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Smart Summary

Factual and Procedural Background

This appeal arises from a suit instituted by the Municipal Committee of Anjangaon against a hardware merchant firm for delivery of goods under an agreement dated 16-3-1934. The firm manufactured and delivered some weights and measures to the Committee but the Committee refused to take further delivery. The firm claimed payment for goods supplied and ready for delivery. Prior litigation ended with a decree in favor of the firm for the price of goods, which was fully paid by the Committee, but the goods remained with the firm. After the High Court judgment, the Committee sent notices demanding delivery, which the firm refused except on payment of rent for care and custody. Consequently, the Committee sued for delivery or alternatively damages for the price of the goods. The trial court decreed delivery and care charges, the first appellate court modified the decree, and the present appeal challenges aspects of these decisions.

Legal Issues Presented

  1. Whether the claim for care and custody charges by the firm is barred by the Limitation Act.
  2. What is the applicable period and rate for care and custody charges payable by the Committee to the firm.
  3. Whether the Committee made a proper application for delivery of the goods under the Sale of Goods Act.
  4. Whether the firm was entitled to refuse delivery until payment of care and custody charges and to retain the goods under a lien.
  5. The appropriate apportionment of costs arising from the suit.

Arguments of the Parties

Respondent (Municipal Committee) Arguments

  • The claim for care and custody charges by the firm is barred by limitation under Article 110 or Article 115 of the Limitation Act.
  • The goods should be delivered without additional charges as the price was already paid.
  • The Committee insisted on delivery at its premises.
  • The firm’s refusal to deliver the goods caused the need for the suit.

Appellant (Firm) Arguments

  • The claim for care and custody charges is not barred by limitation as it arises under Section 44 of the Sale of Goods Act and falls under the residuary Article 120.
  • The firm is entitled to reasonable charges for care and custody until actual removal of the goods.
  • The Committee did not make a proper application for delivery at the place where goods were held, as required by Sections 35 and 36 of the Sale of Goods Act.
  • The firm refused delivery until care and custody charges were paid, relying on a lien.
  • The rate of Rs. 1 per month for care and custody charges is proper based on evidence of rent for the space occupied.
  • The Committee should bear costs of the suit due to its attitude post 21-4-1942.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Secy. of State v. Guru Proshad, 20 Cal. 51 at p. 57 F.B Applicability of residuary Article 120 of the Limitation Act to claims arising under statute (Section 44, Sale of Goods Act) Held that limitation on care and custody charges claim falls under Article 120, not Articles 110 or 115.
Somes v. British Empire Shipping Co. (1860) 11 E.R 459 at p. 462; 8 H.L.C 338 Seller cannot add charges for keeping goods beyond lien debt; no lien for care and custody charges under Section 46(1)(a) of Sale of Goods Act Court held firm could not claim care and custody charges after asserting lien post 21-4-1942.

Court's Reasoning and Analysis

The Court analyzed the limitation question and concluded that the claim for care and custody charges arises under Section 44 of the Sale of Goods Act and is governed by the residuary Article 120 of the Limitation Act, rendering the claim within time. The Court examined the requirement under Sections 35 and 36 of the Sale of Goods Act that the buyer must make an effective application for delivery at the place where the goods are held. It found that mere notices sent by the Committee did not constitute a valid application for delivery and thus the firm was entitled to care and custody charges until such application was made, which was not established before 21-4-1942. The Court rejected the firm’s claim to retain the goods under a lien for these charges under Section 46(1)(a), observing that the lien does not extend to care and custody charges recoverable under Section 44. Post 21-4-1942, the firm’s retention of goods was to enforce payment of charges, which is not permissible to increase the claim. Regarding the rate of charges, the Court accepted the Rs. 1 per month figure based on credible evidence of rent for the space occupied. Finally, the Court found the firm’s liability for costs limited to the price of goods due to the Committee’s necessity to sue for delivery after 21-4-1942.

Holding and Implications

Holding: The appeal is partly allowed. The appellant (firm) is entitled to an additional Rs. 2-12-3 beyond the sums decreed by the lower courts for care and custody charges up to 21-4-1942 plus a further two months and 23 days, totaling Rs. 58-4-3. The decree of the first appellate court is modified accordingly. Costs are apportioned such that the appellant bears his own costs and pays the respondent’s costs, including counsel fees of Rs. 15.

Implications: The decision clarifies the application of limitation provisions to statutory claims for care and custody charges under the Sale of Goods Act, the necessity of a proper application for delivery by the buyer at the seller’s premises, and limits the seller’s lien rights with respect to care and custody charges. No new precedent is established beyond the application of existing principles to the facts. The direct effect is the modification of the monetary decree and costs between the parties.

    Kamruddin Kadibhai v. Municipal Committee

    1. This is an appeal by the defendant who is a firm of hardware merchants at Anjangaon. The plaintiff was the Municipal Committee, Anjangaon. The Committee and the firm entered into an agreement Ex. P-1, on 16-3-1934. Under the agreement the firm was to supply to the Committee sets of weights and measures to be used within the municipal limits of Anjangaon as per by laws of the Committee. On the basis of the agreement the firm got prepared weights and measures, delivered some and was willing to deliver more but the Committee refused to take delivery of the goods. Hence the firm instituted a suit claiming the price of the goods supplied and ready to be delivered.

    2. The prior litigation between the parties ended in the judgment of the High Court in Second Appeal No. 353 of 1938, dated 18-11-1941 (Ex. P-4). The firm obtained a decree against the Municipal Committee for the price of the goods. The decretal amount was fully paid by the Municipal Committee to the firm by 5-1-1939 (vide Exs. P-2 and P-3). The goods, however, remained with the firm. After the decision of the High Court in Second Appeal No. 353 of 1938, the Municipal Committee sent three notices (Ex. P-5 dated 18-12-1941, Ex. P-6 dated 29-1-1942 and Ex. P-7 dated 12-2-1942) asking the firm to deliver the goods. To the last notice the firm replied on 21-4-1942 by Ex. D-1. The firm repudiated any responsibility for the delivery of the goods and in fact refused to deliver the goo is except on payment of rent for the keeping of the goods from 14-6-1937 till the date of the actual removal of the goods. On this the Committee instituted the suit on 8-8-1942 out of which the present appeal arises. The Committee claimed that the firm be ordered to deliver, the stock in specie on approval to the plaintiff or in the alternative to pay to the plaintiff damages in respect of the price of the goods.

    3. The defendant by his written statement resisted the suit and pleaded that he was willing to give delivery of the goods only on payment of rent for the care and custody of the goods at Rs. 4 per mensem from 14-6-1937 till the removal of the goods. The defendant claimed charges for care and custody by way of a counter claim and paid court fees.

    4. The learned trial Judge passed a decree for the delivery of the goods in favour of the Committee and in the alternative for Rs. 1050. The claim of the defendant for care and custody charges was decreed at Rs. 55-8-0 from 14-6-1937 to 29-1-1942 at Re. 1 per month. So the balance only was to be payable to the plaintiff.

    5. The first appellate Court limited the decree for money in the alternative to Rs. 696-14-0. The appeal was dismissed.

    6. In this Court the learned counsel for the respondent contended that the claim in respect of care and custody charges was barred by limitation. He relied upon Article 110 or Article 115, Limitation Act. Neither of these Articles is applicable to the Claim in question. The liability of a buyer for reasonable charges for care and custody of the goods arises under Section 44 of the Sale of Goods Act. As the liability arises under the statute apart from any contract between the parties, the Article applicable is the residuary Article 120: see Secy. of State v. Guru Proshad, 20 Cal. 51 at p. 57 F.B As the defendant claimed charges for a period within 6 years only of the filing of the written statement, the claim cannot be dismissed on the ground of limitation.

    7. The next question is what is the period for which the firm can claim charges in respect of care and custody and at what rate. The contention on behalf of the firm was that there was no proper application for delivery on the part of the Committee. Hence the firm was entitled to get care and custody charges until the articles were actually removed by the Committee on 16-12-1943. On the other hand, it was contended for the Committee that the go ids could not be taken delivery of because of the attitude on the pars of the firm in refusing to deliver the goods until the care and custody charges were paid.

    8. To start with, the Committee misconceived their rights and insisted upon the delivery of the goods at the premises of the Committee. Under Section 35 of the Sale of Goods Act, apart from any express contract the Seller of the goods is not bound to deliver them until the buyer applies for delivery. It was not pleaded that there was any express contract that the goods were to be delivered by the firm without any application for delivery by the Committee. Under S. 36 goods are normally to be delivered at the place at which they are at the tune of the sale. So reading Ss. 35 and 36 together, the Committee had to apply for delivery of the goods at the place at which they were at the time of the sale. The goods were with the firm. So the question is whether there was a proper application for delivery of the goods by the Committee. It is not an effective application for delivery on the part of the buyer to merely send notices or letters if goods are to be delivered at the place of the seller. Some person must be sent to whom the goods can be delivered. As it was not established that the Committee made any effective application for delivery up to 21-4-1942, I hold that the firm was enti led to reasonable charges for care and custody up to that date. Both the Courts were in error that there was a proper application for delivery by the Committee when the notice (Ex. P-6) was sent on 29-1-1942. The firm was entitled to charges for a further period of 2 months and 23 days.

    9. On 21-4-1912 a definite stand was taken by the firm to the effect that the goods would not be delivered until the charges in respect of care and custody were paid. Though the price of the goods was already paid, the firm was not ready and willing to deliver the goods unless the charges were also paid. The firm could not invoke the lien under Section 46(1)(a) of the Sale of Goods Act doss not give to the seller any lien over the goods in respect of charges for care and custody recoverable under S. 44. The seller is entitled to recover them by an action against the buyer. If the seller, however, keeps the goods so that he may be the better able to enforce the payment in respect of the claim for the charges on account of care and custody, he cannot add to his claim any charges in respect of the further retention of the goods. After 21-4-1942 the goods were retained by the firm in enforcement of their supposed lien. After that date they were not entitled to any charges for the retention of the goods. As Lords Wensleydale observed in Somes v. British Empire Shipping Co., (1860) 11 E.R 459 at p. 462 : (8 H.L.C 338):

    “…no person has, by law, a right to add to his lien upon a chattel a charge for keeping it till the debt is paid; that is, in truth, a charge for keeping it for his own benefit, not for the benefit of the person whose chattel is in his possession.”

    10. As regards the rate of charges for care and custody, both the Courts found that Re. 1 per month was proper. Though in the written Statement the firm claimed charges in respect of care and custody, evidence given was only in respect of rent. The goods were kept in the shop of the firm. It was not established that any special charges were incurred for looking after the goods. As the evidence was only given about the charge to be made for the space used by the firm in keeping the goods, the question is whether the figure arrived at by the two Courts is proper. That figure was arrived at mainly on the evidence of Abdul Azis (P.W 2) himself a hardware merchant. The defendant (D.W 1) could not say in cross-examination what a tenant would pay for his shop. I see no reason to differ from the conclusion reached by both the Courts.

    11. The learned counsel for the appellant contended that the Committee may be made to bear all costs of the suit. In view of the fact that the Committee had to institute the suit for the delivery of the goods because of the attitude taken up by the firm on and after 21-4-1942 the firm's liability for the costs of the Committee was rightly restricted by the first appellate Court to the pries of the goods. I see no reason for interfering with the order.

    12. In the result, the appeal is partly allowed. The appellant is entitled to get Rs. 2-12-3 in addition to the sum decreed by the two Courts below. As the Committee has already secured the goods the appellant will now be entitled to recover Rs. 58-4-3 from the Committee. The decree of the first appellate Court will be modified accordingly. As the success of the appellant is insignificant he shall bear his own costs and pay the costs of the respondent. Counsel's fee Rs. 15.

    13. Appeal partly allowed.

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    Kamruddin Kadibhai v. Municipal Committee
    (Nov 30, 1949)