Kalka Prasad Ram Charan v. Harish Chandra

Brij Mohan Lall, J.:— The suit which has given rise to this first appeal was instituted by the respondent, a cloth merchant at Farukhabad, to recover a sum of Rs. 6,108/1/3 from the appellant which is a firm of cloth merchants at Kanpur. The respondent's case was that a partner of the appellant firm purchased for the firm 67 thans of Anda Boski silk from him on 20-4-1945 at the rate of Rs. 5/5/9 per yard, took immediate delivery of 10 thans and left the remaining 57 thans widi the respondent saying that Messrs. Raghubar Dayal Ram Charan of Farrukhabad would take delivery of those thans on the appellant's behalf and would pay the price thereof at the time of delivery. It was, further, alleged that interest was agreed to be paid at ten annas per cent, per mensem. The respondent went on to allege that Messrs. Raghubar Dayal Ram Charan did not take delivery of the remaining 57 thans and made no payment. According to him, the appellant firm was given notice but it still refused to take delivery of the thans. Then follows a very material allegation in the plaint, viz. that after informing the appellant firm the respondent sold the remaining 57 thans. But since the Government had by that time imposed a control on the sale price of the aforesaid kind of silk, the sale fetched price at the rate of Rs. 2/3/- per yard only. After deducting the amount so fetched from his claim, the respondent brought the suit to recover the aforesaid amount which included interest also.

2. The defence of the appellant firm was a complete denial of the contract. Further, it alleged that no notice of the intended sale wis given to it. Lastly it was contended that no interest was agreed to be paid. The receipt of 10 thans was, however, admitted, but it was alleged that they were taken by the appellant's representative at the request of the responded who was anxious to have them sold at Kanpur. In other words, the suggestion was that the appellant's representative obtained the said thans from the respondent to sell them, if possible, at Kanpur as his agent. The learned Civil Judge framed no issue on the question whether notice of the intended sale was or was not given to the appellant. In other respects, he found the respondent's case proved to the hilt and, disbelieving the defence, he decreed the suit in toto.

3. The defendant has now come up in appeal to this Court, and his learned counsel has not chosen to reiterate the plea about the denial of the contract. He is reconciled to the finding recorded by the court below, viz. that a valid contract was made as alleged in the plaint. The learned counsel has, however, taken his stand on Sec. 54 of the Sale of Goods Act (III of 1930) and has contended that no notice of the intended sale was given to his client and therefore his client is not bound to pay any damages whatsoever to the respondent.

4. In order to entertain this plea a finding has to be recorded as to whether or not notice was given by the respondent to the appellant about the intended sale. The learned counsel for the respondent has made a request to us that an issue be remitted to the court below on this point. After having given our best consideration to this request, we do not find ourselves in a position to accede to it. Both parties had stated their cases on this point in unmistakable terms in the pleadings. The respondent had said in paragraph 7 of the plaint that information of the intended sale had been given to the appellant. The latter had, in categorical terms, denied in paragraph 15 of the written statement the receipt of any such notice. It is true that no issue was framed on this point by the court below, but both parties produced evidence relating to this point. Thus each party knew what its case was and availed of the opportunity of producing evidence. We can, therefore, record a finding on this point ourselves. Order 41, Rule 24, C.P.C, lays down that where the evidence upon the record is sufficient to enable the appellate court to pronounce judgment, the appellate court may record a finding itself although the lower court might have left the point undetermined. In exercise of this power, we proceed to examine the evidence on the record with a view to record a finding as to whether or not notice of the intended sale was given by the respondent to the appellant.

5. On 7-6-1945 a notice was sent by registered post by the respondent to the appellant and a grievance was made therein of the fact that delivery had not been taken by the appellant or its agent. The appellant was called upon in this notice to either take immediate delivery of the remaining 57 tham or to pay damages. No indication was given whatsoever about the intention to re-sell the goods in case delivery was not taken. The next notice given by the respondent to the appellant is dated the 8th of July, 1945. In this notice intimation was given that a re-sale had already taken place. In his deposition the respondent stated that he had written to the appellant firm that if it would not take delivery he would sell the goods. But in the very next breath he added that he did not remember as to when he gave that intimation to the appellant. He did not summon that notice from the appellant, nor did he produce any secondary evidence of that notice. He is contradicted by his own Munim, Purshottam Narain, who says in his deposition that no written notice was sent to the appellant. The case put forward by Purshottam Narain is that he had orally told the appellant that goods would be sold away. This is denier, by Mana Lal, one of the partners of the appellant firm. He swears that Munim Purshottam Narain never met him and that whatever communications were addressed by the respondent to the appellant firm were received by registered post. In this state of evidence, we have no hesitation in holding that no notice, written or oral, was given by the resondent to the appellant about his intention to re-sell the goods.

6. Sec. 46 of the Indian Sale of Goods Act enumerates the unpaid seller's rights. One of these rights is a lien on the goods for the price while he is in possession thereof. Sec. 47 explains what the unpaid seller's lien is. It runs as follows:—

“(1) Subject to the provisions of this Act, the unpaid seller of goods who is in possession of them is entitled to retain possession of them until payment or tender of the price in the following cases, namely:—

(a) where the goods have been sold without any stipulation as to credit;

(b) where the goods have been sold on credit, but the term of credit has expired,

(c) where the buyer becomes insolvent.

(2) The seller may exercise his right of lien notwithstanding that he is in possession of the goods as agent or bailee for the buyer.” Sub-sec. (2) of Sec. 54 is in the following terms:—

“Where the goods are of a perishable nature, or where the unpaid seller who has exercised his right of lien or stoppage in transit gives notice to the buyer of his intention to re-sell, the unpaid seller may, if the buyer does not within a reasonable time pay or tender the price, re-sell the goods within a reasonable time and recover from the original buyer damages for any loss occasioned by his breach of contract, but the buyer shall not be entitled to any profit which may occur on the resale. If such notice is not given, the unpaid seller shall not be entitled to recover such damages and the buyer shall be entitled to the profit, if any, on the re-sale.”

7. The last sentence of this sub-section imposes a penalty on the seller in case he exercises the right of re-sale without giving notice of his intention to resell to the buyer. This is a new clause which did not find place in the old Sec. 107 of the Contract Act. The object of introducing this sentence is obvious. If notice is given to the buyer, he can arrange for purchasers or can otherwise take steps to secure better price for his goods. But if the seller deprives him of this opportunity and sells the goods behind his back, he cannot saddle him with damages which, if he had been informed, he might have taken steps to avoid. The position, therefore, is that if Sec. 54 applies and the sale takes place without notice to the buyer, the seller cannot claim any damages from him.

8. The learned counsel for the respondent has, however, contended that in this case there was no exercise of the right of seller's lien and therefore sub-sec. (2) of Sec. 54 did not come into play. In other words, he maintains that the penalty clause which is found embodied in sub-sec. (2) of Sec. 54 did not come into operation. He has elaborated his contention by arguing that a seller's exercise of the right of lien begins when a demand for delivery is made from him by the buyer and is followed by a refusal by him. This contention is, to our mind, not well-founded. It puts a very narrow interpretation on the language of Sec. 47. The result of accepting this interpretation will be that if the buyer chooses never to make a demand the seller's exercise of the right of lien would never commence. In other words, by simply keeping quiet the buyer can deprive the seller of his exercise of the right of lien. This could never have been the intention of law.

9. There were 67 thans in all with the respondent and all these thans were agreed to be sold. Thus the goods were ascertained and were in a deliverable state. Under Sec. 20 of the Sale of Goods Act the property in the goods passed to the buyer as soon as the contract was made. But the seller was allowed to retain possession of 57 thans till the payment of price. No period of credit was given to the seller in respect of them. Therefore, the case fell under sub-sec. 1(a) of Sec. 47 in respect of these 57 thans and the seller's lien commenced from the time of the making of the contract. We, therefore, find no force in the contention that the seller was not exercising his right of lien and that sub-sec. (2) of Sec. 54 did not come into operation. As a matter of fact, the respondent's notice and the frame of the plaint both indicate that the respondent's case throughout had been that he was exercising his right of lien and the right of re-sale conferred by Sec. 54(2) of the Sale of Goods Act. In the notice he gave credit to the extent of the price realised by the resale of the goods. Similarly, in the plaint he adjusted that amount in part satisfaction of his claim and sued for the balance. We are, therefore, of opinion that the respondent did exercise his right of lien and he was purporting to act under sub-sec. (2) of Sec. 54 of the Act, although in doing so he neglected to perform a most material condition laid down by that sub-section and has therefore to bear the penalty imposed by that sub-section.

10. The next contention put forward by the learned counsel for the respondent is that if a buyer falsely denies the making of a contract, he cannot claim the benefit of the penalty clause of Sec. 54(2). This contention also is not well-founded. Sec. 54(2) confers a right on a seller, although that right is subject to a certain limitation. The learned counsel for the respondent has not been able to point out to us any provision of the Act which says that because a false defence has been put forward by the buyer any one of the seller's rights is to be curtailed. Nor has he been able to cite any decided case in support of the contention put forward by him. We are, therefore, of opinion that the mere fact that the appellant firm falsely denied the making of the contract is not sufficient to take the case out of the purview of Sec. 54(2).

11. It is next contended by the learned counsel for the respondent that he had two rights, viz. a right of re-sale under Sec. 54(2) and an independent right under Sec. 55 to sue for the price of the goods. This contention is perfectly correct. It was open to him not to sell the goods and to sue for the price leaving it to the purchaser to take delivery of the goods lying with him (the seller) at his own convenience. Moreover, he should have in that case sued for the entire amount and not for the amount that according to him remained due to him after deducting the price fetched by the goods sold. He did not adopt this course. His suit, as it is framed, is not one under Sec. 55 of the Act. If we decree the claim on the basis of the right conferred by Sec. 55, we would be giving him a decree for an amount larger than that for which a claim was put forward in the plaint.

12. As a result of the above discussion, we are of opinion that no damages can be claimed in respect of these 57 thans of silk. The case about the remaining 10 thans stands on a different footing. Admittedly the appellant firm has taken delivery of them. Its version, viz. that it had taken delivery as the respondent's agent, has been disbelieved by the lower court and that finding has not been challenged before us. We, therefore, take it that these 10 thans were taken as part of the sale transaction and had not been paid for. Their price comes to Rs. 1,353-3-9. The interest from the date of contract till the date of institution of the suit at the stipulated rate of ten annas per cent, per mensem on Rs. 1,353-3-9 comes to Rs. 44-8-0. We, therefore, allow this appeal in part, modify the decree of the court below and decree the suit for a sum of Rs. 1,397-11-9 with interest at 3 per cent, per annum from the date of the suit till the date of deposit of the amount in court. Parties shall receive and pay costs in proportion to their success and failure in both Courts.

13. Appeal allowed.