. Though the defendants knew that the goods had arrived partly in August and partly in October, the defendants paid the customs duty and clearing charges in respect thereof and got the same cleared on their behalf by the plaintiffs' Muccadam, The defendants also paid godown rent in respect of the first lot of two cases. Further, though the plaintiffs repeatedly demanded payment from the defendants of the price of the goods and wrote several latters to the defendants demanding payment (Ex. H), the defendants did not object to payment on the ground of late shipment at any time. Nor was the objection that the goods were not of the contract shipment taken by the defendants in their written statement. The objection was taken for the first time when issues were raised by the defendants' counsel. I hold that the goods that arrived in Bombay on August 10, 1920, and on October 21, 1920, were of contract shipment. The words in the contract are 'shipment from October approximately' which are quite different from 'October shipment.' I think that the reason why no objection was taken by the defendants on the ground of shipment was that the defendants themselves treated the goods as of contract shipment though they arrived in August and October.

13. The next point to consider is whether the property in the goods passed to the defendants, for if the property did not pass the plaintiffs are not entitled to the loss on re-sale, but they are entitled to damages only on the basis of the rate prevailing at the date of the breach. The material sections of the Indian Contract Act bearing on this subject are Sections 82 and 83. The combined effect of those sections is that where goods agreed to be sold are not ascertained at the time of making the agreement, but goods answering the description in the agreement are subsequently appropriated by one party for the purposes of the agreement and that appropriation is assented to by the other the sale is complete, and the property in the goods passes to the buyer. In order that the property may pass to the buyer it is necessary that the goods appropriated to the contract by the seller must answer the description in the agreement. Thus in Vigers Brothers v. Sanderson Brothers [1901] 1 K.B. 603 the plaintiffs had contracted to sell to the defendants two parcels of sawn laths to be shipped at Wasa for Hull and to be of particular specified lengths, and it was expressly provided that the property should pass on shipment; it was nevertheless held by Bigham J. that the latter provision only applied to laths of the description contracted for and the sellers not having supplied laths of that description were not entitled to recover the price. As regards the buyer's assent to the appropriation, it is to be noted that the assent may be express or implied. See Badische Anilin Und Soda, Fabrik v. Hickson [1906] A.C. 419 and Pignataro v. Gilroy [1919] 1 K.B. 459.

14. In the present case, as I have held before, the goods offered to the defendants answered the description in the agreement. The act of the sellers in sending the invoices to the buyers amounted to a notification of appropriation by the sellers (The Parchim [1918] A.C. 157; Benjamin on Sale, 6th Edition, p. 420, cited with approval in Re Cargo ex S.S. Rappenfels I.L.R. (1914) Cal. 334 and the subsequent acts of the buyers, namely, the request to the plaintiffs' muccadum to clear the goods on their behalf, coupled with the payment of customs duty and clearing charges to the muccadum and the payment of Port Trust rent constituted an assent by the buyers to the appropriation, with the result that the property in the said five cases passed to the buyers Of course, mere appropriation by the seller does not pass the property in the goods to the buyer. The effect of appropriation is that the seller loses the possibility of withdrawing the goods from the contract and he would break his contract with the buyer if he offered any other goods to him, though the goods still remained his property. The appropriation must be assented to by the buyer to pass the property.

15. The next point urged on behalf of the defendants was that though the property in the goods passed to the defendants, it was competent to the defendants, if the goods were not of the contract shipment, to repudiate the contract and to refuse payment for the goods as the defendants had not accepted the goods within the meaning of Section 118 of the Indian Contract Act. The first part of Section 118 is as follows:-

Where here has been a contract, with a warranty, for the sale of goods which, at the time of the contract, were not ascertained or not in existence, and the warranty is broken, the buyer may accept the goods or refuse to accept the goods when tendered.

16. The word 'warranty' is used in this section in the wide sense of condition, that is, a stipulation, the breach of which may give rise to a right to treat the contract as repudiated, as distinguished from a stipulation, the breach of which may give rise to a claim for damages. In connection with this section it is important to observe that the question of acceptance does not arise when the property in the goods has passed to the buyer. This, as stated in Benjamin on Sale (6th Edition p. 853), follows from principle. The result is that the provisions of Section 118 do not apply where the property in goods has passed to the buyer; for where the property in goods passes by appropriation on the part of the seller and assent on the part of the buyer, since the appropriation can only be of goods of the contract description, the conditions of the contract are ex hypothesi complied with. The case contemplated by Section 118 is one where there has been a contract with a condition and the condition is broken. In such a case the buyer may waive that right of rejection and accept the goods. The property in the goods then passes by the buyer's acceptance and if the buyer thereafter refuses to pay for and take delivery of the goods, the seller is entitled to sue the buyer for the price.

17. In the present case, as I have already stated, the goods offered to the defendants complied with the description in the contract and the property in the goods passed under Section 82 and 83. But, even if the goods were not of the contract shipment and the property in the goods did not pass to the defendants I hold that the defendants by their conduct waived the condition as to shipment. It is, therefore, too late for the defendants to contend that they are not bound to pay for the goods on the ground that the goods were not of the contract shipment, By waiving the stipulation as to shipment the defendants accepted the goods. It is elementary law that a party may waive a stipulation which is for his own benefit.

18. As the property in the goods passed to the defendants, they are bound to pay the loss on re-sale in respect of the two cases that were sold on October 3, 1921.

19. As regards the remaining three cases which were not sold, the plaintiffs are entitled to damages only. I hold that the breach took place on September 23, 1921, that being the date on which the plaintiffs wrote to the auctioneers to advertise the two cases for sale (sse Ex. S). On the evidence before me I hold that the market rate of the goods in question on September 23, 1921, was Rs. 3 nett per yard.

20. The rate of exchange in respect of the two cases was agreed at 1 Section 7 1/16 d. As regards the rate of exchange in respect of the remaining three cases, the parties have agreed to take it at 1 Section 5 9/32 d. being the rate prevailing on October 3, 1921.

21. The result is that there will be a decree for the plaintiffs for Rs. 9,094 costs and interest on judgment at six per cent, per annum.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //