1. On 5-11-1944 Rai Bahadur Kapurc'nand Choudhary, the plaintiff, sold to Mangilal Karwa, the defendant, at Jabalpur, 503 bags of masur (each bag to contain 21/2 maunds of masur) stocked with his adatiya Messrs Liladhar Raghunath Sahain at Damoh for Rs. 10,153/8/9 inclusive of the price of the gunny bags, under the agreement Ex. P-1 which reads as follows:
“……I have purchased your masur, bags 503, (each bag being of) the capacity of 21/2 maunds which is kept at Damoh in the Adat of Liladhar Raghunath Sahayan of Damoh and the cost price of which is Rs. 10,153/8/9 in words, ten thousand one hundred and fifty-three rupees, eight annas and nine pies, inclusive (of the price of) bardana (gunny bags). I will pay the expensed whatever be incurred on railway freight, carting charges, palledari (coolie charges for loading and unloading), octroi and terminal taxes etc. etc. in bringing the same to Jabalpur from the godown at Damoh to the railway station and from Jabalpur railway station to my godown there.
You have got with you a government permit for loading the goods. Hence you please will accompany (us) to Damoh and get the goods loaded. I will return to you the empty bardana (gunny bags) of these goods within 15, fifteen, days. With respect to empty bardana (gunny-bags) you will deduct the price thereof at 0-8-0 per bag from the cost price. I will pay the amount of these goods to you in one month from the day of arrival of the goods at my godown……….”
2. On 11-11-1944 the plaintiff gave delivery to the defendant Mangilal through his agent Kaluram of 202 bags of masur from the bungalow of Shri David and of 298 bags from a godown at Mowganj. It is not disputed that the plaintiff had informed the defendant that the masur which he was selling to him had been purchased by him in the harvest of that year. It is also not disputed that the masur in the godown was rotten and could not be considered to be of merchantable quality. As a matter of fact, 3 bags of masur out of these were sold at rates ranging from 10 to 19 seers per rupee-though the price of good masur on that date was 7 to 81 seers per rupee. The defendant paid to the plaintiff from time to time Rs. 4800, namely,
3. Rs. 2,000 on 11-12-1944, Rs. 2,100 on 30-12-1944 and Rs. 700 on 15-1-1945.,
4. He also returned to the plaintiff 300 empty gunny bags valued at Rs. 150. The plaintiff now claims from the defendant the balance of the price of the 503 bags of masur sold to him (the defendant) on 11-1944 together with incidental expenses, interest and costs. The details of the claim as disclosed in the plaint are as follows:
Rs. 10,153/8/9
price of the 503 bags of masur.
Rs. 166/12/0
for incidental expenses incurred by the plaintiff in sending the masur from Damoh.
Rs. 10,320/4/9
Total.
Deduct
Rs. 4,950/0/0
money paid towards price and value of the empty bags returned.
Rs. 5,370/4/9
Deduct
Rs. 62/12/0
price of 3 bags of masur which had deteriorated due to natural causes.
Rs. 5,307/8/9
Balance.
Add
Rs. 462/3/0
interest at 9 per cent, per annum from 21-12-1944 to the date of the suit.
Rs. 11/5/6
cost of registered notices etc.
Rs. 5,781/1/3
Total
5. The suit had thus been filed by the plaintiff for Rs. 5781, the rest having been given up. The trial Court found that the defendant had agreed to purchase from the plaintiff 503 bags of masur of that years' harvest kept by him at Damoh with his adatiya Liladhar for Rs. 10,153-8-9; that the defendant had no opportunity to seethe goods, nor was a sample of the goods shown to him; that the 300 bags of masur of which delivery was taken from the godown were rotten and not of merchantable quality; that the market value of the damaged goods was 12 seers per rupee; and that as there was a breach of warranty for which the defendant could claim a diminution in price, he assessed the loss suffered by the defendant at Rs. 1500 — the difference between the market price of the damaged masur at a Sat rate of 12 seers per rupee and the market price of good masur on that date at 71/2 seers per rupee.
6. He also disallowed Rs. 45/9/6 claimed towards incidental expenses on account of the price of the empty bags, and in the result decreed the suit for Rs. 3761-15-0.
7. Both parties have appealed. First Appeal No. 119 of 1947 is the defendant's appeal while First Appeal No. 135 of 1947 is the plaintiff's appeal. During the pendency of the appeal, the plaintiff Kapurchand Choudhary died and his legal representative has been brought on record. This judgment will dispose of both these appeals.
8. For the defendant it is contended that the trial Court's estimate of damages is incorrect for the following reasons:
(i) On the basis of the evidence before it, its estimate of the market price of the damaged masur on the date of delivery at 12 seers per rupee is incorrect: and
(ii) The measure of damages in cases of breaches of warranty is the difference between the contract rate and the rate of the damaged stuff on the date of delivery.
9. It is also contended that the plaintiff's suit was liable to be thrown out on the ground that the contract was opposed to public policy, in that it; provided for the transport of good? already purchased by the defendant at Damohi to Jabalpur on the strength of permits obtained in the name of the plaintiff, which would be contrary to the control orders in force on that date.
10. The learned counsel for the plaintiff, on the other hand, contends—
(i) that the property in the goods sold passed to the buyer on the date of sale and hence the plaintiff could not be liable for any damages for the alleged breach of warranty;
(ii) that no warranty of quality was expressly stipulated, nor could it be implied under the circumstances of the case;
(iii) that as there was no breach of warranty the defendant was not entitled to put forward that excuse for any diminution in price; and
(iv) that the rate of damages has been ascertained on correct principles, that is to say, the defendant, if at all entitled to damages by claiming a diminution in price, can do so only on the basis of the difference of rates on the date of delivery between the market rate of good masur of contract quality and of the damaged masur which was in fact supplied.
11. As to the contention of the defendant that the contract was not enforceable being opposed to public policy, we find that the contention is without substance. There is nothing in the contract (Ex. P-1) regarding any contravention of a control order, nor does the contract provide that the plaintiff had to undertake the transport of those goods to Jabalpur.
12. This is not a suit in respect of a contract of carriage in contravention of the control order. Even if it be true that the plaintiff, as a matter of grace in spite of the control order, chose to deliver the goods to the defendant at Jabalpur, that would in no way vitiate the contract of sale as being opposed to public policy.
13. It has not been nor can it be seriously disputed that on the basis of the material on record the rate of damaged masur on the date of delivery would be 15 seers per rupee and not 12 seers per rupee as estimated by the trial Court. We are however clear that the principle adopted by the trial Court for assessing damages for breach of warranty of quality is correct.
14. We will now examine the contentions raised on behalf of the plaintiff-appellant, seriatim: The contract in the instant case was not a contract for the sale of specific or ascertained goods. The plaintiff had agreed to sell 503 bags of masur kept by him at Damoh in the adat of Liladhar. Liladhar (D.W 4) has deposed that from 10-5-1944 to 12-11-1944 the plaintiff purchased about 2200 bags through his adat. It could not therefore be said what particular bags were intended to be sold.
15. The bags were stored at Damoh in various godowns. The defendant was given delivery from two places, i.e David's bungalow and the go down of Mawganj of which the keys were with the plaintiff. It is not the case of the plaintiff that he specified the goods by intimating that he was selling these particular bags and by handing over the keys of the godowns to him.
16. Under the circumstances, under Sections 18, 19 and 23 of the Sale of Goods Act, the property in the goods did not pass on 5-11-1944 when the contract of sale was made but on 11-11-1944 when delivery was given. It has also to be noticed that though the goods were of that year's harvest, the deterioration was mainly due to bad storing.
17. According to Liladhar (D.W 4) the godown was damp even on the day when the plaintiff chose to store his goods there. He get some ‘bhusa’ spread on the floor in order to avoid the effect of dampness. The terrace was leaking and as the keys had been taken away by the plaintiff himself, it was not possible to take any steps, for protecting the goods till they were finally disposed of. There is no evidence to snow the state of the goods on 5-11-1944 when the contract of sale was entered into.
18. In any case it could not be asserted that the goods were of merchantable quality even on that, date and that their deterioration started thereafter. But in our opinion, this question is immaterial in the instant case as the property in the goods did not pass to the defendant on the date of the agreement. The incidence of the damage could therefore never fall on the defendant.
19. The plaintiff as P.W 1 has admitted that he had informed the defendant that the masur was purchased by him in the harvest of that year. According to Liladhar the masur was in fact of that year's harvest. There is thus no question that what the parties intended to deal, in was masur of that year's harvest. Masur is a foodstuff and it is reasonable to prestume that the purpose of the purchase was its use as a foodstuff. The law has been clearly stated by Lord Ellenborough in — ‘Gardiner v. Gray’, (1815) 16 RR 764 (A) in these terms:
“…………under such circumstances, the purchaser has a right to expect a saleable article answering the description in the contract. Without any particular warranty, this is an implied term in every such contract. Where there is no opportunity to inspect the commodity, the maxim of caveat emptor does not apply.
He cannot without a warranty insist that it shall be of any particular quality or fineness, but the intention of both parties must be taken to be, that it shall be saleable in the market under the denomination mentioned in the contract between them. The purchaser cannot be supposed to buy goods to lay them on a dunghill”.
20. This principle of common law is contained; in Section 16 of the Sale of Goods Act (hereinafter referred to as the Act) which so far as is relevant for our present purposes provides as follows:
“16. Subject to the provisions of this Act and of any other law for the time being in force, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows:
(1) ………………
(2) Where the goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or producer or not), there is an implied condition that the gocds shall be of merchantable quality;
Provided that, if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed.
(3) ……………………………
(4) ……………………………
21. The question whether the defendant-purchaser had an option to reject the goods because what he bargained for was masur and not some rotten stinking stuff which was once masur of that year's harvest does not arise for consideration in, this case. For, even if there be a breach of a condition, the defendant by taking delivery has, under Section 13 of the Act, elected to treat it as a breach of warranty which under Section 59 entitles him to a diminution or extinction of the price.
22. It is settled law that even after the goods have been delivered into the actual possession of the buyer the performance of the seller's duties, may still be incomplete by reason of the breach; of some of the conditions or warranties — express or implied — whether as to title, or quality, or fitness to which he has bound himself by the contract: (Benjamin on Sale, Page 984).
23. The question then is: what is the diminution in price to which the defendant is entitled under Section 59 of the Act? Section 59 is in the following terms:
“59(1) Where there is a breach of warranty by the seller or where 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 of 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.
(2) The fact that a buyer has set up a breach of warranty in diminution or extinction of the price does not prevent him from suing for the same breach of warranty if he has suffered further damage”.
24. In the instant case the defendant has set up the breach of warranty of quality in order to claim a diminution of price under clause (a) of sub-s. (1). He is therefore entitled to such damages as, are available to him under clause (a) which; would be all damages resulting as a natural and ordinary consequence of his breach of contract in supplying a damaged article or an article of an inferior quality than the one contracted for.
25. It is well established that damages are a pecuniary compensation for the injury which a party suffers because of the non-performance of a contract by the other contracting party. The law attempts as far as possible to place the injured party in the same position as if no default had occurred.
26. Section 53 of the English Sale of Goods Act specifically provides how such damage is to be calculated in cases of a breach of warranty or quality. No similar provision is to be found in our Sale of Goods Act. But even under the Common law, the principle was the same which has; now been adopted in Section 53 of the English Act.
‘Dingle v. Hare’, (1859) 121 RR 424 (B) was the case of a sale of 20 tons of superposphate of time guaranteed to contain 30 per cent phosphate of time at £ 55s a ton. Ten tons of the goods supplied were not of the guaranteed quality as they contained only 7 to 8 per cent of phosphate of time and were worth £ 22s a ton only. It was held that the damages were rightly assessed at the difference between the price paid for the 10 tons of the inferior manure and the sum proved to be its true market value.
27. In ‘Jones v. Just’, 1868-3 QB 197 (C) the true measure of damages for a breach of warranty was held to be the amount which would put the plaintiff in the position in which he would have been if the contract had been fulfilled. We have no hesitation in adopting this principle here as it correctly represents the natural and ordinary consequence of the breach by the seller in supplying the goods of an inferior quality.
28. It may be that in ascertaining the damages with reference to the market price on the date of delivery we may be ascertaining them without reference to the fall or rise in the market since the date of the contract. Actually in the case of — ‘Jones v. Just’, (C) (cit sup.) the plaintiff got the benefit of the rise in the market, but this consideration can have no relevance to the principle on which damages are awarded.
29. We cannot accept the contention of the learned counsel for the appellant that the damages should be calculated with reference to the contract price of the goods. Contract price is the special value of the goods to him and has no relevance to the consideration that the law is attempting to place the appellant-defendant in the same position as if the good quality masur was being delivered to him. As explained by the Division Bench of the Madras High Court in ‘Thilokchand Poosaji v. Crystal and Co.’, 1955 Mad 481 (486) (AIR V 42) (D).
“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. 20 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 might have indented foe solid colour pens at about 19 dollars per 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 exconcessis' 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”.
30. We therefore hold that the appellant would be entitled to claim the difference between the market price of good masur (i.e 71/2 seers per rupee) and the market price of the damaged masur (i.e 15 seers per rupee) as his general damages under Section 59 of the Act which he can set up in diminution of the price. On the basis of the price of damaged masur being 15 seers for a rupee the damages on the aforesaid principle would amount to Rs. 2,000. The decretal amount in F.A No. 119 of 1947 would thus stand reduced by Rs. 500. This appeal is thus partly allowed. Under the circumstances, we leave the parties to bear their own costs in both the Courts.
31. Order accordingly.