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Gauri Shanker Surajmal and ors. Vs. Moolchand Pannalal and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtMadhya Pradesh High Court
Decided On
Case NumberSecond Appeal No. 45 of 1955
Judge
Reported inAIR1958MP415
ActsSale of Goods Act, 1930 - Sections 2(4)
AppellantGauri Shanker Surajmal and ors.
RespondentMoolchand Pannalal and ors.
Appellant AdvocatePatankar, Adv.
Respondent AdvocateMotilal, Adv.
DispositionAppeal allowed
Cases ReferredDhian Singh v. Union of India
Excerpt:
.....under section 324 of i.p.c., sentence of 3 years imprisonment reduced to period undergone by appellant considering mental agony suffered by him - if on the date of what that court considered to be the frustration of the agreement, the price had been higher than that on the date of the sale, the vendor would have been liable to pay the difference as well. whether he had only detained, or had already converted the goods, he would be liable either to a decree for restoration or the price on the date on which delivery is refused, the error of the lower courts, lay in their assuming that against the defendants 1 and 2, it was a suit for damages for breach of contract 5. this takes us to the consideration whether the transaction between rustam khan and the plaintiff was a sale or was..........the outstanding debts, which was frustrated by the failure of the commission agents to deliver the goods. the delivery order runs thus (ex. pi 1) :'after compliments to bhai moolchandji nemichandji whenever seth surajmalji (plaintiff no. 1 in the suit) demands the 800 bags of charcoal you will please deliver them to him after weighment; you should not take anything from him. since last year i owed them money; so there should be no obstruction in the weighment and delivery of the charcoal. otherwise, i may be made to look small as in fact there has been already some false excuses made to him. therefore, you should as the first thins make over to seth surajmalji immediately on his demand his coal (inka koyala)'.this is a categorical order directing delivery to the commission agents of.....
Judgment:

H.R. Krishnan, J.

1. This is an appeal by the plaintiff directed against the concurrent judgments of the lower Courts, passing a decree for the price against defendant No. 3 Vendor, and refusing to pass any decree against defendants 1 and 2, who as Arhtias keeping the goods on his behalf, still refused to deliver them to the plaintiff in accordance with the delivery order from the vendor. The questions for decision are whether the delivery order given by defendant No. 3 to the purchaser-appellant made him the owner of the goods, and as such competent to bring a suit in tort (action detinue or conversion) against defendants 1 and 2. Secondly, whether on the materials available we can hold that the goods were worth on the date of refusal of delivery, anything more than what the plaintiff had paid to the vendor (defendant 3).

2. The facts as found by the lower Courts are the following. The plaintiffs originally, both father and son but now the latter alone surviving, had lent money to Rustum Khan, uncontesting defendant-respondent No. 3. The latter manufactures charcoal and at the time of transaction, he had 800 bags of it, stored for sale, with the adhtias-defendants 1 and 2 (father and son). On 23-4-1950 he sold to the plaintiff these 800 bags of charcoal for the sum of Rs. 1,845/- which he owed them. He also wrote a delivery order directing the adhatias, to deliver immediately on demand to the plaintiffs the goods, which he already describes as 'their charcoal'. Accordingly, the plaintiff went to them on 30-5-1950, presented the delivery order, and demanded the goods.

But the defendants 1 and 2 asserted that the goods were in pledge to them for a loan that Rustam Khan had taken and that they would not deliver them. They did not claim any commission such as is usual for the commission agents to charge from the vendor or from the purchaser; nor did they express any doubts as to the genuineness of the delivery order. The plaintiff accordingly brought this suit against all the there. Against Rustam Khan the suit can be on the basis of a contract; but against the ethers the suit can He in tort, only if the delivery order had the effect of making the plaintiff owner of the goods as in fact has been stated by the vendor in the order itself. In the lower Courts defendants 1 and 2, who alone contested, urged that they were holding the goods in pledge for a debt.

The question was not whether Rustam Khan owed them any money, but whether there was a charge on those goods by way of a pledge, over and above what might be claimed by way of commission on sales howsoever effected. Both the Courts have found on the facts that the goods were not in pledge, and, that the entry in the books of the contesting defendants to that effect is a piece of forgery. This is a clear finding of fact which I accept. I also note that the defendants 1 and 2, have taken away from the trial Court the register containing the forged entry. If after the disposal of this appeal, the trial Court considers it just and expedient to start an inquiry about the advisability of prosecuting them for using a forged document, the register will have to be called from the defendants.

3. Though the lower Courts have rejected the plea of pledge they have still passed a decree only against the vendor for the sale-price, and none against the defendants 1 find 2. The relevant parts of the first appellate Court's judgment are not very clear to me; but the trend is that the whole transaction was an arrangement proposed for the satisfaction of the debt payable by Rustam Khan to the plaintiff. By the defendants 1 and 2 refusing to honour the delivery order and make over the goods to the plaintiff, this proposal was frustrated.

Therefore, the status quo ante was restored, and the vendor became liable to refund the price. If on the date of what that Court considered to be the frustration of the agreement, the price had been higher than that on the date of the sale, the vendor would have been liable to pay the difference as well. Actually, the evidence on the price at the place of intended delivery was very little; any way, the lower Courts did not give a finding on this.

4. In this Court, the plaintiff appellant argued that he was suing the defendants Nos. 1 and 2 in tort and not in contract; in fact, there was no contractual nexus with them. The delivery order was a document of title to the 800 bags of charcoal, and represented it. By refusing to deliver them, the defendants who had been holding them on behalf of the were liable in detinue. They did not deny that such an order did represent the goods; on the contrary they set up a story of pledge, and sought to support it by some document; the Court has found that the document was forged and there was no pledge.

The vendor had also directed that no commission should be claimed from the plaint; still they would have paid if it had been demanded. The lower Courts were wrong in supposing that it was a mere proposed arrangement, and not a transfer of the ownership of goods simply because no cash was paid as the price. There had been a completed sale, and the commission agent or bailee was bound to deliver the goods on the presentation of the delivery order. Whether he had only detained, or had already converted the goods, he would be liable either to a decree for restoration or the price on the date on which delivery is refused, The error of the lower Courts, lay in their assuming that against the defendants 1 and 2, it was a suit for damages for breach of contract

5. This takes us to the consideration whether the transaction between Rustam Khan and the plaintiff was a sale or was a proposed agreement to satisfy the outstanding debts, which was frustrated by the failure of the commission agents to deliver the goods. The delivery order runs thus (Ex. Pi 1) :

'After compliments to Bhai Moolchandji Nemichandji whenever Seth Surajmalji (plaintiff No. 1 in the suit) demands the 800 bags of charcoal you will please deliver them to him after weighment; you should not take anything from him. Since last year I owed them money; so there should be no obstruction in the weighment and delivery of the charcoal. Otherwise, I may be made to look small as in fact there has been already some false excuses made to him. Therefore, you should as the first thins make over to Seth Surajmalji immediately on his demand his coal (inka koyala)'.

This is a categorical order directing delivery to the commission agents of goods already described by the owner-vendor as the purchaser's property. There is a further direction that the commission payable need not be demanded from the new owner; that means that the vendor will pay it. One can certainly understand the commission agent insisting the commission being paid by the new owner, but that is, not the point in the suit.

6. The point is whether or not this document is a delivery warrant or order answering to the definition of 'document of title to goods' in Section 2(4) of the Indian Sale of Goods Act,

'Any document used in the ordinary course of business, purporting to authorise the possessor of the document to receive goods thereby represented.'

It is not questioned by the defendants 1 and 2 that this type of delivery order is given in the business. Their defence was on other grounds altogether and has been rejected for good reasons. It is argued on their behalf in this Court that there could be no suit against them as they were strangers to the transaction between defendant No. 8 and the plaintiffs. In support of this they have relied on the ruling reported in Gulabchand Sitaram v. Laxminarayan Balmukund, AIR 1944 Nag 120 (A). One cannot dispute the principle laid down in that ruling, but that cannot be made applicable to the present case except by fallacious reasoning. A suit for breach of contract cannot be brought against these contesting defendants.

The plaintiffs themselves were not suing them on that basis. In the reported case it was found that the document on which the plaintiff relied could not be considered as an agreement by the defendant to pay the amount in suit to him. But in the present suit the plaintiff having become the owner of the goods on the strength of the delivery order, he is suing these defendants in tort So the question is one what I have stated in the previous paragraph namely whether this delivery order is a document of title to the goods and as such made the plaintiffs the owners. It is not questioned that such documents are passed in trade to the purchaser and represent the goods themselves. In fact, the vendor already described the goods as being those of the plaintiff and directed the defendants to deliver them.

Abdul Shakur v. Motiram Premji, AIR 1949 Nagf 186 (B), has also been relied upon by the contesting defendants. But there the position was different. A document called sauda chitthi was sought to, be made the basis of the plaintiff's claim, the Court held that it was not a document of title and the endorsement did not pass a title in goods. The main distinction from the present one is that the sauda chitthi in that case was a contract for delivery of goods in future and obviously could not actually represent those goods. Whereas in the present case the delivery order is not a contract for delivery of goods in future, but a direction to deliver existent goods held by the defendants on behalf of the maker of the delivery order to the purchaser, who was expressly described as the owner of the goods. Similarly, Gajadhar Prasad v. Rishabkumar, AIR 1949 Nag 319 (C), has also no application here.

There it was held that a purchaser who retains money with him for payment to the mortgagee of the property purchased does not became his trustee and the mortgagee cannot enforce against him the undertaking entered into by him by the mortgagor. I do not see how that principle comes in here at all. The defendants have also placed the recent ruling in Dhian Singh v. Union of India, AIR 1958 SC 274 (D). In this ruling the circumstances in which the bailee can be sued in detinue or in trover have been explained. If anything, this ruling helps the plaintiffs.

7. In the result, I find that it is immaterial for : the purposes of this suit whether the sale by the defendant No. 3 to the plaintiff was for cash or in satisfaction of existent debt; the delivery order in this case is a document of title to the goods and, in fact, described them as the plaintiffs' goods. Failing to implement the direction, the defendants 1 and 2 made themselves, liable in tort for detinue.

8. The second question is simple. In a suit like this the tort-feasor defendants are liable to restore the goods or, if they have converted them, to the value of the goods on the relevant date. Strictly speaking, it is not a case of 'damages' though sometimes parties use that word loosely. Prima facie the goods were worth Rs. 1,850/-. The plaintiffs made a feeble attempt to show that the price was Rs. 4/-per bag on the date of refusal. Later on, they were trying to claim Rs. 3-8-0 per bag though actually the price paid a few weeks earlier was only Rs. 2-5-0 per bag. In their evidence the plaintiffs have spoken of the price at Delhi and not the price at Ruthia where the defendants were doing business and where the goods were detained by them. The defendants have not given any materials from which the price on that date could be ascertained. So it may be concluded for the purposes of the suit that there had been no change in the price between the sale and the refusal to deliver the goods.

9. In the result, the appeal is allowed and the decree is passed jointly against all the defendants.Costs and pleaders fee payable to the plaintiffs bycontesting defendants-respondents 1 and 2 accordingto rules.


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