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Sha Thilokchand Poosaji Vs. Crystal and Co., by Its Authorised Agent and Manager C. Satyam - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai High Court
Decided On
Case NumberO.S.A. No. 3 of 1951
Judge
Reported inAIR1955Mad481
ActsSale of Goods Act, 1930 - Sections 13, 15, 42, 43, 45, 46, 53, 59 and 59(1)
AppellantSha Thilokchand Poosaji
RespondentCrystal and Co., by Its Authorised Agent and Manager C. Satyam
Appellant AdvocateG. Ramakrishna Iyer, Adv.
Respondent AdvocateT. Ramaprasada Rao, Adv.
DispositionAppeal dismissed
Cases ReferredChampanhae and Co. Ltd. v. Waller and Co
Excerpt:
contract - remedy for breach - sections 13, 15, 42, 43, 45, 46, 53, 59 and 59 (1) of sale of goods act, 1930 - where goods not conform with description stated in contract buyer has remedy to reject goods, obtain refund of price paid in advance and sue for damages for non-delivery - second remedy available to buyer is to waive condition and accept goods and sue for damages for breach of warranty - both remedies are alternative remedies and cannot be availed simultaneously. - - but the evidence in this case as well as the subsequent conduct of the parties to which we shall refer make it clear that 'de luxe' was understood in the trade to mean pens whose barrels were of pearl colour. by this letter the advocates for the plaintiff after referring to the previous correspondence complained.....rajagopala aiyangar, j.1. the defendants are the appellants in this appeal which is directed against the judgment of. mack j. sitting on the original side of this court and the complaint is regarding the dismissal of the counter claim which they had filed in c. s. no. 384 of 1947, a suit filed by the plaintiff against them, the appellants are the buyers in a contract for the sale of goods while the respondent is the seller or the representative of the sellers.2. the facts giving rise to c. s. no. 384 of 1947 may be briefly stated. the plaintiff is a general merchant, importer and exporter and commission agent carrying on business in madras while the defendants are a firm of merchants dealing among others in stationery articles. after some previous correspondence to which it is unnecessary.....
Judgment:

Rajagopala Aiyangar, J.

1. The defendants are the appellants in this appeal which is directed against the judgment of. Mack J. sitting on the original side of this Court and the complaint is regarding the dismissal of the counter claim which they had filed in C. S. No. 384 of 1947, a suit filed by the plaintiff against them, The appellants are the buyers in a contract for the sale of goods while the respondent is the seller or the representative of the sellers.

2. The facts giving rise to C. S. No. 384 of 1947 may be briefly stated. The plaintiff is a general merchant, Importer and Exporter and commission agent carrying on business in Madras while the defendants are a firm of merchants dealing among others in stationery articles. After some previous correspondence to which it is unnecessary to refer the defendants placed an order with the plaintiff on 30-12-1946 for the supply to them of 550 gross of Everlast fountain pens.

The description of the pens was '1000 D. F. regular fills.' The price per gross was 74.95 dollars. This was forwarded to Messrs. Frazer and Co., New York, who themselves were middlemen getting these goods from manufacturers of these pens. The price here mentioned included the commission payable to the plaintiff but by a subsequent arrangement evidenced by Ex. P. 2 dated 4-1-1947 it was agreed by the defendants that invoices might be made out for the price to be paid to Messrs. Frazer and Co., in America while they themselves undertook to pay five per cent, of the value of the order as com-mission to the plaintiff.

This was accepted by Messrs. Frazer and Co., New York by their letter, Ex. P. 3, dated 30-1-1947. The description of the goods for which the order was accepted stated in this acceptance letter was 550 gross, styled 1000 De Luxe Dropper filled (regular) fountain pens.' The price was mentained as 74.05 dollars per gross F. AS. New York and it was added 'However in accordance with the instructions from Crystal Company (the plaintiff herein) we are deducting their five per cent, commission from this price. The merchandise will be billed to you at 71.20 dollars nett per gross F. AS. New York.' The letter stated that the goods had been shipped by parcol post to Madras, the price to be paid on arrival. The goods arrived in Madras in the first week of March 1947 and were cleared by the defendants on 6-3-1947.

The packages when opened were found to contain 370 gross fountain pens with barrels of pearl colour while the rest 180 gross consisted of pens with barrels of solid colour. Before proceeding further it might be stated that it is now common ground that there is a difference in the market price of these two varieties those with barrels in pearl colour being higher priced.

It will be noticed that in the indent dated 30-12-1946 the defendants had not mentioned specifically that the pens were to be of pearl colour. The letter D. F. added to Everlast in that order merely indicating that they were dropper filled. When however this order accepted by the plaintiff's principals in America they described the goods ordered by the defendants as 'De Luxe'. There is some controversy in the case as to whether the description 'De luxe' did or did not indicate that the barrels should be assorted colours.

But the evidence in this case as well as the subsequent conduct of the parties to which we shall refer make it clear that 'De luxe' was understood In the trade to mean pens whose barrels were of pearl colour. This is evident from the price list which shows that a price approximating to that which had been fixed in the order in the present case obtained for pearl colour pens, while the price of pens with solid colour was about 10 dollars less per gross.

3. When the defendants found that 180 gross were of solid colour they immediately contacted the plainliff and desired him to communicate with his foreign principals to rectify the matter. As this correspondence was proceeding, the defendants also rejected the 180 gross fountain pens of solid colour as not conforming to the description contracted for by them. This rejection was accepted orally by the plaintiff and the matter was put in writing in Ex. P. 4 addressed by the defendants to the plaintiff on 31-3-1947.

They wrote

'We are obliged to pay you 5 per cent, buying commission as agreed upon 370 gross, which we shall nay. The other 180 gross will have to be taken back by you at the landed cost of the same which works out at Bs. 26-11-0 & have to be paid by you at your earliest convenience. Kindly confirm the above so that we may debit the cost of 180 gross fountain pens in your account.'

On the same day this was replied to by the plaintiff as follows:

'In reply to your letter dated 31st March, you may under the circumstances, return the 180 gross solid colour fountain pens. In other words, you may debit the cost of these fountain pens the landed cost of which works out to Rs. 26-11-0 to our account. In view of the fact that we have no go-down of our own, you may keep this stock in your godown, delivery to be taken by us as and when required for sale.

We will attempt to dispose of the goods within 30 days from date and in case we are not able to do so within that time, you are at liberty to charge us interest on the value of the 180 gross. For the first one month, you are not entitled to any interest. In the meantime please let us have your cheque for the 5 per cent, commission on the value of the 370 gross. De luxe fountain pens.'

4. This letter has been marked as Ex. P. 45. It was acknowledged on the same date in Ex. P. 6 by the defendants in these terms:

'We are in due receipt of your letter of the 31st inst and noted the contents with thanks. Accordingly we have debited the cost 180 gross solid colour fountain pens at Bs. 28-11-0 per dozen to your account and the goods are kept ready for you. Please arrange to take delivery of the goods within thirty days and oblige.'

5. The plaintiff wrote to the defendants on 8-4-1947, intimating to the latter that they had secured a godown and requesting them to deliver 180 gross pens. He stated that this delivery would facilitate the disposal of the same to his customers and assured them that he would sell them quickly and pay them the sale proceeds within a month and adding that if within 30 days any stock remained unsold he would pay them the usual rate of interest.

He also requested them to send a cheque for the commission on 370 gross which had been accepted by the defendants. Defendants however refused to comply with this request and by their letter Ex, P. 8 dated 11-4-1947 took up the position that the 180 gross would not be delivered to the plaintiff except as against their payment of their value as per their landed cost. The plaintiff's reply to this is Ex. P. II dated 19-4-1947 by which he drew the defendant's attention to the fact that he would not be able to sell the goods unless he had them in his hands and added that having debited the goods to his account, they could not insist upon withholding the delivery of the goods.

He also insisted upon the payment of the commission due to him. He added a note 'without prejudice' which was based upon the letter received by him from his principals in New York that the expression De Luxe did not by itself mean any particular colour of the barrel and that in consequence the entirety of the goods originally supplied were in conformity with the contract.

As this letter did not invoke any immediate response the plaintiff caused a lawyer's notice Ex. P. 12 dated 21-4-1947 to be served upon the defendants. By this letter the advocates for the plaintiff after referring to the previous correspondence complained against the non-delivery of 180 gross solid colour fountain pens to the plaintiff the ownership of which had passed to him as evidenced by the correspondence between the parties.

In this letter they put forward a contention that the effect of this correspondence was a sale of 180 gioss solid fountain pens by the defendants to the plaintiff at a price of Bs. 26-11-0 per dozen and complaining of the non-delivery of the goods, a claim was made for damages for the breach of this contract in the sum of Rs. 2835 the figure being computed as the difference between the landed cost of the said goods at Rs. 26-11-0 and the prevailing market rate stated to be Rs. 28 per dozen.

The defendants also in their turn had this letter replied to by their lawyers and in this the contention of the defendants, that they would not part with the possession of the 180 gross pens until payment of the price was reiterated. It was urged that the plaintiff could not claim delivery before paying the value of the goods. The defendants also threatened that if before the end of the month the goods were not sold by the plaintiff and the proceeds delivered to them, the defendants would either by public auction of private retail sale sell these goads at the risk of the plaintiff after 1-4-1947 and hold him liable for the deficiency.

They also called upon the plaintiff to pay to the defendants the price of 180 gross already paid by the defendants, namely, Rs- 53000 and odd. The answer of the plaintiff to this threat of sale is contained in Ex. P. 14, another lawyer's letter dated 23-4-1947. The position taken up here was that the defendants were not entitled to sell the 180 gross or deal with them in any manner except with express knowledge or consent and that any such aealing would be tantamount to conversion and criminal breach of trust, since the defendants were holding the goods as bailee, for which criminal action was threatened to bo taken against them. The correspondence on the same lines went on till May 1947.

6. Subsequently the defendants sent these goods to Calcutta, Delhi and other places without the knowledge or consent of the plaintiff, had them sold and kept the sale proceeds themselves. The plantiff first tiled a suit in the City Civii Court for the recovery of Rs. 2800 and odd being the damages for the non-delivery of 180 gross which according to him had been agreed to be sold to him ior the price of Rs. 26-11-0 per dozen. It will be seen that this was the claim which was. foreshadowed in the first lawyers' letter, Ex, P. 12 as early as 21-4-1947.

In addition the plaintiff filed the present suit C. S. No. 384 ot 1947 for the recovery ot 5 per cent, commission due on 550 gross pens ordered by the defendants. The defendants filed written statements in both the suits and in the suit in the High Court on the original side they filed a counter claim ior Rs. 14,510-12-0 from the plaintiff after giving credit to the commission, Rs. 4021-14-0 due to the plaintiff on 370 gross pens which they had accepted.

The suit in the City Civil Court was transferred to this Court for disposal alons with C. S. No. 384 ot 1947, and the two were tried together by Mack J.

7. The learned Judge dismissed the suit filed by the plaintiff in the City Civil Court and granted a decree to the plain tilt in C. S. No. 384 of 1947 for the commission due in respect of 370 gross de luxe pens and disallowed the rest of the commission. He also dismissed the counter claim preferred by the defendants. The plaintiff does not appeal against the decree so far as it is against him, but the - defendants have filed this appeal against the dismissal of their counter claim.

8. The . argument of learned counsel for the appellants may be summarised thus; There was here a contract ior the sale of goods by description. The 180 gross fountain pens did not answer to the description of the goods contracted for. The defendants were therelore entitled to reject these goods and this was consented to by the plaintiff. As the defendants had paid for the entire value of the goods, they had a right to insist that possession of Jhe goods should be with them until they were paid their value by the plaintiff.

The attitude of the plaintiff who insisted upon the delivery of the goods without payment of their price was not lawiul and the defendants were therefore justified in refusing to part with the goods and insist on payment before delivery. As the action of the plaintiff was not proper, the defendants were entitled to sell the goods and appropriate the sale proceeds to themselves. That would amount to an acceptance o( these goods and the claim put forward in the counter claim is in the nature of damages for breach of warranty.

As admittedly there has been a breach of the condition on the acceptance of the goods by the buyer they have a right to sue for damages as for breach of warranty under the terms of Section 59, Sale of Goods Act and the learned Judge was not therefore justified in rejecting the counter claim.

9. Before dealing with the legal points involved in this argument it is as well that we should refer to the claim of the defendants as formulated in the written statement. In para. 7 the defendants stated 'the defendants informed the plaintiff that they cannot accept the said 180 gross pens, that they had rejected the same, that the plaintiff was liable to pay the value of the same at landed cost and take back the goods.' In para. 8 the allegation was

'On 31-3-1947 it was agreed between the parties that the plaintiff should repay the value of the said 180 gross pens at Rs. 26-11-0 per dozen being the landed cost which works out to Rs. 57,745 and take back the goods. The plaintiff requested the defendants to give him a month's time to do so and also, requested 'the defendants not to charge interest for the said period of one month. The commission on 370 gross pens was agreed to be adjusted against the said amount.'

In para. 9 the defendants stated

'contrary to the agreement between the parties the plaintiff set up a case of sale of goods on credit and insisted on delivery of the said 180 gross pens without payment The defendants slate that the plaintiff had no right to claim delivery before payment and they informed the plaintiff that they were prepared to deliver the goods against payment as agreed to between the parties. The defendants state that they were always ready and willing to deliver the pens as agreed upon at material times and the allegation to the contrary in the plaint is false and untrue.'

This idea is continued in para. 10;

'The defendants submit that by not paying and taking delivery of the goods by the end of April 1947 the plaintiff has rendered himself liable in damages on the basis of Rs. 26-11-0 per dozen being the rate at which the plaintiff were bound to take back the goods and Rs. 18 per dozen -being the market rate for Everlast solid colour pens on or about 1-5-1947 amounting to Rs. 18765 and after giving credit to Rs. 462l:-14-0 being the commission duo to the plaintiff on the 370 gross pens supplied according to contract, a sum of Rs. 14,143-2-0 is due to the defendants by the plaintiff.

In a reply statement which the plaintiff filed he drew the attention of the Court to the fact that the defendants had sold these pens and appropriated the sale proceeds to themselves. The point that is now raised on behalf of the appellants was never present to their minds at the stage of the trial and this is clear from the relevant issue dealing with the present matter. It is issue No. 4 which runs thus: 'Was there an agreement beween the parties that the plaintiff should take back 180 gross pens at Rs. 26-11-0 as alleged in para 8 of the written statement?'

When analysed it will be seen that the basis of the counter claim as put forward in the written statement is this, viz., that there was an agreement that the plaintiff should take back 180 gross pens at Rs. 20-11-0 per dozen and that he failed and neglected to do so, this failure being rested on subsidiary point that though the plaintiff asked for delivery he failed to pay for the goods and therefore was not entitled to make such a demand.

In respect of this part of the case, it is necessary to mention that when goods are properly rejected by a buyer there is no obligation upon him to return the goods in the sense that he is not bound to take steps to see that they are delivered at the place of business of the seller. This is provided by S, 43, Sale ot Goods Act. In cases where a buyer who has already paid for the goods rejects them as not conforming to the contract, he has however no lien upon the goods to enable him to hold on to their possession and effect a resale in exercise of such lien.

In other words, a buyer who has rejected the goods after paying for them is not an unpaid seller within the meaning of Sections 45 and 46, Sale of Goods Act so' as to have a lien on them for his purchase money. See - 'Lyon's and Co. v. May and Baker', 1923 1 KB 685 (A). (Benjamin on Sale of Goods, 8th Edn., 687). Exs. P. 4 and P. 6 do not contain any agreement to the contrary entitling the buyer to retain the goods until payment so that it cannot be said that the plaintiff was not justified in law in insisting upon the delivery of the goods even without payment, particularly as the defendants themselves had agreed to debit the plaintiff in his books and to charge him intereset after the end of a month.

10. but this point only arises hidden tally. The charge against the plaintiff was that he tailed and neglected to take delivery of 180 gross on payment of the price at Rs. 26-ll-0 per dozen. The counter claim in substance is an action by a seller for damages for non-acceptance. It will be noticed that this is based upon a theory of a subsidiary contract of sale in respect of 180 gross between the plaintiff and the defendant evidenced by the correspondence on 31-3-1947, a claim which is nearly identical with that upon which the plaintiff's suit in the City Civil Court was based.

On the basis of the legal claim as thus formulated the damages duo to the defendants 'would be calculated on the difference between Rs. 26-ll-0 a dozen the contract price and the ruling market price, on the date of the breach, that is April-May, 1947 of these pens. This was however not the basis upon which the damages put forward in the counter claim was calculated. It will be apparent that the basis of the claim in the counter claim and that put forward by their learned counsel in appeal are entirely contradictory.

The counter claim is based upon the existence of a new contract come to between the plaintiff and the defendants on 31-3-1947, while the argument in appeal is based upon the breach of the original contract constituted by the acceptance of the plaintiff's order by Ex. P. 3 dated 30-1-1947. The learned Judge has found that the defendants did not produce their books of account to show the exact price for which they sold these goods. But they called in some evidence to prove the ruling prices of these pens in or about April-May, 1947.

On the other hand, the plaintiff also let in some evidence to show that the price of these pens on the relevant dates was about Rs. 26-11-0 per dozen, in which event of course the defendants would not be entitled to any damages for a breach by a buyer for non-acceptance. The learned Judge was not inclined to accept the evidence adduced on behalf of the defendants and that was the ground upon which he dismissed the counter claim.

Counsel for the appellants does not challenge these findings of the learned Judge and that is exactly the reason why counsel for the appellants raised the contentions which we have summarised above and which proceeded upon a footing totally different from that on which their case was rested at the trial in the pleadings and in the evidence.

11. Even assuming that it is open to the defendants to put forward such a new case at this stage, we consider that there are no merits in the argument sought to be raised. Tho relevant provisions of the Sale of Goods Act which have a bearing on the point under discussion are Sections 13, 15, 42 and 39. Under Section 15 of the Act, where there is a con-tract for the sale of goods by description, there is an implied condition that the goods shall correspond with the description; and under Section 13(1) where a contract of sale is subject to any condition to be fulfilled by the seller, the buyer may waive the condition or elect to treat the breach ot the condition as a breach of warranty and not as a ground for treating the contract as repudiated.

12. Section 42 runs thus;

'The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the goods have been delivered to him and he does any act in relation to them which it inconsistent with the ownership of the seller, or when after the lapse of a reasonable time he retains the goods without intimating to the seller that he has rejected them.'

13. Section 59(1) runs thus:

Whether there is a breach o warranty by tho seller or whether the buyer elects or is compelled to treat any breach of a condition on the part of the seller as a breach of warranty, the buyer is not by reason only of such breach ot warranty entitled to reject the goods but he may,

(a) set up against the seller the breach of warranty in diminution or extinction of the price, or

(b) sue the seller for damages for breach of warranty,'

In the present case, we may take it as established that the colour of the barrel of the pens ordered was a part of the description. It follows that the 180 gross of the pens which were delivered to the appellants did not answer to the description. The appellants having become aware of the breach of the condition on their inspection of the goods immediately on their arrival made it clear to the seller, that is, the plaintiff, that they were not going to accept the delivery of these goods as a performance or even an improper performance of the contract of sale.

They exercised their undoubted right of rejection of these goods as not conforming to the description of the goods stipulated in the contract. This election of theirs was accepted as proper and justifiable by the seller. It is needless to enquire whether on such an election by the buyer the correct legal theory is that the properly in the goods which has vested in the buyer on their delivery or physical acceptance is divested from them and revested in the seller, or on the other hand whether the original vesting of the property itself is conditional on the goods delivered conforming to the description contracted for and on the condition being broken and on the buyer not electing to retain the goods, the title that vested conditionally in the buyer is determined and put an end to.

It is sufficient to state that whatever be the legal theory in the case of a sale of the type now under consideration, namely, 'Fas New York' once the buyer elects to disaffirm the delivery and exercises the right of rejection he is divested of the title to the goods and the title vests in the seller. Not having any title to the goods, the buyer would have no light to them, for the property in them is in the seller.

There is no obligation on the buyer to return the goods to the seller whose property they have become by reason of their rejection (S. 43). In the present discussion we are not concerned with the correctness of the attitude taken up by the buyers in the refusing to part with their possession, a matter which has already been dealt with earlier. Further, for the consideration of the present question this is an irrelevant circumstance and need not detain us.

One tiling is clear however from the correspondence and that is, that to the end the appellants proceedcd on the footing of a valid rejection by themselves of these goods, a position which was concurred in and accepted by the seller.

14. The right of a buyer to sue for damages for a breach of warranty proceeds upon the basis that he has accepted the goods delivered to him, the goods becoming his property by reason of his acceptance of these goods. The right of rejection of a buyer and his right to sue for damages for a breach of warranty are alternative remedies and can never be cumulative for they proceed upon contrary state of facts. A question may arise as to whether a buyer who has once exercised an election to reject and the seller has accepted the rejection can revoke that election and proceed to accept the goods as in performance of a contract reserving his light to claim damages -as for a breach of a warranty.

We find it difficult to sustain such a position as ltgally possible. Once a buyer elects to reject the goods, he divests himself of his title to them and the property is thereupon vested in the seller. It follows that he cannot thereafter without the consent of the seller re-appropriate the goods to the contract and purport to accept them as in performance of the original contract.

Whatever be the position as regards cases where the seller does not accept the rejection, it is clear to us that in a case where this divesting of the property from a buyer and the vesting of it in the seller takes place as a result of the conjoint action of the buyer and the seller, the buyer cannot subsequently by any unilateral act of his own divest the seller of his title to the property and purport to accept the goods as in performance and delivery of the original contract.

The position of law appears to be this. When a seller delivers goods not answering to that contracted for, the buyer has two remedies open to him, the first is that he can reject the goods so as to destroy his own title to them and then call for a proper performance of the contract by the seller by delivering goods of the description stipulated in the contract, for it might well be that the seller on the date of the improper delivery and rightful rejection has still time to perform the contract by a proper delivery. If, however, the time for performance has already expired and the buyer does not extend the same, he can sue the seller for I damages for non-delivery.

The damages would then be calculated on the difference between the contract price and the market price on the date of the breach. A buyer however to whom the goods not conforming to the contracted description are delivered is not bound to reject. He has an option to waive the condition and elect to treat the breach of the condition as a breach of warranty and not as a ground for treating the contract as repudiated (Vide Section 13(1), Sale of Goods Act).

These two rights are by their very nature alternative. When a buyer accepts the delivery or deais with the goods as his own, he is not thereafter entitled to reject the goods and sue the seller for damages for nondelivery (Vide Section 42). Section 59(1) of the Act deals with the right of buyer in such a contingency. Where however the buyer rejects the goods there is no question of his suing for any other relief -than damages for non-delivery.

15. What is however urged on behalf of the appellants before us is that appellants must be treated to have accepted the goods by reason of their private sale in Delhi Calcutta etc., and they are now therefore entitled to sue for damages as for a breach of warranty under Section 59(1), Sale of Goods Act.

We have already pointed out that the appellants cannot. divest the seller of his title and appropriate the goods to the contract and accept them so as to bring themselves within Section 59. In view of this, it is not legally possible for the buyers to accept the goods and claim relief under Section 59, Sale of Goods Act

16. Learned counsel for the appellants relied on a decision of this Court reported in - 'Muthu Krishna Reddiar & Sons v. Madhavj'i Devichand and Co. Ltd:', : AIR1953Mad777 (D) as supporting his contention. That arose out of a suit by a buyer for damages for breach of contract. The buyer ordered a certain quantity of new red chillies and the defendant sold to him goods said to answer to those described while they were in transit from Calcutta to Cuddalore. The contract was C. I. F. and the buyer paid for the goods on presentation of shipping documents. The goods were cleared at Cuddalore port by the buyers' clearing agents and railed to him to Alandur where he had his place of business.

On inspection the goods were found to be greatly detcriorated, white in colour and old stock, the seeds falling out. The buyer rejected the goods but the seller refused to accept the rejection contending that there was no stipulation as to the quality of the goods or their description. After some correspondence between the buyer and the seller the goods were ultimately sold at the risk of the seller by the buyer through public auction. The goods realised about Rs. 5,000 and odd and after giving credit to this sum, the buyer as plaintiff filed a suit for the recovery of damages sustain-ed by him, that is -the price he had paid besides the expenses he had incurred, in addition to the profits he would have made if the goods answered to the description in the contract and his estimated loss of profit.

The suit was tried on the Original Side of this Court by Bell J. who dismissed the action on the ground that the correspondence did not establish the plaintiff's case that there had been any warranty or condition as to the quality of the goods. The plaintiff filed an appeal and it came before a Bench consisting of one of us and Venkatarama Aiyar J.

Then on appeal it was held that the contract was for delivery, of new chillies and that there had been a breach of contract on the part of seller. On this finding it was clear that the buyer was entitled to damages. The only question was whether the price realised at the sale of the goods did or did not represent the actual market value of the goods on the date of the breach. The contention of the buyer was that it did while it was contended for the seller that as the goods were sold at Alandur they might not have fetched the proper price and that evidence was necessary to show the exact price of the goods on the date of the breach. For this purpose the matter was remanded to the original side.

It will be seen that the facts of this decision do not help the appellant in the least. In the case then before this court, the buyer had brought in the sale proceeds of the goods and had claimed the relief for the balance and it was such a case that was the subject-matter of the decision. In these circumstances, we do not consider that that decision affords any assistance to the appellants in the present case where the defendants have not brought into account the sale proceeds.

We are, therefore, of the opinion that appellants are not entitled to any relief in their counter claim on the basis put forward by them in the written statement. Before the learned trial Judge the case of the defendants proceeded upon the basis of a valid rejection and a separate contract between them and the plaintiff on 31-3-1947.

If they had been able to establish any damages on this footing, which we may incidentally state, was the basis on which the suit in the City Civil Court was filed by the plaintiff, they would have succeeded before the learned Judge. They failed in this and the correctness of the learned Judge's decision in this regard is not canvassed before us. Having failed on the ground of rightful rejection and a subsequent independent contract between themselves and the plaintiff, the appellants now seek in appeal to put forward a different set of facts and a case based upon the acceptance of the goods by them and a right to relief under Section 59, Sale of Goods Act.

Even assuming that they can put forward such a claim, we have shown that they cannot legally succeed on such a ground since their election to reject accepted by the seller continues to be opera-tive till the very end and their remedies of rejection and damages under Section 59 are alternative and not cumulative.

17. Before concluding we might briefly summarise the position: 1. Where goods not answering to the description contracted for are delivered to a buyer he has a right to one of two alternative remedies, (a) reject the goods and obtain a refund of the price if paid in advance and sue for damages for non-delivery. In such an event the damages he would obtain would bo the difference between the contract price and the market price of the goods on the date of the breach if the latter were higher; (b) waive condition and accept the goods and sue for damages for a breach of warranty.

When lie accepts the goods, he has to pay the contract price less any claim for set off for the breach of warranty. Section 59, Indian Sale of Goods Act does not state the principle on which such damages are to be computed, but this is set out in Section53, English Sale of Goods Act as the estimated loss directly and naturally resulting in the ordinary course of events from the breach of warranty, in other words, the difference between the value of the goods as delivered and their value if they had answered to the contracted description. The basis on which the buyer is entitled to damages would be as stated in - 'Jones v. Just', (1868) 3 QB197 (C), the difference between what the goods were worth when they arrived and what the same goods would have realised had they been in the state contracted for.

In the words of Slade J. in - 'Champanhae and Co. Ltd. v. Waller and Co, Ltd.', 1948 2 All ER 724 (D):

'The measure of damages is in the first place the difference in value between the goods as they were and the value which they would have had had they complied with the warranty.'

The law in India is exactly the same. It will be seen that in this computation, the price contracted for is wholly irrelevant and immaterial. To take the present case as a concrete instance, the contracted price of the goods was Rs. 26-11-0 per dozen. Suppose the market price in April-May 1947 of solid colour pens were Rs. 28 per dozen while that of pearl colour was Rs. 30 a dozen; the buyer would be entitled to damages at Rs. 2 per dozen notwithstanding that he is making a profit by the sale.

On the other hand, if the market price of the solid colour pens went down to Rs. 18 per dozen while the variety contracted for was say Rs. 20 per dozen, he would still be entitled only to Rs. 2 per dozen and nothing more. The fact that he mihgt have indented for solid colour pens at about 19 dollers par gross less than what he was charged for the De Luxe pens is not relevant for the assessment of the damages recoverable by him, for ex-concessis' there was never any contract for solid colour pens and the price at which the buyer could have obtained them is wholly immaterial for assessing the damages sustained by him. '

The whole basis of the calculation is the improper implementation of a contract for De Luxe pens and the loss occasioned by the supply of solid colour pens is the only factor to be taken into account. Thus viewed it would be seen that in no event cart the buyer in an action for breach of warranty recover the difference between the contract price as such and the lower price at which he sells or has to sell:

For it might well be that- the prices-have gone down and such loss cannot be attributed to the non-fulfilment of the contract by the seller. Just to clarify the position the corresponding situation when the buyer having rightly rejected the goods sues for damages for non-delivery may be considered. If the market goes down and the market price at the date of the breach is less than the . contract price, there is no question of the buyer recovering any damages.

18. The basis of the plaintiffs' claim in the present case as set out in the written statement is the difference between Rs. 26-11-0 per dozen the landed cost and Rs. 18 the alleged- market price of solid colour pens in April-May 1947. On no conceivable legal position can the buyer be entitled to claim on this footing.

19. In passing we might mention that in the memorandum of appeal to this Court the appellants made a calculation under which they were entitled to a sum of Rs. 10,000, odd and after giving up some portion of the claim arrived at a figure of Rs. 3,985 as due to them. We are unable to understand the basis on which these figures were worked out and learned counsel for the appellants was in no better position. In the view we take of the claim it is unnecessary to pursue the matter further.

20. As we have already stated the defendants throughout stuck to the rejection and similarly the plaintiff to his acceptance of the rejection. At one stage when the defendants threatened to sell the goods at the risk of the plaintiff it must obviously be as plaintiff's agents, for in no other character could they have effected the sale and if subsequently the goods were actually sold by them without the consent 6f the plaintiff, they were bound to have brought this sum into account in mitigation, if any, o the damage suffered by them by reason of the plaintiffs breach of contract. But the defendants did not even mention this sale in their written statement and so their contention is unsustainable on this also.

21. In the result, the appeal fails and is dismiss-ed with costs.


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