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Mysore Sugar Co. Ltd. Vs. Manohar Metal Industries - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtKarnataka High Court
Decided On
Case NumberSecond Appeal No. 405 of 1975
Judge
Reported inAIR1982Kant283; ILR1982KAR1203; 1982(2)KarLJ49
ActsSale of Goods Act, 1930 - Sections 19, 20, 54 and 54 (2); Indian Contract Act, 1872 - Sections 73
AppellantMysore Sugar Co. Ltd.
RespondentManohar Metal Industries
Appellant AdvocateS.N. Keshava Murthy, Adv.
Respondent AdvocateS.K.V. Chalapathy, Adv.
Excerpt:
.....advocate appearing for the appellant strenuously urged before me that under section 54 of the sale of goods act,1930, the plaintiff had the right to re-sell and he bad right to never the difference in price from the defendant who committed breach of contract. 73 of the act clearly stipulated that the plaintiff should adduce evidence to show as to what was the market value of the material in question on the date of breach of contract. that would clearly show that the defendant knew that what was offered was the material on 'as is and where is condition. that satisfied the condition mentioned in section 54(2) of the act. 2, the person who purchased the goods in the re-sale has clearly stated in his evidence that the prices were more three months prior to his giving the tender for..........contract act, 1872 (hereinafter referred to as the 'act'). according to him, section 54 of the sale of goods act. 1930 was not applicable. the defendant, according to him, was not liable to pay any damages. on the other hand, he claimed compensation of rs. 1,000/-.4. the trial court raised the following issues :-(1) whether the defendant committed breach of contract in failing to lift the copper scraps and ingots?(a) whether the plaintiff has defaulted in performing the obligation under the contract ?(2) whether the plaintiff has incurred a loss of rs. 8,643-96 on account of the breach of contract by the defendant?(3) whether the goods did not conform to what was agreed to be purchased by the defendant and whether the defendant was justified in refusing to take delivery of the.....
Judgment:

1. This appeal by the plaintiff is directed against the judgment and decree dated 23-9-1974 passed by the Principal Civil Judge, Bangalore City, in R. A. No 139 of 1973 on his file allowing the appeal on reversing the judgment and decree dated 28-2-1973 passed by the IV Addl. I Munsiff, Bangalore, in O. S. No. 609 of 1968 on his file decreeing the suit of the plaintiff as prayed for.

2. The Mysore Sugar Company, the plaintiff in the suit, advertised for sale of certain items like copper ingots, copper scraps as well as brass tubes available with the company at Mandya by its notification dated 27th July, 1966. The defendant offered to purchase the same by his letter dated 30-6-1966. The plaintiff accepted the offer of the defendant to purchase the various items and it thereafter, the defendant lifted certain items on part-payment and when it came to lifting of copper ingots, he sought for time to pay the balance and to remove the same separating it from other things with which it was mixed up. The defendant had to lift 2,000 K.Gs. of copper scrap and 2,000 K.Gs. of copper ingots valued at Rs. 48,503-96. He wrote to the plaintiff on 28-4-1966 raising objections regarding percentage of copper contents in the articles. The plaintiff intimated to the defendant on 12-9-1966 stating that no certificate for purity of the metal would be given and the material was sold on 'as is and where is' condition. In spite of repeated reminders and demands, the defendant did not take delivery of the remaining goods and remit the value. The letter dated 22-11-1966 to the defendant also did not meet with favourable response. Therefore, the plaintiff resold copper tubes and copper ingots through an advertisement dated 30th Dec., 1966 to M/s. Karnataka Hardware, Avenue Road, Bangalore. By the said resale, the plaintiff incurred loss of Rs. 8,643-96. The plaintiff got issued a legal notice to the defendant to make good the loss. The defendant did not. Hence, the plaintiff instituted the suit for recovery of Rs. 8,643-96 less Rs. 5001- being the initial deposit by the defendant. The plaintiff claimed, in all, Rs. 8,143-96 ps. from the defendant along with costs and interest.

3. The defendant contended that the suit was not tenable. According to him, what was offered was copper scraps and copper ingots in the advertisement and what was found at the spot was alloy and not pure copper. Therefore, he contended that the plaintiff committed breach of contract. He further contended that the plaintiff did not have right to re-sell and that compensation, if any, could only be recovered under the general principles contained in S. 73 of the Indian Contract Act, 1872 (hereinafter referred to as the 'Act'). According to him, Section 54 of the Sale of Goods Act. 1930 was not applicable. The defendant, according to him, was not liable to pay any damages. On the other hand, he claimed compensation of Rs. 1,000/-.

4. The trial Court raised the following issues :-

(1) whether the defendant committed breach of contract in failing to lift the copper scraps and ingots?

(a) Whether the plaintiff has defaulted in performing the obligation under the contract ?

(2) Whether the plaintiff has incurred a loss of Rs. 8,643-96 on account of the breach of contract by the defendant?

(3) Whether the goods did not conform to what was agreed to be purchased by the defendant and whether the defendant was justified in refusing to take delivery of the goods?

(4) Whether the contract is void as pleaded by the defendant?

(5) Whether the suit as brought is not maintainable ?

(6) Whether the plaintiff is entitled to recover any damages from the defendant If so, how much ?

(7) What order?

5. The trial Court appreciating the evidence on record answered all the material issues in favour of the plaintiff and, in that view, it decreed the suit of the plaintiff as prayed for. Aggrieved by the said judgment and decree, the defendant went up in appeal before the learned Civil Judge who raised the following points for consideration in the appeal.

(1) Whether there is any breach of contract by the defendant?

(2) Whether the plaintiff is entitled to any damages, and

(3) If so, what is the quantum?

6. Re-assessing the evidence on record, in the light of the arguments addressed before him, the learned Civil Judge held that the defendant committed breach of contract, agreeing with the finding of the trial Court. But he dismissed the suit for damages as no relevant material was placed on record by the plaintiff to fix the quantum of damages. Thus he allowed the appeal and dismissed the suit of the plaintiff. Aggrieved by the said judgment and decree, the plaintiff has come up with the above second appeal before this Court.

7. The learned Advocate appearing for the appellant strenuously urged before me that under Section 54 of the Sale of Goods Act,1930, the plaintiff had the right to re-sell and he bad right to never the difference in price from the defendant who committed breach of contract. Since in this case after the re-sale, Rs. 8,643-96 was the loss incurred by the plaintiff, he ought to have been given a decree for that sum. In other words, the counsel submitted that the learned Civil Judge ought to have confirmed the judgment and decree of the trial Court. As against that, the learned counsel appearing for the respondent-defendant in the appeal submitted that since the plaintiff did not bring about the re-sale within a reasonable time, especially so, when the prices were falling and since there was no material on record as to what was the price for the material at the relevant time of breach of contract, the learned Civil Judge was justified in dismissing the suit for damages. He also submitted that the plaintiff had no right to re-sell as Section 54 of the Sale of Goods Act could not be invoked on the facts of this case. According to him, the relevant provision contained in S. 73 of the Act clearly stipulated that the plaintiff should adduce evidence to show as to what was the market value of the material in question on the date of breach of contract. Since there is no such evidence on record, he submitted that the learned Civil Judge was justified in dismissing the suit of the plaintiff. He further submitted that since what was advertised was copper scraps and copper ingots and what was found was only alloy, the breach of contract was committed by the plaintiff and not by the defendant.

8. The points, therefore, that arise for my consideration in this appeal are :-

(1) Whether the Courts below were justified in holding that the defendant committed breach of contract?

(2) Whether the learned Civil Judge was justified in dismissing the suit for damages?

9. It is true that in the advertisement given by the plaintiff, it is specifically mentioned that what was offered for sale was copper scraps and copper ingots. It is further true that there was no clause in the tender stating that the goods were sold on as is and where is' condition. It is also on record that the parties were not allowed to inspect the goods before offering their tender. The fact, however, remains that after, the tender of the defendant was accepted he had occasion to inspect the goods and be lifted part of the goods and when he came to lifting of copper scraps and copper ingots, instead of raising any protest, he prayed for extension of time to make payment and to lift the goods. That would clearly show that the defendant knew that what was offered was the material on 'as is and where is condition. Hence, the Courts below have rightly rejected the contention of the defendant that he was not offered copper scraps and copper ingots of cent per cent purity and as such the plaintiff committed the breach of contract. I have no reason to differ.

10. It is no doubt true that it is the plaintiff who has come to the Court claiming damages. The first question that would arise for my consideration is whether, under Section 54(2) of the Sale of Goods Act, the goods had already passed on to the ownership of the buyer. Section 54(2) reads :

'(2) Where the goods are of a perishable nature, or where the unpaid setter who has exercised his right of lien or stoppage in transit gives notice to the buyer of his intention to re-sell, the unpaid seller may if the buyer does not within a reasonable time pay or tender the price, re-sell the goods within a reasonable time and recover from the original buyer damages for any loss occasioned by his breach of contract, but the buyer shall not be entitled to any profit which may occur on the re-sale. If such notice is not given, the unpaid seller shall not be entitled to recover such damages and the buyer shall be entitled to the profit, if any, on the re-sale'.

11. Thus we have to find our whether the seller exercised his right of lien or stoppage in transit on the facts of this case.

12. Section 19 of the Sale of Goods Act speaks of passing of property on sale. It states :

'(I) Where there is a contract for the sale of specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred.

(2) For the purpose of ascertaining the intention of the parties regard shall be had to the term of the contract the conduct of the parties and the circumstances of the case.

(3) Unless a different intention appears, the rules contained in Sections 20 to 24 are rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer.'

Section 20 states:

'Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to buyer when the contract is made, and it is immaterial whether the time of payment of the price or the time of delivery of the goods, or both, is postponed.'

12-A. Thus by reading Ss. 19 and 20 of the said Act, it becomes obvious that in this case an offer was made by advertising to sell all the articles in question. Thereafter, a tender was given by the defendant and his tender was accepted as per Ex D-2. Therefore, there is an unconditional contract of sale and there were, no doubt, stipulations for payment of price and delivery of goods subsequently. In such a case, the property in the goods passes on to the buyer and hence Section 54 of the Act comes into Play. It is' on record that the plaintiff issued a notice to the defendant as per Ex. D-10 on 22-11-1966 making his intention clear that the buyer must lift the goods on payment as otherwise he will have to resell the goods, and the defendant shall be liable for any loss caused. That satisfied the condition mentioned in Section 54(2) of the Act. Therefore, after, however., it was made clear by a notice to the defendant that if he did not lift the goods within three days, his contract would be treated as cancelled. That is by Ex. D-9 dated 12-9-1966. Therefore, since the goods:' were not lifted by the defendant, the contract came to an end on or about 15-9-1966. With in a reasonable time thereafter the company should have resold the goods by advertising it. But the evidence on record shows that the advertisement was inserted only on 30-12-1966 i.e after nearly three months.

13. The learned Advocate appearing for, the respondent-defendant urged before me that this was not re-sale within a reasonable time as contemplated under S. 54(2) of the Act. It is all the more so, according to him, because P. W. 2, the person who purchased the goods in the re-sale has clearly stated in his evidence that the prices were more three months prior to his giving the tender for resale, and, thereafter, the prices came down. Therefore it is clear from the evidence on record that the prices were falling from Aug., 1966 and the plaintiff-company delayed for three months therefrom to give the advertisement, knowing fully well that the prices were falling; for P. W. 2 has stated that the prices were a little low at the time when he gave his tender and that the prices were a little more earlier. P. W. 2 is witness examined by the plaintiff. Making allowance for his interestedness, it is obvious that the prices were more in about Sept., 1966 when the breach of contract occurred.

14. It is needless for me to point out that a duty lay on the plaintiff to mitigate the damages. Even in view of S. 54(2), it was the duty of the plaintiff to see that re-sale was effected within a reasonable time especially so, when the prices were falling for the relevant material. Three months delay, therefore, on the facts of this care, is certainly inordinate and re-sale has not taken place within a reasonable time as contemplated in Section 54(2). It is relevant to mention in this context that what was the ruling price in about Sept., 1966 is not brought on record by the plaintiff though P. W. 2, as stated above, admitted that the prices were more at that time.The difference claimed as damages on the facts of this case, is also not much. That being so, the learned Civil Judge having regard to the probabilities has observed that if the goods were re-sold in Sept., 1966 within a reasonable time, the plaintiff would not have incurred any loss whatsoever. At any rate, since the burden of proving the damages was on the plaintiff and he has not placed any evidence on record in that behalf, the learned Civil Judge has rightly proceeded to disallow the suit for damages.

15 It may be mentioned in this context that the High Court of Madras had an occasion in the case B. Parthasarathy Chetty v.T, M. Gajapathi Naidu and Company, (AIR 1925 Mad 1258) to consider this question

The Hon'ble Chief Justice Coutts Trotter and Krishnan J., have observed in the case thus:

'The plaintiffs should not unreasonably delay before they re-sold the goods and that before they could substantiate their claim to recover the difference between the contracted price and the price actually realised by them, they must show that the goods which they purported to re-sell and had re-sold were goods which the defendants would have been obliged to take under the terms of the contract but failed to do so.-

Similar is the view expressed by Shadi Lal, C. L, in Nikku Mal Sardari MaL Y. Gur Prashad and Brothers, (AIR 1931 Lahore 714. Speaking for the Bench, his lordship Shadi Lal, C. J., has observed:

'It is well settled rule that if the vendor, chooses to enforce his right to re-sell, he must do so within a reasonable time from the date of breach and that he should not allow the value of the goods to depreciate

by making undue delay in re-selling them. If the goods are re-sold within a reasonable time Thomas after the breach of contract by the purchaser, the measure of damages is the difference between the contracted price and the price realised on the re-sale with the costs and expenses of the re-sale. But if the re-sale has been unreasonably delayed until the market price has fallen, the price of re-sale will not afford a true criterion of the damages'.

16. As explained above, there has been unreasonable delay in re-selling, on the facts of the present case, when the market price falling. Hence, the value realised on re-sale does not afford a good ground to fix the

damages. There is no evidence on record placed by the plaintiff to show the ruling price of the commodity at the time when tbere was breach of contract. The plaintiff has come to Court. The burden is on him to prove the alleged damages and since fie has not placed any material evidence to show that he has suffered damages, he has to fail and the learned Civil Judge has rightly held so I have no reason to differ.

17. The learned counsel appearing for the respondent-defendant submitted that S. 54(2) of the Sale of Goods Act should be read with Section 73 of the Act. It may be stated in this context that Section 73 contains the general principle with regard to fixing up of damages, whereas Section 54 speaks of specific case of moveable property sold. Section 54 is more specific whereas Section 73 is general in nature. Therefore, Section 54 prevails over Section 73 though both the sections are based on the same general principles.

18. In the result, therefore, I am constrained to hold that the appeal is devoid of merits and is liable to be dismissed and I dismiss the same. No costs.

19. Appeal dismissed.


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