J.W. Crewdson v. Ganesh Das Hari Bux

Mookerjee, J.:— This is an appeal by the defendants from a judgment of Chaudhuri, J., in a suit for recovery of money representing the depreciation in the value of goods supplied by them to the plaintiffs in a damaged condition. The plaintiffs carry on business as a firm importing printed sarees and selling them to dealers. The defendants are a firm in London carrying on business as exporters of printed sarees. There have been transactions between the firms since 1910, and, according to the plaintiffs, one of the terms and conditions of business was as follows:

“Should cut and otherwise faulty pieces be found in the cases received, the plaintiff firm should examine one or more of the said cases as the plaintiff firm should thick proper in order to arrive at an average of the proportion of faulty pieces in the said cases and on the basis of the said average, claim the usual allowance of 33 ⅓ per cent.”

2. The plaintiffs further assert that on the basis of the survey of a sample case made on 17th March 1914 by Kerr Tarruck & Co., with the concurrence of both parties, the proportion of faulty pieces was determined as 40 per cent. The plaintiffs accordingly claimed Rupees 31,047-8-0 from the defendants as due on faulty pieces invoiced in 1912, 1913 and 1914 as perfect goods. The plaintiffs further claimed a sum of Rs. 4,098-4-0 as customary interest on this amount from 17th March 1914 to 29th May 1916. The defendants repudiated the claim as largely exaggerated and denied liability for interest. Chaudhuri, J., has found in favour of the plaintiffs that the proportion of damaged goods should, on the basis of the survey by Kerr Tarruck & Co., be taken at 40 per cent but he has come to the conclusion that as the cuts were of various lengths the depreciation should be allowed at the rate of, not one-third, but three-fourths of one-third, that is, one fourth. Chaudhuri, J., has in substance held that the proportion of faulty goods should be taken to be two-fifths and the depreciation in value thereof should be taken at one-fourth. On this basis, he has allowed the plaintiffs a decree for R. 23,285-10-0 less Rs. 980-3-0 (covered by previous awards), that is to say a net amount of Rs. 22,305-7-0.

3. The claim for interest antecedent to the suit was abandoned in the Court below but interest has been allowed on the sum decreed from the date of commencement of the suit. The plaintiffs have also been awarded costs. Both parties were dissatisfied with this decree. The defendants have appealed and have contended, first, that the plaintiffs have not proved that 40 per cent of the goods were damaged, secondly, that as, according to the learned Judge, the plaintiffs had failed to prove that the value of the damaged goods was depreciated by one-third, he should not have arbitrarily assessed the depreciation at one-fourth; and, thirdly, that no interest should have been allowed before date of decree. The plaintiffs have preferred cross-objections and have contended that the depreciation in value of the damaged goods should have been assessed at one-third and that the evidence does not justify a reduction to one-fourth, which is not the case of either of the parties. We are of opinion that the appeal must succeed in part and the cross-objections must also be allowed. In the appeal we have to consider two elements, each essential for calculation of the sum recoverable by the plaintiffs from the defendants on account of the damaged condition of the goods supplied. The evidence conclusively proves that an appreciable proportion of the goods invoiced as perfect were in fact damaged; indeed, this conclusion of the Court below has not been seriously contested here. Consequently, we have to determine the proportion of the damaged goods and the depreciation in value on account of their damaged condition. Theoretically, the ideal method would be, if the goods were still unsold and available for inspection, to examine each piece and to determine its depreciation in value. But even if the goods were available, such a procedure would be manifestly impracticable from the point of view of transaction of mercantile business. The plaintiff stated in his deposition that when allowance for damaged goods is fixed each case is not examined, because if that were attempted, it would not only be very difficult to find room for the pieces taken out but also to fold them again; they could not plainly be sold as fresh goods, because the finish would inevitably get spoiled. It is obvious that, in these circumstances, recourse must be had to some method of averages.

4. The question is, did the parties in the present case agree upon such a method. The correspondence between the parties, which is summarised in the judgment of Chaudhuri, J., shows that the parties did not reach an agreement on this matter before 1914. In February 1914, Mr. Blair came to Calcutta as the representative of the defendant firm. He opened one case of goods on 19th February 1914 and examined two parcels. The parties were not however agreed as to the inference to be drawn from this partial examination of a single case. Mr. Blair then arranged for the examination of another case by Kerr Tarruck & Co. An officer of Kerr Tarruck & Co., actually inspected a case taken at random on 14th March. The result of the inspection was that one hundred and sixty pieces out of four hundred were found damaged; the length of the cuts varied from half an inch to six inches, and while some of the cuts were in the borders, others were in the middle of the pieces. The report of this inspection, dated 17th March 1914, further shows that 20 pieces had defective colours, that is, were badly stained. The forwarding letter of Kerr Tarruck & Co., states that although, according to Mr. Blair, some-of the pieces had stains 6 to 8 inches square, the stains actually found measured 3 to 5 feet in length. This report and the forwarding letter were sent to Manchester for information of the defendant firm.

5. We are of opinion that the parties intended that the proportion of the damaged goods should be determined on the result of this inspection. The parties had carried on an inconclusive correspondence on the subject for many months; the representative of the defendants came to Calcutta for the purpose, amongst, others, of settling the matter. He himself, made a partial inspection of one case and then requested a well-known firm in the trade to make an inspection of another full case. If Mr. Blair had intended that the result of this inspection should not be accepted as the basis for calculation, he might easily have arranged for inspection of some more cases. The result of the inspection was communicated to the defendants; they did not suggest that the case opened could not be deemed a fair sample and they did not ask for examination of other cases. The present suit was instituted on 6th June 1916, and the defendants-made no attempt to examine Mr. Blair on commission, till 1st July 1918. The application was adjourned and Mr. Blair died on 10th August 1918. It is worthy of note that the application was not proceeded with, though it included the names of other members of the defendant firm as possible witnesses. In these circumstances, we hold that Chaudhufi, J., has correctly found that the proportion of damaged goods must betaken at 40 per cent on the basis of the survey made by Kerr Tarruck & Co., with the concurrence of both parties.

6. Next comes the question of the extent of the depreciation due to the damaged condition of the goods. Here, the application of the principle of averages is still more imperative from practical considerations, than it is for the purpose of ascertaining the proportion of damaged goods. The depreciation depends, not merely upon the size, but also upon the location of the cuts, while the depreciation due to stains must vary with size, location and colour of the spots. In such circumstances, an almost infinite variety and gradation is possible, and a classification is well nigh impracticable. The plaintiffs assert that the usual allowance for depreciation is one-third. The defendants only generally deny the terms alleged by the plaintiffs, but do not specifically contradict the statement; they do not allege an alternative rate or rates. On the other hand, the plaintiff asserted on oath that other European firms, for instance, Ralli, Graham, Finlay Muir, gave allowances on the basis of one-third for damaged and cut pieces; it is significant that no attempt was made to cross-examine the plaintiff on this point. It is further worthy of note that when “cuts and jobs.” are separately supplied, a reduction of one-third is allowed on the price for perfect goods; the inference may therefore be reasonably drawn that the same rate would be allowed when these are mixed with and invoiced as perfect goods. There is also some evidence to show that previous claims by the plaintiffs, though for small amounts, were paid by the defendants at the same rate. Finally, the correspondence between the parties shows that the plaintiffs have consistently adhered throughout to the statement that the reduction in value is calculated at one-third. In their letter dated 25th June 1914, the defendants practically admit that this is the rate, but allege that this rate is not applicable to cuts not exceeding two inches; they do not however state what if any special rate is applicable in such cases. We hold accordingly that the plaintiffs have established that the reduction in the value of damaged goods must be calculated at one-third and we are unable to uphold the conclusion of Chaudhuri, J., that the rats is one-fourth, which is not supported by any evidence on the record.

7. The only other point which requires consideration is whether the plaintiffs should have been allowed interest during the pendency of the suit. It is plain that such interest cannot be claimed under Section 1 of the Interest Act, 1839, as the sum due is neither a “debt” nor a “Bum certain” within the meaning of that section. The only statutory provision which authorizes the Court to allow interest, in its discretion, in such a case, is that contained in Section 34 of the CPC, 1908. That section contemplates interest in three stages, namely: (1) interest prior to the institution of the suit on the principal sum adjudged as distinguished from the principal sum claimed; (2) additional interest on the principal sum adjudged from the date of the suit to the date of the decree, at such rate as the Court deems reasonable; and (3) further interest on the aggregate sum adjudged, from the date of the decree to the date of realization or to such earlier date as the Court thinks fit. The section does not provide for payment of interest for period antecedent to the suit, but it empowers the Court when the decree is for the payment of money to allow interest pendente lite as also interest subsequent to decree. We are not called upon to consider whether the plaintiffs can claim interest prior to the institution of this suit, because though such interest was claimed in the lower Court as customary interest the claim was abandoned at the trial. We have only to consider whether interest pendente lite should have been allowed. We are of opinion that interest during the pendency of the litigation should not have been decreed. The sum recoverable by the plaintiffs is not a debt but unliquidated damages, and as Westropp, C.J, observed in Framji Hormasji v. Commissioner and Deputy Commissioner of Customs, Salt and Opium (4), interest does not run upon unliquidated damages. The same view was adopted in Rutnessur Biswas v. Hurish Chunder Bose (5). We do not see why, in point of principle, a distinction should in this respect be made between interest prior to suit and interest pendente lite; interest prior to suit was clearly not recoverable for reasons stated in Subramania Aiyar v. Subramania Aiyar (6) and Boddu Sanyasiraju v. Kotra Ramamurthi (7), though the point was apparently overlooked in Mohamad Ravuther v. British India Steam Navigation Company Limited (8).

8. We may add that interest pendente lite is not claimed as damages for wrongful detention of money which the defendants had profitably invested: see the observation of Lord Macnaghten in Johnson v. Reg (9). We cannot also overlook the fact that there was a substantial dispute between the parties as to the basis for assessment of damages and the litigation itself lasted for more than two years in the Court of first instance. In view of all these circumstances we must hold that the Court should not allow the plaintiff's interest pendente lite.

9. We may add finally that the plea of limitation which was overruled in the Court below, was not even mentioned in the course of argument, though it was taken in one of the grounds of appeal. The result is that the appeal is allowed in part and the cross-objection also is allowed. The decree of the Court below will be varied in two respects, namely, first the sum due to the plaintiffs will be calculated on the basis that the depreciation in value of the goods delivered was one-third and not one-fourth; and secondly, interest will be allowed, not from date of suit, but only from date of judgment of the Court below, that is, the 20th August 1919. Subject to these variations, the decree will stand confirmed. As the victory has been a divided one, each party will bear his own costs of this appeal.

Fletcher, J.:— I agree.

V.B/R.K

10. Appeal partly allowed.