Mysore Sugar Co. Ltd., Bangalore v. Manohar Metal Industries, Chikpet, Bangalore AIR 1982 Kant 283
[Section 54 – Right of an un-paid seller]
Second Appeal No.405 of 1975 decided on 12/01/1982
Headnote
(A) Sale of Goods Act (3 of 1930) , S.54(2), S.19, S.20— Sale of copper scraps and ingots advertised – Defendant’s offer to purchase accepted – Part of the goods was lifted – Balance goods not lifted despite notice proposing resale – S.54 was attracted.
The plaintiff advertised for the sale of copper ingots and copper scraps. No prior inspection of the goods was given. The sale was also not stated to be of goods ‘as is and where is’ condition. The defendant’s tender was accepted. The defendant paid in part and lifted the goods in part. He sought extension of time for payment and for lifting the remaining goods. He failed to lift them in spite of notice demanding fulfilment of the contract and proposal to resell the goods in
the event of non-compliance. Viewed in the light of Ss.19 and 20 the property in the goods was held to have passed when the defendant’s offer was accepted even though the time for payment of the price and lifting of the goods remained postponed. Defendant’s refusal to lift the remaining goods in spite of the notice entitled the plaintiff to resell the goods under S.54. The notice proposing to resell the goods was sufficient compliance of S.54(2).(Para 9 10 12-A)
(B) Sale of Goods Act (3 of 1930) , S.54(2)— Resale after three months from notice when price was falling was not proper – Resale price did not give for true measure of damages.
Especially where the price was falling resale of the goods after three months from the date of notice proposing to resell was not proper and the resale price in the circumstances would not be a good ground for fixing the damages. In the absence of any evidence regarding the price of the goods at the time of the breach of the contract that suit for damages should fail. The burden to prove damages lay on the plaintiff.
(C) Sale of Goods Act (3 of 1930) , S.54— In the case of sale of movable property S.54, Sale of Goods Act prevails over the general provision under S.73, Contract Act.
Contract Act (9 of 1872) , S.73— (Para17) (Para 17)
Judgement
The Mysore Sugar Company, the plaintiff in the suit, advertised for sale of certain items like copper ingots, copper scraps as well as brass tubes available with the company at Mandya by its notification dated 27th July, 1966. The defendant offered to purchase the same by his letter dated 30-6-1966. The plaintiff accepted the offer of the defendant to purchase the various items and, thereafter, the defendant lifted certain items on part-payment and when it came to lifting of copper ingots, he sought for time to pay the balance and to remove the same separating it from other things with which it was mixed up. The defendant had to lift 2,000 K.Gs. of copper scrap and 2,000 K.Gs. of copper ingots valued at Rs. 48,503-96. He wrote to the plaintiff on 28-4-1966 raising objections regarding percentage of copper contents in the articles. The plaintiff intimated to the defendant on 12-9-1966 stating that no certificate for purity of the metal would be given and the material was sold on “as is and where is” condition. In spite of repeated reminders and demands, the defendant did not take delivery of the remaining goods and remit the value. The letter dated 22-11-1966 to the defendant also did not meet with favourable response. Therefore, the plaintiff resold copper tubes and copper ingots through an advertisement dated 30th December, 1966 to M/s. Karnataka Hardware, Avenue Road, Bangalore. By the said resale, the plaintiff incurred loss of Rs. 8,643-96. The plaintiff got issued a legal notice to the defendant to make good the loss. The defendant did not. Hence, the plaintiff instituted the suit for recovery of Rs. 8,643-96 less Rs. 500/- being the initial deposit by the defendant. The plaintiff claimed, in all, Rs. 8,143-96 ps. from the defendant along with costs and interest.
The defendant contended that the suit was not tenable. According to him, what was offered was copper scraps and copper ingots in the advertisement and what was found at the spot was alloy and not pure copper. Therefore, he contended that the plaintiff committed breach of contract. He further contended that the plaintiff did not have right to re-sell and that compensation, if any, could only be recovered under the general principles contained in S. 73 of the Indian Contract Act, 1872 (hereinafter referred to as the ‘Act’). According to him, Section 54 of the Sale of Goods Act, 1930 was not applicable. The defendant, according to him, was not liable to pay any damages. On the other hand, he claimed compensation of Rs. 1,000/-.
G.N. SABHAHIT, J. – 8. The points, therefore, that arise for my consideration in this appeal are:
(1)Whether the Courts below were justified in holding that the defendant committed breach of contract?
(2)Whether the learned Civil Judge was justified in dismissing the suit for damages?
9. It is true that in the advertisement given by the plaintiff, it is specifically mentioned that what was offered for sale was copper scraps and copper ingots. It is further true that there was no clause in the tender stating that the goods were sold on “as is and where is” condition. It is also on record that the parties were not allowed to inspect the goods before offering their tender. The fact, however, remains that after the tender of the defendant was accepted he had occasion to inspect the goods and he lifted part of the goods and when he came to lifting of copper scraps and copper ingots, instead of raising any protest, he prayed for extension of time to make payment and to lift the goods. That would clearly show that the defendant knew that what was offered was the material on “as is and where is” condition. Hence, the Courts below have rightly rejected the contention of the defendant that he was not offered copper scraps and copper ingots of cent per cent purity and as such the plaintiff committed the breach of contract. I have no reason to differ.
10. It is no doubt true that it is the plaintiff who has come to the Court claiming damages. The first question that would arise for my consideration is whether, under Section 54(2) of the Sale of Goods Act, the goods had already passed on to the ownership of the buyer.
11. Thus we have to find out whether the seller exercised his right of lien or stoppage in transit on the facts of this case. (The court re-produced sections 19 and 20 of the Act.)
12-A. Thus by reading Ss. 19 and 20 of the said Act, it becomes obvious that in this case an offer was made by advertising to sell all the articles in question. Thereafter, a tender was given by the defendant and his tender was accepted. Therefore, there is an unconditional contract of sale and there were, no doubt, stipulations for payment of price and delivery of goods subsequently. In such a case, the property in the goods passes on to the buyer and hence Section 54 of the Act comes into play. It is on record that the plaintiff issued a notice to the defendant as per Ex. D-10 on 22-11-1966 making his intention clear that the buyer must lift the goods on payment as otherwise he will have to resell the goods and the defendant shall be liable for any loss caused. That satisfied the condition mentioned in Section 54(2) of the Act. Thereafter, however, it was made clear by a notice to the defendant that if he did not lift the goods within three days, his contract would be treated as cancelled. That is by Ex. D-8 dated 12 -9-1966. Therefore, since the goods were not lifted by the defendant, the contract came to an end on or about 15-9-1966. Within a reasonable time thereafter the company should have resold the goods by advertising it. But the evidence on record shows that the advertisement was inserted only on 30-12-1966, i.e., after nearly three months.
13. The learned Advocate appearing for the respondent-defendant urged before me that this was not re-sale within a reasonable time as contemplated under S. 54(2) of the Act. It is all the more so, according to him, because P.W. 2, the person who purchased the goods in the re-sale has clearly stated in his evidence that the prices were more three months prior to his giving the tender for resale, and, thereafter, the prices came down. Therefore it is clear from the evidence on record that the prices were falling from August 1966 and the plaintiff-company delayed for three months therefrom to give the advertisement, knowing fully well that the prices were falling; for P.W. 2 has stated that the prices were a little low at the time when he gave his tender and that the prices were a little more earlier. P.W. 2 is witness examined by the plaintiff. Making allowance for his interestedness, it is obvious that the prices were more in about September 1966 when the breach of contract occurred.
14. It is needless for me to point out that a duty lay on the plaintiff to mitigate the damages. Even in view of S. 54(2), it was the duty of the plaintiff to see that re-sale was effected within a reasonable time especially so, when the prices were falling for the relevant material. Three months delay, therefore, on the facts of this case, is certainly inordinate and re-sale has not taken place within a reasonable time as contemplated in Section 54(2). It is relevant to mention in this context that what was the ruling price in about September 1966 is not brought on record by the plaintiff though P.W. 2, as stated above, admitted that the prices were more at that time. The difference claimed as damages on the facts of this case, is also not much. That being so, the learned Civil Judge having regard to the probabilities has observed that if the goods were re-sold in September 1966 within a reasonable time, the plaintiff would not have incurred any loss whatsoever. At any rate, since the burden of proving the damages was on the plaintiff and he has not placed any evidence on record in that behalf, the learned Civil Judge has rightly proceeded to disallow the suit for damages.
16. As explained above, there has been unreasonable delay in re-selling, on the facts of the present case, when the market price was falling. Hence, the value realised on re-sale does not afford a good ground to fix the damages. There is no evidence on record placed by the plaintiff to show the ruling price of the commodity at the time when there was breach of contract. The plaintiff has come to Court. The burden is on him to prove the alleged damages and since he has not placed any material evidence to show that he has suffered damages, he has to fail and the learned Civil Judge has rightly held so. I have no reason to differ.
17. The learned counsel appearing for the respondent-defendant submitted that S. 54(2) of the Sale of Goods Act should be read with Section 73 of the Act. It may be stated in this context that Section 73 contains the general principle with regard to fixing up of damages, whereas Section 54 speaks of specific case of move able property sold. Section 54 is more specific whereas Section 73 is general in nature. Therefore, Section 54 prevails over Section 73 though both the sections are based on the same general principle.
18. In the result, therefore, I am constrained to hold that the appeal is devoid of merits and is liable to be dismissed and I dismiss the same.
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