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Lachhmi Newas Vs. Firm Ram Das Ramnivas - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAllahabad High Court
Decided On
Case NumberSpecial Appeal No. 59 of 1961
Judge
Reported inAIR1963All110
ActsSale of Goods Act, 1930 - Sections 20, 21, 22 and 23; Contract Act, 1872 - Sections 73
AppellantLachhmi Newas
RespondentFirm Ram Das Ramnivas
Appellant AdvocateSaraswati Pd., Adv.
Respondent AdvocateN. Banerji, Adv.
DispositionAppeal allowed
Excerpt:
.....of contract act, 1872 - no time limit for performance of contract in the agreement - agreement for sale of goods - goods to be loaded in wagon when available - delay in availability of wagon - seller offered to make alternative arrangements - buyer not accepted offer of seller - goods were booked by buyer - additional expenses if any will have to be paid by buyer - buyer asking seller to borne additional expenses - not valid - breach in agreement - buyer responsible for breach of agreement - seller liable to get damages. - - there is nothing in the findings recorded either by the learned single judge or the courts below to indicate that the appellants failed to take any steps necessary for procuring a wagon and, in fact, it has been assumed that the appellants had done alt what they..........the learned single-judge.7. reference was made by the appellants to sections 20, 22 and 23 of the sale of goods act. it was pointed out that under section 20 where there is an unconditional contract for the sale of goods in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment of the price or the tune of delivery of goods, or both, is postponed.it was urged that the contract for the sale of broken rice was an unconditional contract for the sale of specific goods in a deliverable state and the property in the goods passed to the buyers when the contract was made, i.e., on 2nd august, 1953, or on 3rd august, 1953, when the goods were weighed and stocked in the godowns of the sellers. section 22 of the.....
Judgment:

S.D. Singh, J.

1. This special appeal against the judgment of our brother Beg, J., arises out of a suit which was filed by the present appellants, Lachhmi Niwas Rice Mills, against Ram Deo Ram Niwas who are respondents in this appeal, for the recovery of Rs. 820/-as damages for breach of contract under circumstances given below.

2. The appellants deal in grains at Tikonia in district Kheri, while the respondents deal in grains at Colonelganj in district Gonda. Under an agreement, which according to the appellants, evidenced a completed sale, and according to the respondents, amounted to only an agreement of sale, the parties entered into a transaction for the sale of 600 maunds of broken rice 'Bilty-cut' at Rs. 14/8 per maund on 2nd August, 1953. The appellants agreed to sell the aforesaid quantity of rice 'Bilty-cut', which means he undertook to bag the goods and book the consignment and deliver the railway receipt for the same to the respondents, whose representative, Ashrafi Lal, paid Rs. 500/- in cash on the spot, and undertook to pay Rs. 500/- on return to Colonelganj. The balance of the price was to be paid on the delivery of the railway receipt. Ashrafi Lal got the goods weighed and stocked in the godowns of the appellants on 3rd August. The goods were to be despatched by the appellants on the wagon being available, the relevant part of the agreement providing 'gari milne se lad javega'.

3. The appellants applied for the wagons being allotted to them for despatch of these goods, but the wagons being in short supply, none could be allotted within the month. The appellants, therefore, wrote to the respondents on 20th August, 1953, that there was likely to be delay in the despatch of the goods as availability of the wagons was not in their hand, and suggesting that if the respondents agreed to the goods being despatched in an open wagon, the same could be arranged immediately. The appellants, however, pointed out that in that case the respondents will have to make arrangement for a tarpaulin for covering the goods and also for a man to accompany the wagon so as to guard against pilferage.

The respondents wrote back on 25th August, that it was the appellant's responsibility for booking the goods and that even if the goods were to be booked in an open wagon, all consequent additional charges will have to be paid by them. The respondents further intimated to the appellants that unless the railway receipt was received by them within eight days of the despatch of the letter, i.e., by 3rd September, 1953, latest the appellants would be deemed to have committed breach of the contract and be liable to pay Rs. 1,000/- as damages.

4. The appellants' contention was that thoughthe responsibility for booking the goods was theirs, they could not be held responsible for delay in the despatch of goods on account of the non-availability of the wagons, and that all what they could do was to send the consignment by the other alternative mode, namely, by an open wagon if it was acceptable to the respondents, and if the respondents were also agreeable to bear necessary additional expenses in connection with it which they were not.

5. The appellants alleged that there was fall in the price of the broken rice and the quantity of goods purchased by the respondents had to be sold by them at a loss of Rs. 1320/-. The respondents already having deposited Rs. 500/- in advance, the appellants claimed the balance, namely, Rs. 820/-by way of damages.

6. It was contended on behalf of the appellants in the lower courts as also before the learned single Judge that there was a completed contract of sale between the parties and the goods had, in fact, been delivered to the respondents when they were weighed at the instance of Asharfi Lal. But this contention was not accepted by the lower courts or by the learned single Judge and it has been held that there was only an agreement of sale between the parties and it has also been held that the breach in the performance of that agreement was committed by the appellants. It was on account of that finding, that the suit was dismissed by the trial Court and the appeal filed by the appellants dismissed by the first appellate Court as also by the learned single-Judge.

7. Reference was made by the appellants to Sections 20, 22 and 23 of the Sale of Goods Act. It was pointed out that under Section 20 where there is an unconditional contract for the sale of goods in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment of the price or the tune of delivery of goods, or both, is postponed.

It was urged that the contract for the sale of broken rice was an unconditional contract for the sale of specific goods in a deliverable state and the property in the goods passed to the buyers when the contract was made, i.e., on 2nd August, 1953, or on 3rd August, 1953, when the goods were weighed and stocked in the godowns of the sellers. Section 22 of the Sale of Goods Act, it was pointed out, did not apply to the facts of the case, as under that section the passing of the property in the goods is postponed only when the seller is bound to weigh, measure, test or do some other act or thing with reference to the case for the purpose of ascertaining the price and that nothing of the kind had to be done in the case.

Even Section 23, it was urged, did not apply to the facts of this case as the contract was for the sale of present ascertained goods and not unascertained or future goods. As was, however, pointed out by the learned Counsel appearing for the respondents, it is Section 21 which applies to the facts of this case. There was undoubtedly an unconditional contract for the sale of specific goods, but the sale was 'Bilty-cut' and the sellers were consequently bound to do something to the goods for the purpose of putting them into a deliverable state.

The expression 'Bilty-cut' was the subject of some discussion during the hearing of this appeal and reference in that connection was made to Firm Seth Hajarimal v. Gulabchand Udechand Firm, AIR 1956 Nag 118 and Nathmal v. Ganga Vishnu, AIR 1952 Vind Pra 62. The suggestion was that where the parties enter into a 'Bilty-cut' transaction, the intention is only to fix the rate for the sale of goods as including all charges up to the booking of the goods excluding, of course, the railway freight. That is one aspect of a 'Bilty-cut' transaction and it was this aspect, which was referred to in AIR 1956 Nag 118 (supra). It was pointed out by Deo, J. that the expression 'Bilti-cut' refers to the rate agreed and that a 'Bilty-cut' rate included the cost of bagging or containers, weighing, transport to the railway station, loading in wagons, if this is to be done by the consignor, and other station charges tilt the 'billy' is issued. In AIR 1952 Vind Pra 62 (supra), also it was pointed out that a 'Bilty-cut' rate is higher than the normal market rate and is meant 'with the way bill made out.' This is, however, only one aspect of a 'Bilty-cut' transaction.

The other aspect of such a transaction is that it is the seller, who undertakes to get the goods booked. He will not be deemed to have performed his part of the contract unless he arranges for the wagon, the goods are booked and the railway receipt obtained for the same, for which service payment is already included in the 'Bilty-cut' rate. It may be that in a particular 'Bilty-cut' transaction the buyer may himself agree to arrange for the wagon and booking of the goods and all what the seller may be liable in such a case may be only to bear all the expenses up to the booking of the goods. If that is so, necessary allegations will have to be made and evidence led to prove the exact terms of the contract. If all what is alleged or proved is that the parties had entered into a 'Bilty-cut' transaction at a particular rate, the obvious inference would be that the responsibility for the booking of the goods was that of the seller. In that view, therefore, the sellers, in this case were bound to do something to the goods for the purpose of putting them into a deliverable state, i.e. get them booked and obtain a railway receipt for the same. It is, therefore, Section 21 of the Sale of Goods Act, which applies to the facts of the case. There could be no passing of property in the goods to the buyers till the goods were booked. It cannot, therefore, be said that there was a completed sale.

8. The next question argued before us was about the responsibility of either side for the breach of the contract. The agreement between the parties does not provide for the time within which the agreement was to be performed by the appellant, but it being a business transaction, we would agree with the learned Single Judge that a contract of this nature should be fulfilled within a reasonable time. Under normal circumstances, when there is no difficulty in the availability of the wagons, a period of one month may be more than sufficient for the performance of an agreement.

But in this particular case it was in the contemplation of the parties that there might be some difficulty in obtaining the wagon. That was the reason why according to the agreement, Ex. 2, thegoods were weighed and stored in the godowns of the appellants and it was specifically mentioned that the goods would be loaded on the wagon being available. The words 'gari milne par' put no time limit upon the performance of the agreement. The goods were to be loaded only upon the wagon being available.

Lakshmi Narain, who is a partner in the appellant firm, has deposed that he applied for the wagon the very next day, i.e., on 3rd August, 1953, and that he got his demand registered but could not get the wagon. There is nothing in the findings recorded either by the learned single Judge or the Courts below to indicate that the appellants failed to take any steps necessary for procuring a wagon and, in fact, it has been assumed that the appellants had done alt what they could for obtaining the wagon. On 20th August, 1953, i.e., after waiting for two weeks, they intimated to the respondents that the wagon may not be available for sometime to come and that the goods could be despatched in an open wagon if the respondents so desired and undertook to bear the additional expenses.

Even though the transaction was a 'Bilty-cut' transaction, all expenses subsequent to the booking of the goods were to be paid by the respondents. All additional expenses, which were, therefore, to be incurred in the carriage of the goods in an open wagon, if that means of transport were acceptable to the respondents, were to be borne by them.

Two courses were, therefore, open to the respondents when they received the appellants' letter dated 20th August, 1953, Ex. 5. They could have either intimated to the appellants that they would be prepared to wait for the despatch of the goods till the wagon is available, however long the time taken might be, or they might have agreed to the despatch of the goods in an open wagon and bear all consequent expenses in connection with it. Instead of accepting either of the two alternatives, they demanded that the appellants should, themselves bear the additional expenses and see that the railway receipt was delivered to them within eight days.

In normal course compliance with this new condition was impossible inasmuch as the letter itself was delivered to the appellants on 28th August, three days being thus already lost; and even if the appellants 'were' to obtain an open wagon, sometime would have been taken even in procuring the same, and then in sending the railway receipt to the respondents at Colonelganj. Virtually therefore the respondents put an impossible condition on the performance of the contract and, in any case, the condition placed was in addition to those agreed upon and it must, therefore, be the buyers, who must be deemed to have been responsible for the breach of the agreement.

9. Reliance was placed by the learned counsel for the respondents on Tsakiroglou and Co. Ltd. v. Noblee Thori G.M.B.H., 1962 AC 93, which is a case decided by House of Lords. In that case the sellers in Sudan agreed to ship groundnuts to the buyers c.i.f. Hamburg during November/December, 1956. As a result of certain political activities Suez Canal was blocked during that period and the agreement could not, therefore, be performed. Whenthe buyers in Hamburg claimed damages on account of non-performance of the agreement, the sellerscontended that on account of the Suez Canal being blocked, the performance of. the contract became impossible for reasons beyond their control and that, therefore, they could not be held responsible for the breach of the same. It was found that the goods could still be sent by an alternative longer route round the Cape of Good Hope. It was heldthat even though the carriage charges by the alternative route could have been higher than those by the normal route, the sellers were bound to send the goods by an alternative route if it was available and they having failed -to do so, they were responsible for the breach of the contract and consequently liable for damages.

It was contended by the respondent on the authority of this decision that it was the duty of the seller to bear the additional expenses consequent upon the discharge of the goods by the alternative means of delivery. The authority relied upon by the learned counsel for the respondents, however, relates to a case in which the goods were to be delivered to c.i.f. Hamburg. The price which is agreed upon in a c.i.f. contract is quoted as at the port of destination, i.e. inclusive of carriage, insurance and freight. In that case, therefore, the additional expenses for despatch of the goods by the alternative route were bound to be borne by the sellers and it was obviously a breach of contract on their part if in order to avoid those additional expenses they did not despatch the goods by alternative mode. In the instant case, on the other hand, the freight and all other charges, after the goods were actually booked, were to be paid by the buyers. If any additional expenses were, therefore, incurred by any alternative means available, those expenses were bound to be borne by the buyers. In fact, the buyers were bound to wait in terms of the agreement till a wagon was available and it was only in the interest of the buyers themselves that the appellants suggested in their letter dated 20th August, that if they so desired the goods could be despatched almost immediately in an open wagon.

10. Reliance was placed on behalf of the respondents on China Cotton Exporters v. Behari LalRamcharan Cotton Mills Ltd., (AIR 1961 SC 1295),but the decision in that case is hardly of any helpto them. In that case the contract was in respectof the shipment 'October/November, 1955'. Oneof the terms of the contract was 'this contract issubject to import licence and therefore the shipment date is not guaranteed'. There was delayon the part of the sellers in the performance of thecontract, but it was found, as a fact, that the importlicence was received in time. What was contendedon behalf of the sellers was that the shipment datenot being guaranteed, they could not be held responsible for the breach of the contract on accountof delay in the performance of the sale. But it washeld that the words 'shipment date was not guaranteed' referred only to the import licence not beingavailable in time and did not cover any other groundfor delay in the performance of the contract and thatthe sellers were consequently liable for the breachof the same.

The facts in the instant case are quite differentand the decision relied upon by the learned counsel for the respondents is not applicable to it at all. Here the goods were to be despatched only on the wagon being available There is nothing to show that the appellants made no attempt to get the wagon in time. The appellants are consequently not liable for the breach of the contract at all. In fact, the breach was committed by the respondents as they refused to take delivery of the goods if the railway receipt were to be delivered to them more than eight days after 25th August, 1953.

11. We are, therefore, of opinion that the respondents are liable for the loss occasioned to the appellants on account of breach of contract on their part. In that view the suit of the plaintiff-appellant was bound to be decreed for the sum of Rs. 820/-. Lakshmi Narain (P. W. I) has clearly deposed that the goods which were weighed for the respondents at the instance of Asharfi Lal, had to be sold at a loss of Rs. 5/8/- per bag.

The trial court and the first appellate court have both pointed out that there was no evidence on record as to the rate of the broken rice on the date of the breach of the agreement There is nothing in the statement of Asharfi Lal (D. W. 1), who appeared on behalf of the defendants either, to show that the stock of broken rice could have been sold with advantage by the appellants on the date of breach. The appellants carry on business at Tikonia and when the respondents failed to accept the goods in accordance with the terms of the contract, it would naturally take sometime in finding another buyer for the same. The defendants did not even allege in their written statement that there was a better rate prevailing on the date of the breach of the statement, or that the goods could have been sold at a higher rate by the appellants.

12. The appellants are clearly entitled to a decree for the amount claimed by them.

13. This appeal is, therefore, allowed. Thejudgments and decrees of the lower courts as alsoof the learned single Judge are set aside. The suitof the plaintiff-appellants will stand decreed for theamount claimed with costs throughout.


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