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Ram Saran Das Raja Ram and anr. Vs. Lala Ram Chander - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtDelhi High Court
Decided On
Case NumberR.F.A. No. 75-D of 1959, from decree of Sub-J. 1st Class, Delhi, D/- 10-9-1959
Judge
Reported inAIR1968Delhi233
ActsSale of Goods Act, 1930 - Sections 46, 54(2) and 60; Indian Contract Act, 1872 - Sections 73
AppellantRam Saran Das Raja Ram and anr.
RespondentLala Ram Chander
Appellant Advocate H.R. Sawhney and; S.P. Aggarwal, Advs
Respondent Advocate Parkash Chandra and ; Ramesh Chandra, Advs.
Cases ReferredMessrs Bhawan Dass Brtohers v. Messrs. Dina Nath Daulat Ram
Excerpt:
it was adjudged that where the seller delivered his goods to the railway company, obtained the railways receipt in respect of the goods in his own name and endorsed the railway receipt in favor of the bank and delivers a hundi with a direction that the railway receipt should be delivered to the buyer only when the hundi was honoured and the price of the goods paid, then the title in the goods does nto pass to the buyer- in case of refusal by the buyer to take delivery the seller was nto entitled to resell the goods under the terms of section 54(2) of the sale of goods act, 1930- however the seller could claim difference in price as damages if transaction of resale was genuine. - section 13: [altamas kabir & cyriac joseph,jj] custody of child - welfare of child vis--vis comity of courts.....1. this is a defendants appeal from the judgment and decree of a learned subordinate judge 1st class, delhi, whereby the plaintiff's suit for recovery of rs. 6,434-10-9 was decreed with costs against the defendants with interest at 4 percent per annum from the date of the suit till the date of realization.2. the plaintiff ram chander, proprietor of jindal oil mills, delhi-shahdra, pleaded in the plaint that on 3-5-1954, the defendants messrs. ram saran das raja ram, whose partner raja ram was also imp leaded as defendant no. 2, entered into a contract of purchase of one tank wagon (about 500 maunds) of mustardoil at rs. 61 per maund f. o. r. delhi-shahdra (bilti cut) with a condition of 1/2 per cent leakage. the tank was to be dispatched to kirkand, the place of business of the.....
Judgment:

1. This is a defendants appeal from the judgment and decree of a learned subordinate judge 1st Class, Delhi, whereby the plaintiff's suit for recovery of Rs. 6,434-10-9 was decreed with costs against the defendants with interest at 4 percent per annum from the date of the suit till the date of realization.

2. The plaintiff Ram Chander, proprietor of Jindal Oil Mills, Delhi-Shahdra, pleaded in the plaint that on 3-5-1954, the defendants Messrs. Ram Saran Das Raja Ram, whose partner Raja Ram was also imp leaded as defendant No. 2, entered into a contract of purchase of one tank wagon (about 500 maunds) of mustardoil at Rs. 61 per maund F. O. R. Delhi-Shahdra (Bilti cut) with a condition of 1/2 per cent leakage. The tank was to be dispatched to Kirkand, the place of business of the defendants. The plaintiff dispatched one tank wagon weighing 505 maunds of mustard oil in accordance with this contract as per R/R No. 149067 from Delhi Shahdra to Kirkend. The R/R was sent to the defendants through the Punjab National Bank Ltd., Delhi-Shahdra and the plaintiff drew a hundi for Rs. 30,874/5/- on the defendants on account of price of the oil dispatched. The defendants, repudiating the contract, wrongfully refused to honour the hundi and to receive the R/R from the Bank and to take delivery of the oil.

The plaintiff had in consequence to arrange to take delivery of the oil at Kirkend and disposed it of there at the cost, risk and responsiblity of the defendants after giving them due ntoice. The plaintiff could only realise Ruppees 25,186/13/9 by the resale of the said oil after adjusting the R/R, Bank charges, sale commission and toher expenses incidental to the sale of the said oil. Thus there was a loss of Rupees 5,687/7/3. The plaintiff had also to pay Bank charges for the dishonoured hundi and to send his man to Kirkend to arrange for taking delivery of the said oil and to supervise its sale which entailed expenses amonting to Rs. 720/ 11/6. Adding to it a sum of Rs. 26/8/- on account of interest with effect from 1-7-1954 up to the date of the suit at 9 per cent per amount according to the marker rate, the ttoal amount claimed was calculated to Rs. 6,4834/10/9 as observed earlier.

3. The defendants resisted the suit as various pleas, including a challenge to jurisdiction of the Courts at Delhi. The main plea, however, was that there was no completed however, was that there was no completed contract between the parties in respect of the sale and purchase of the oil in question. The additional pleas contained what the defendants described to be the correct position. The defendant-firm, according to these pleas, telephoned to one Gobind Ram Singhania at Purulia and made an offer to purchase one tank mustard oil at Rs. 61 per maund f.o.r. Kirkend, the defendants being liable for leakage up to 1/2 percent, leakage above this percentage to be the risk of the seller. The goods, according to the defendants instructions, were to be sent after 15-5-1954, Gobin Ram Singhania acknowledged this proposal andinformed the defendants that their proposal had been passed on to Jinda Oil Mills. Neither gobin Ram Singhants nor the Jindal Oil Mills sent any acceptance of the proposal.

The defendants wrtoe on 5-5-1954, repealing their earlier offer made through Gobind ram Singhania. The plaintiff did nto acknowledge the defendants' letter nor did he communicate to them the acceptance of the offe. There being no accpetance received from the plaintiff the defendants considered that their proposal stoods revoked. On 18-5-1954, the defendants received a telegram from Jindal Oil Milla informing of dispatch of tank 74730, but this message made no sense. The defendants, how ever, promptly wired back to the plaintiff it pudiating their obligation. After exchanging tow more telegrams, the defendants wird on 20-3-1954 to the following effect:

'Received no valid contract. Tank dispatched violating condition nto liable to accept'. Without admitting, but assuming the existence of a contract, according to the defendants' plea, the oil had to be dispatched on 15-5-1954 and this was an essential condition. Non-compliance with this condition was vocative of the essential terms of the contract. The plaintiff had nto informed the defendants about the dispatch of the wagon till after 18-5-1954. Besides the defendants had agreed to place the order at Rs. 61 per maund F. O. R. Kirkend and nto F. O. R. Delhi-Shahdra as billed by the plaintiff. On the basis of these pleas, the defendants denied their liability. It was added that the defeudants having repudiated the contract on 20-5-1954, 'it was the duty of the plaintiff to dispose of the goods on that day. The plaintiff on the toher hand allowed the goods to remain unsold for about a couple of months with a view to take advantage of the rise in the market. Again the goods were nto sold at Kirkend but at Jharia. The plaintiff did nto dispose of the oil as it was contained in a tank wagon, and is reported to have taken delivery of the oil by inverting them into tins. The defendants do nto even admit that the oil which the plaintiff is supposed to have sold at Jharia. All along the plaintiff treated the goods as his own.' I have considered it proper to reproduce the exact words of this part of the additional pleas.

4. Jurisdiction of the Court below was upheld by an interlocutory order on the preliminary issue which was affirmed by the High Court on revision. The following issues on the merits were the settled:-

1. Whether the plaintiff is sole proprietor of Jindal Oil Mills?

2. Whether there was no completed contract between the parties?

3. What were the terms of the contract?

4. Whether the plaintiff performed his part of the contract?

5. Whether the plaintiff actually sold the goods in defendants' account and after ntoice?

6. Whether the plaintiff could sell the good s in the account of defendants?

7. To what damages, if any, is the plain tiff entitled?

8. Relief.

All the issues having been decided in favor of the plaintiff, this suit was decred for Rs. 9,434-10-9 as observed earlier.

(15) On appeal, Shri H. R. Sawhney has, to begin with, urged that there was no completed contract between the parties. In support of this submission, he has drawn our attention to Exhibit 'A' dated 3-531954, which is a letter from Gobind ram Singhanja signed by Hari Parsad singhania on his behalf and addressed to Ram Saram Dass Raja Ram. It reads as under:-

'Received no letter from you. So please write one to me.

Today I had a talk with you on phone. In accordance with your instructions one tank of mustard oil with the condition of leakage to the extend of 1/2 per cent and further condition that it will be dispatched after the 15th day. 1954, at the rate of Rs. 61 per maund (rupees sixty one only)'bilti cut has been purchased from the Jindal Oil Mills, Delhi, Shahdra. So please keep this in view. In this connection, a telegram has been sent to you today which you might have received. It will be learned on receipt of your lette.

Please reply to this letter, Please write us any service from your sied'.

There is a ntoe at the btotom in the following words:-

'please do contact us for purchasing or selling any of the aforesaid goods'.

This ntoe apparently refers to the various articles mentioned on the margin for which Gobind Ram Singhania seems to be acting as selling agent. Exhibit P-9 is a telegram of the same date dispatched at 9-40 A. M., conveying the following message:-

'Reference phonic offer sold one tank mustard oil sixty-one bilti cut leakage half percent confirm Ramsaran Dass Rajadeonm Kirkend. Singhania'.

The argument of the learned counsel for the appellants is principally based on these two documents, and, according to him, the confirmation sought in the telegram conclusively shows that it was an offer which had to be confirmed before it could in law become a contract. The counsel has also drawn our attention to Exhibit P.W. S/I which is translation of an entry in the plaintiff's bahi dated 16-5-1954. This entry is to the following effect:-

'Sold one tank of oil weighing 500 maunds at the rate of Rs. 61 per maund F. O. R. Shahdara, to Ram Saran Dass Raja Ram of Kirkend through Gobind Ram Singhania. Telegram received on the 3rd May, 1954'.

Lower down, there is a ntoe to the following effect:-

'He refused to receive the goods. The goods were sold to Kidar Nath at Jharia'. Shri Sawhney has in this connection also read out the statement in cross-examination of Ram Chander plaintiff where he has stated:-

'Exhibit P-9 is the telegram, the reference of which is given in the entry of the sauda bahi, copy of which is given in the entry of the sauda bahi, copy of which is Exhibit P. W. S/1. It is wrong that the contract was based only nto the telegram, P-9 and that there was no talk regarding the terms of the contract on phone. The talk on telephone was received on night of 3rd May, 1954. The telephone message was received on the night between 2nd May, 1954 and 3rd May, 1954 after 12 O'clock in the midnight

I cannto give any specific reason why there is no mention of telephone in the entries in sauda bahi.

The learned counsel has in addition invited our attention to Exhibit P-1, a post-card dated 5-5-1994, written by Messrs. Ram Saran Dass Raja Ram of Kirkend Bazar to Messrs Jindal Oil Mills. This letter, so far as relevant, reads as under:-

'It is alright that you have sold one tank I. E. 500 maunds of oil at the rate of Rs. 61 (per maund) through Bhai Gobind ram Singhania. The same be gto dispatched after 15th. The tank be dispatched for Kirkend Station. The statement of the defendant Mtoi Ram Aggarwal appearing as witness No. 3 examined on commission has also been relied upon by the appellants' counsel. He has stated that the talk between Munshi Ram and Gobind ram Singhania took place in his presence on 3-5-1954 at 7 A. M. It appears that two documents bear the exhibit mark 'A', one which is a letter date 3-5-1954, to which reference has already been made, and the toher is a bill for the telephone trunk call dated, 9-7-1954 for the month of May, 1954 sent by the Indian Posts and Telegraphs Department to Messrs. Ram Saran Dass Jaja Ram. Item No. 2 is dated 3-5-1954 and the telephone number called is 'PEL 58' at 7 A. M. From this material, Shri Sawhney wants us to hold that there was no completed contract and the offer mad e by the plaintiff had elapsed. We are unable to sustain this submission. The telegram Exhibit P-9 and the letter Exhibit 'A' dated 3-5-1954 appear to me to completely negative the appellants' suggestion. Exhibit P-1 dated 5-5-1954 from the defendants ram Saran, Dass Raja Ram to Jindal Oil Mills seems almost to conclude the matter beyond the possibility of any controversy. There was quite clearly a completed contract, and any attempt on the part of the defendants to contend to the contrary seems to me to be an argument of despair. The appellants learned counsel has placed considerable reliance on Exhibit P. S/i, translation of an entry in sauda bahi as printed in the paperbook.

I have looked at the original document in Urdu from the record. It recites the sale of 500 maunds at R. 61 per maund F. O. R. Shahdara through Gobind Ram Singhanta and also mentions the receipt of a telegram on 3-5-1954. In the margin, the date is mentioned as 16-5-1954. At the btotom to the left, is the ntoe that delivery was declined and the gooda sold to Kidar Nath at Jharja. Accourding to Ram Chander plaintiff, appearing as P. W. S. In answer to a question in cross-examination, this enttry was made after the receipt of the telephone and of the telegram. No further question was apparently asked from the plaintiff in connection with this document. We are, thereforee, unable to hold that this document negatives the plaintiff's case and supports the defendants' theory that there was no completed contract and the whole thing has been concocted or made up by the plaintiff with the object of claiming damages on the basis of a breach of their obligations on the part of the defendants. Reference has also been made by shri Sawhney to the statement of the plaintiff recorded on 23-131956 on the preliminary issue relating to the jurisdiction of the Court , wherein he stated that the consignee of the R/R in dispute was self which was nto endorsed in the name of the defendants and that up to Kirkend, the owner of the oil was the Punjab National Bank. Without holding, but assuming that this part of the statement can be taken into account for the purposes of determining issue No. 2, I do nto think the statement can be construed to establish that there was no completed contract between the parties. It is significant that when the plaintiff was examined is P W S on the issues on the merits, no point was sought to be made on the basis of his earlier statement date 23-1-1956 and he was nto even questioned with reference to his previous statement.

Be that as it may, on a consideration of the evidence, btoh oral and documentary we have nto the least hestitation in holding that there was a completed contract between the parties and that the Court below was quite right in so holding. This brings us to the challene on the question of the dispatch of goods. This is the subject-matter, of issue No. 4. The defendants' plea is that the plaintiff had to dispatch the goods after 15-5-1954, where as the goods were dispatched on 16-5-1954 which was vocative of the terms of the contract, P. W. 2 Abbey Ram, an employee of Jindal Oil Mills in 1954, has sworn that the tank in dispute was loaded on 15-5-1954 and the same left Shahdara on 16-5-1954. In cross-examination, all that has been elicited is that he was nto present at the railway station when the tank in dispute actually left and that the date of its dispatch is nto entered in the records Shri Gugan Ram P. W. S, also an employee of M/s. Jindal Oil Mills as a Munim in 1954, has corroborated Abhey Ram by swearing that this tank was loaded on 15-5-1954 and the same left delhi-Shahdara station on 16-5-1954. His cross-examination has also nto brought out any reason for disbelieving his statement to this effect. Shri Sawhney has referred us to the statement of sadhu Ram P. W.1. who was posted as a Goods Clerk at Delhi-Shahdara station in May, 1954, wherein he has stated that there was no record with him which could support his statement that tank No. 74730 had left Delhi Shahdara in the early hours on 16-5-1954.

I may point out that in his examination in chief, he has stated that the tank in question had been made over to M/s. Jindal Oil Mills on 14-5-1954 at 14 hours for loading and the loading was completed on 15-5-1954 at 7 hours,. They said tank was dispatched on 16-5-1954 early in the morning. The plaintiff, appearing as P. W. S. Has also deposed that the tank was loaded on 15-5-1954 and it left delhi-Shahdara at about 1 A. M. On 16-5-1954. It is true that after referring to the defendants' request to dispatch the goods after 15-5-1954, the plkaintiff has also stated that the railway Authorities had been requested by him to supply a tank and the tank would have to be loaded the day it was supplied. But whether or nto he is right in denying the dispatch of the goods after 15-5-1954, to be a term of the contract, the fact remains the according to the evidence on this record, the tank left on 16-5-1954 and nto earlier. The defendants have nto shown by any reliable evidence that the goods had actually been dispatched earlier. Some attemp has been made at the abar to suggest that there it a likelihood of the tank having left Delhi Shahdara on the 15th and nto on the morning of the 16th of May.

The evidence, in our opinion , quite clearly negatives this suggestion, though it is questionable whether even if the goods had left Delhi shahdara sometime late on 15-5-1954, It could be said to have amounted to a breach of an essential term of the contract thereby entitling the defendants to avoid the contract. The toher part of the decision on issue No. 4 that the goods were dispatched 'Bilti-cut' F. O. R. Delhi Shahdara has nto been seriously challenged before us on behalf of the appellants, and in our opinion, rightly so.

This brings us to issues Nos. 5 and 6 on which Shri Sawhney has very eloquently addressed us in support of the appeal. The challenge on this part of the case has broadly speaking centered round three points:-

(a) Whether the property in question passed to the defendant-appellants?

(b) Whether the plaintiff could resell the goods? And

(c) Whether the resale was effected after ntoice to the defendant-appellants?

In this connection, stress has been laid on the following submissions:-

(I) The R/R was obtained in the plaintiff's own name:

(ii) The R/R was endoresed in favor of the Punjab National Bank against payment;

(iii) The amount of the hundi was obtained from the Bank and the R/R was given as security, with the result that the property should be considered to have passed to the Bank:

(iv) The plaintiff had appointed his own sales agent for reselling the goods without reference to the defendant-appellants and the goods were actually so sold;

(v) The goods were neither ascertained nor appropriated; and

(vi) The plaintiff had reserved the right of disposal till payment was made by the defendant-appellants.

The counsel has in the course of his arguments referred us to Sections 54 and 60 of the Sale of Goods Act (hereafter called the Act) and has releid on some decided cases in support of his challenge to the impugned judgment and decree. I may first deal with the statutory provisions. Section 54 of the Act provides that sales are nto generally rescinded by lien or stoppage in transit. Where, however, the unpaid seller, who has exercised his right of lien or stoppage in transit. Where, however, the unpaid seller, who has exercised his right of lien or stoppage in transit, gives ntoice to buyer of his intention to sell, the unpaid seller may, if the buyer does nto within a reasonable time pay or tender the price, resell the goods within a reasonable time and recovery from the original buyer damages for any loss occasioned by his breach of contract, but the buyer is nto entitled to any profit which may occur on the re-sale . In case of re-sale, pursuant to the exercise of the right of lien or stoppage in transit, the buyer acquires a good title thereto as against the original buyer ntowithstanding want of ntoice of the resale to the latter.

In case of a contract which expressly reserves a right of re-sale on buyer's default, when the goods are re-sold on such default, the original contract is thereby rescinded, but this does nto prejudice any claim for damages which the seller may have under the law. Section 60 of the Act, dealing with repudiation of contract before due date provides that when either party to a contract of sale repudiates the same before the date of delivery, the toher party may either treat the contract as subsisting and wait till the date of delivery or he may treat the contract as rescinded and sue for damages for the breach. Here, reference may also be made to Section 46 of the Act which deals with the subject of unpaid seller's rights. According to this section, subject to the provisions of the Act and of any law for the time being in force, ntowithstanding that the property in the goods may have passed to the buyer, unpaid seller of goods, as such, has by implication of law;

(a) a lien on the goods, for the price while he is in possession;

(b) in case of insolvency of the buyer, right of stopping the goods in transit after he has parted with possession; and

(c) a right of re-sale as limited by the Act. In cases where the property in goods has nto passed to the buyer, the unpaid seller has, in addition to toher remedies, right of withholding delivery similar to and CO-extensive with his rights of lien and stoppage in transit where the property has passed to the buyer. We no turn to the decided cases to which reference has been made at the bar. Before ntoicing the toher cases cited on behalf of the appellants, reference may appropriately be made to a Bench decision of the Punjab High Court in Firm Paharia Mal Ram Shahai v. Birdhi Chand Jain and Sons, . It is laid down therein that the seller's lien depends on actual possession and nto on title and it can be exercised only when the property in the goods has passed to the buyer. In such a case, the property in the goods having passed to the buyer, the seller, by taking the receipt in his own favor, merely exercises his right of lien of the goods. This observation is stated to have been based on a decision of the Privy Council In re: Prachim, 1918 Ac 157 : AIR 1918 Pc 344. On behalf of the appellants, after making an attempt to distinguish of facts the decision of the Punjab High Court, its correctness has been challenged on the authority of two recent decisions of the Supreme Court (I) in Badriprasad v. State of Madhya Pradesh, : [1965]3SCR381 and (ii) in M/s. Carona Sahu Co., Private Ltd. V. State of Maharashtra, : [1966]2SCR845 . The decision in the case of M/s. Carona Sahu Co., : [1966]2SCR845 , lays down the settled law in these words:- ' in the case of contract for sale of unascertained goods the property does nto pass to the purchaser unless there is unconditional appropriation of the goods in a deliverable state to the contract. In the case of such a contract, delivery of the goods by the vendor to the common carrier is an appropriation sufficient to pass the property. But there is a difference in the legal effect of delivering goods to common carrier on the one hand and shipment onboard a ship under a bill of lading on the toher hand . Where goods are delivered on board of a vessel to be carried, and a bill of lading is taken, the delivery by seller is nto delivery to the buyer, but to the captain as bailee for delivery to the person indicated by the bill of lading. The seller, may, thereforee, take the bill of lading to his own order. The effect of this transaction is to control the possession of the captain and make the certain accountable to deliver the goods to the seller as the holder of the bill of lading. The bill of lading is the symbol of property, and by so taking the bill of lading the seller keeps to himself the right of dealing with property shipped and also the right of demanding possession from the captain, and this is consistent even with a special term that the goods are shipped on account of and at the risk of the buyer'.

After qutoing from Gabarron v. Krett, (1875) 10 Ex. 274, and reproducing Section 25 of the English Sale of Goods Act, that decision proceeds to state:-

'The endorsement in the invoice merely indicated that the insurance charges were to be paid by the appellant and the clause has no bearing on the question of the passing of title.'

We do nto think the Supreme Court decision has overruled or cast any doubt on the correctness of the law as laid down by the Punjab High Court in the case of F. Paharia Mal Ram Sahai, . A Single Bench decision of the Lahore High Court by Addition, J., in Sundar Singh Jit Singh v. Gulab Singh Lalyan Singh, Air 1927 Lah 269, given prior to the enactment of the Act, has approved the view that where the goods are sent through Railway, the railway receipt being addressed to self to be delivered though a Bank to the purchaser only on the receipt of the price for the goods, the property in the goods does nto pass to the purchaser till the price is paid. For this very view, reliance has also been placed on a Single Bench decision of the Bombay High Court, on the original side, Ford Automobiles (India) Ltd. V. Delhi Mtoor and Engineering Co., Air 1923 Bom 125.

A decision by Umamaheswaram, J., in Majety Balakrishna Rao v. Mooke Devassy Ouseph and Sons, : AIR1959AP30 , also lays down that where the seller delivers his goods to be railway company, obtains the railway receipt in respect of the goods in his own name, endorses the railway receipt in favor of the Bank and delivers a hundi with a direction that the railway receipt should be delivered to the buyer only when the hundi is honoured and the price of the goods is paid, the title in the goods does nto pass to the buyer. It is added that there is no distinction in principle in regard to reservation of title in respect of a bill of lading and a railway receipt and the seller in such a case is nto entitled to resell the goods under the terms of Section 54(2) of the Act. In the judgment in this case, reference has been made to a Supreme Court decision in Commissioner of Income-tax, Madras v. Mysore Chromite Ltd., : [1955]27ITR128(SC) . Our attention has also been drawn to a recent Bench decision of this Court in Messrs Bhawan Dass Brtohers v. Messrs. Dina Nath Daulat Ram, R. F. A. No. 108-D of 1959, D/-21-3-1967 (Punj). It has been observed in this decision:-

' in the case of the sale of goods, nto being specific or ascertained goods, if a buyer commits a breach in taking delivery of the goods, the seller has normally no right to resell the goods in the buyer's account. Such a right of re-sale would be there if there be an express term of the contract to that effect as was the case in Moll Schutte and Co. V. Lachmi Chand, (1898) 2nd 505, Such a right is also provided in some special cases by Section 54 of the Sale of Goods Act. Those special cases relate to goods of perishable nature or where the unpaid seller exercises his right of lien or stoppage in transit. In case where, however, there is no express right of re-sale in the contract and the case does nto fall within the ambit of Section 54 of the sale of Goods Act, a seller cannto be deemed to be vested with a right of re-sale and he cannto base a claim on re-sale as such. His only remedy is to sue the buyer for damages for breach of contract and the damages would represent the loss suffered by the seller because of the difference between the contract price and the market value of the goods on the date of the breach. If, however, in such a case the seller resells the goods and the re-sale is a genuine transaction, the price obtained as a result of re-sale can be taken into account as indicative of the market value of the goods on the date of the breach. The price realised as a result of the re-sale would thus become relevant for determining the quantum of damages.'

Reference has also been made to a present Full Bench decision of this Court in Bhajan singh Hardit Singh and Co. V. Karson agency (India) L. P. A. No. 95-D of 1962, D/-31-3-1967 : AIR 1967 Del 101. It appears to us to be necessary to find out the precise controversy before the Full Bench and the point which it was called upon to , and actually did, decide. A suit had been instituted by M/s. Bhajan Singh Hardit Singh against Karson Agency (India) and B. L. Kaura for compensation for breach of contract. The defendants had agreed to purchase from the plaintiffs 500 yards of worsted woollen cltoh, Rs. 1,000 having been paid in advance. The plaintiffs sent a bill for 500 yards of the specified worsted cltoh on 25-7-1951 stating that they would deliver the worsted cltoh on payment of the balance of Rs. 10,625 after allowing for the sum paid in advance. The defendants did nto take delivery and in August, 1951, the plaintiffs sent a ntoice to the defendants stating that unless they paid the price and took delivery within four days, the cltoh would be re-sold at the defendants risk. No delivery having been taken, the cltoh was sold in smaller quantities on various dates.

The plaintiffs claimed a decree for Rupees 3,392/9/6 on account of the loss suffered on the defendants' breach of the contract. The only point argued on second appeal by the defendants was the question of limitation, the contention being that the suit was governed by Art. 115, Indian Limitation Act. The courts below had held that Art. 120 applied to the case. The Single Bench took the view that the cause of action had accrued when the contract was broken, that is to say, when the defendants failed or refused to take delivery of the goods. The suit was no this view, held barred by time under Article 115 of the Limitation Act. On Letters Patent Appeal by the plaintiffs, reliance was placed on Section 24 of the Limitation Act, according to which, in the case of a suit for compensation for an Act which does nto give rise to a cause of action, unless some specific injury actually results there from, period of limitation is to be reckoned from the time when the injury results. According to the submission, the breach of contract did nto give rise to any cause of action without damages resulting there from and it was only when the plaintiff discovered, after reselling the goods, that he was still short of the price the defendants had agreed to pay for the goods, that the right to sue accrued to him.

It appeared to the Division Bench to be proper that the question of limitation be authoritatively decided by a larger Bench, with the result that the appeal, which raised only the question of limitation on the facts found by the Court of first appeal, was referred to a Full Bench for decision. The Full Bench ntoiced that the learned Additional district Judge, in agreement with the Subordinate Judge trying the suit, had observed that the unpaid seller had two rights, viz., a right of re-sale under Section 54(2) of the Act and an independent right under Section 55 of the Act to sue for the price of the goods and that it was open to him to sell the goods, but to sue for the price, leaving it to the purchaser to take delivery of the goods lying with the seller at his convenience. In that case, however, the plaintiff had availed himself of the remedy provided under section 54(2) and resold the goods, and sued the defendants for making good the loss sustained by the plaintiff on account of breach of contract by the opposite party. In these circumstances, the question which was canvassed before the Full Bench was in regard to the right of resale under Section 54(2) of the Act. After reproducing Section 4 of the Act, it was observed in the course of the judgment:-

'Thus, it is Section 46(1)(c) that gives a right of resale to the unpaid seller in certain circumstances prescribed in the Act. We are concerned in the present case only with the said right of resale given to the unpaid seller, but nto with the right to a lien or the right to stoppage of goods in transit given to him under Section 46(1)(a) and (b).'

Section 54 of the Act was then reproduced and reliance on behalf of the appellant on Section 54(2) in support of the right to resell the goods was repelled with the finding that the goods in that case could nto be regarded as perishable goods within the meaning of Section 54(2). The right to resell under Section 54(2) was on this basis negatived. The right of the seller to exercise his lien within the meaning of Section 54(2) was considered to be nto helpful because the right to resell the goods conferred on the unpaid seller was exercisable only when the property had passed to the buyer. The Full Bench then proceeded to consider this question and observed that as the property in the goods did nto pass to the buyer, there could be no question of the seller having any right to resell the goods by virtue of Section 46(1) and Section 54(2) of the Act.

This decision does seem to us to some extent to come into conflict with the Bench decision of the Punjab High Court in F. Paharia Mal Ram Sahal's case, . It also distinguished antoher Bench decision of the Punjab High Court, Circuit Bench, at Delhi in Messrs. Eastern Traders (P.) Ltd. V. Punjab National Bank, Ltd., (Dulat and Shamsher Bahadur JJ.). In that case, the Bench had held that the period of limitation of three years for compensation for the breach of any contract is to be reckoned from the date when the contract is broken and nto when the breach is known to the plaintiff and that breach in the abstract would nto be sufficient to provide a fotohold for the plaintiff to file a suit for compensation. Time, according to this decision, must run from the date when the injury is actually sustained. These observations were held to be obiter. The two unreported decisions of this Court, one of them being by a Full Bench, are clearly binding on us and to the extent to which they, or either of them happen to be inconsistent with the decisions of the Punjab High Court, the former must be preferred.

5. In the case in hand, assuming that the title in the goods did nto pass to the seller, the fact remains that the defendant had committed breach of contract in nto taking delivery of the goods. In accordance with the view taken by the division Bench of this Court in the case of Messrs. Bhagwan dass Brtohers, R.F.A. no. 108-D Of 1959, d/-21-3-1967 (Punj.), the plaintiff as seller would be entitled to damages for breach of contract and such damages can be determined on the basis of the difference between the contract price and the market rate of the goods at the time of the breach. If the resale of the goods by the seller is a genuine transaction, then the price obtained on such resale can fairly be considered to be indicative of the market price of the goods at the time of the breach. No reason has been advanced why this view of the Bench of this Court should be held inapplicable to the present case or should nto be followed.

6. Now, the resale by the plaintiff has been criticised on behalf of the appellants on the ground that it was made long after the breach of the contract and that the goods were sold nto in one lto but in Installments in smaller quantities. It is pointed out that the sale had been repudiated on 18-5-1954 and the resale was effected from 4-6-1954 to 20-6-1954. This, according to the submission, is contrary to law and in any event, the resale does nto represent the correct market rate at the time of the breach. The appellants' submission is untenable on the evidence on the record. Abhey Ram, P.W.2, has deposed that on the defendants' refusal to take delivery of the goods, the witness and some tohers tried to persuade the defendants to take delivery of the goods in question but without sucess. An attempt was then made to sell the goods at Kirkend is a small place. The goods were then attempted to be sold at Jharia which is at a distance of about 5 miles from Kirkend by selling the bilti: but no one was willing to purchase the bilti.

It was in these circumstances that the goods were sold at Jharia through Messrs, Kedar Nath Raghu Nath. This firm took delivery of the goods on payment of Rs. 25,000 to the plaintiff by means of a hundi. This firm purchased tins and then took delivery of the tank and thus the said oil was sold at Jharja. Those tins were sold at the market rate. In cross-examination, it has further been elicited that the witness had gone to Jharia on the date of the defendants' refusal to take delivery of the goods and, on enquiry about the market rate, discovered that there was a difference of Rs. 5 or Rs. 6 per maund in the price of the oil. The goods were sold at Jharjain ltos in 15 or 20 days. The plaintiff as P.W. S has also deposed that the goods in question could nto be sold at Kirkend because the toher dealers there were disinclined to displease the defendants. Messrs, Kidar Nath Raghu Nath sold the oil at Jharia which is about 8 to 14 miles from Kirkend. In cross-examination, he has stated that Jharia is a big mandi of oil and the rate of oil was falling from 28-5-1954 to 24-6-1954, though the witness could nto foresee its continuous fall. The evidence produced by the defendants that some dealers at Kirkend would have been willing to purchase the oil at higher rates is far from impressive. The resale of the oil thus seems to us on the evidence on the record to be a genuine transaction at the prevailing market rate.

7. In regard to the question of ntoice, it is clear that on 24-5-1954, as per Ex. D-1, the Jindal Oil Mills ntoified to Messrs. Ram Saran Dass Raja Ram, Kirkend, that arrangement should be made to take delivery of the goods within 24 hours, in default of which, necessary steps would be taken to dispose of the goods at the market rate. It is ntoeworthy that in this ntoice, goods had been described to be the defendants goods to be sold at the risk and responsibility of the defendants. The appellants counsel has of course made reference to the statement of Abbey Ram, P.W. 2, where in he has stated that he had nto given any ntoice to the defendants that the goods would be sold at their risk, but in face of Exhibit d-1, these statements are of little help to the appellants. The only criticism in regard to Exhibit D-1 which the appellants' counsel could urge in his reply is that ntoice should have been given after goods had been taken delviery of by the plaintiff from the Railway.

We find no justification for this submission. In this connection, a passing reference has also been made to Exhibit P-8/1 which, according to the leaned counsel, shows that the goods had actually been sold on 16-5-1954. This construction of Exhibit P-8/1 is wholly unjustified and misconceived. The last nto, as sen by us from the original document, was apparently made on a much later date and the date 16-5-1954 on the margin is apparently meant to cover the first part of this document as printed at p; 131 of the printed paper look. The appellants challenge to the decision on issues Nos. 5 and 6 is thus also without merit and is repelled.

8. In view of what has been stated above, the amount of damages decreed by the Court below must necessarily be affirmed, and indeed ntohing has been said on this part of the case independently of the criticism leveled against the decision on the issues already discussed.

9. As a result of the foregoing discussion, this appeal fails and is dismissed, but in the peculiar circumstances of the case, without any order as to costs.

10. BNP/DVC

11. Appeal dismissed.


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