Full Judgment Text
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PETITIONER:
MARWAR TENT FACTORY
Vs.
RESPONDENT:
UNION OF INDIA AND ORS.
DATE OF JUDGMENT09/11/1989
BENCH:
RAY, B.C. (J)
BENCH:
RAY, B.C. (J)
MUKHARJI, SABYASACHI (J)
CITATION:
1990 AIR 1753 1989 SCR Supl. (2) 127
1990 SCC (1) 71 JT 1989 (4) 307
1989 SCALE (2)1149
ACT:
Indian Sale of Goods Act 1930--Sections 23, 39 and
61--Short delivery in transit of goods----Liability for--F.
O.R. Contract--Meaning of.
HEADNOTE:
The appellant is a firm dealing in the manufacture and
sale of Tents and Tarpaulins at Jodhpur in Rajasthan. It
carried on a regular business of supplying these goods to
defence services. The Director General of Supplies and Dis-
posal invited tenders for the supply of tents and the appel-
lant-firm submitted its tender, which was accepted. The said
contract was of two kinds of tents viz, "Flies Inner" and
"Flies Outer", the agreed rate of the latter was Rs.225 per
tent and the quantity was 15,000. As per the terms of the
contract, the goods were to be inspected at the premises of
the appellant firm and after inspection the same were to be
despatched to Commandant, C.O.D., Kanpur. As regards the
mode of payment of the price of the goods, 95% of the price
was to be paid on proof of despatch of goods and production
of inspection note, and 5% latter.
On October 14, 1968 one consignment of 1500 tents was
despatched to C.O.D. Kanpur from Jodhpur by the appellant
under Railway Receipt No. 502671 and 95% of the price was
paid to the appellant. The commandant, C.O.D. Kanpur, the
consignee reported that 224 tents out of the said sale
consignment had not been received at Kanpur and for that
reason a sum of Rs.51,912 being the price of 224 tents was
deducted from the amounts due to the appellant, under anoth-
er contract. The Traffic Officer, Commandant C.O.D. had
filed a claim with the railways for short delivery of 224
tents.
Despite repeated requests by the appellant for the
payment of the said amount, the same was not paid to it. As
such the appellant filed a suit in Delhi High Court for the
recovery of the principal amount as also for the interest
thereon. In the suit, the appellant also claimed interest on
two other consignments, as its balance price i.e. 5% amount-
ing to Rs.24,357 was paid after a delay of 3 years and thus
a sum of Rs.8,525 was claimed as interest @ 12% per annum
from 1.1.69 to 1.12.71. Thus the total claim was of
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Rs.74.972.
128
The defence of Respondents 1, 2 & 5 was that 224 tents
were received short and as such a sum of Rs.51,912 its price
was rightly deducted from the appellant’s bill.
Respondents 3 & 4 (Railways’ Officials) filed a State-
ment that only 11 tents were delivered short for which the
admitted liability was Rs.2,475, the same having been paid
to C.O.D. Kanpur by debit adjustment.
The Trial Judge by his Order dated February 12, 1982
dismissed the claim of the appellant substantially but so
for as the amount of Rs.2,475 regarding the shortage of 11
tents was concerned, the same was decreed with interest.
Against the Judgment and Order of the Trial Judge, the
appellant preferred an appeal before the Division Bench of
the High Court and the same having been dismissed, the
appellant has come up in appeal to this Court after obtain-
ing Special Leave.
Allowing the appeal, this Court,
HELD: In view of the terms and conditions of the con-
tract embodied in clause 11 of the schedule of acceptance of
tender regarding the place of delivery "F.O.R. Jodhpur", the
property in the goods passed immediately on to the seller
after delivering the goods and loading the same in the
railway wagons at Jodhpur for transmission to the buyer, the
consignee, without reserving any right of disposal. [136D]
On consideration of the place of delivery as well as the
terms of delivery embodied in clause 11 of the schedule of
Acceptance of Tender, the property in the goods alongwith
the risk in the goods passed from the appellant to the
Respondent No. 5 when the goods were delivered and dis-
patched by railway wagons at Jodhpur i.e. F.O.R. Jodhpur.
The consignee, Commandant, C.O.D. Kanpur is, therefore,
liable for the price of 224 tents which was deducted by him
from the other bills of the appellant. [137A-B]
The plaintiff is entitled to get a decree of interest on
the price from 1.1.69 to 1.12.1971 @ 6% per annum which is
considered to be a reasonable rate of interest as claimed by
the plaintiff-appellant. [139C]
Girija Proshad Pal v. The National Coal Co. Ltd., AIR
1949 Cal. 472; The Commissioner of Sales-Tax, Eastern Divi-
sion, Nagpur v.
129
Husenali Adamji & Co., [1959] 2 Supp. SCR 702; B.B. Bose v.
National Coal Trading Company, AIR 1966 (Patna) 346 and M/s.
M.K.M. Moosa Bhai Amin, Kota v. Rajasthan Textile Mills,
Bhawanimandi, AIR 1974 Raj. 194-1974 Raj. L.W. 77, referred
to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4586 of
1989.
From the Judgment and Order dated 14.3.1983 of the Delhi
High Court in R.F.A. (O.S.) No. 3 of 1983.
Pallav Shishodiya and D. Bhandari for the Appellant.
V.C. Mahajan, Arun Madan and C.V.S. Rao for the Respondents.
The Judgment of the Court was delivered by
RAY, J. Special leave granted. Arguments heard.
This is an appeal against the judgment and order passed
in R.F.A. (OS) 3 of 1983 on March 14, 1983 by the High Court
of Delhi dismissing the Civil Writ Petition in limini
against the judgment and decree rendered by Chawla, J. in
Suit No. 50 of 1972 on February 12, 1982.
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The matrix of this case is stated hereunder.
The appellant M/s Marwar Tent Factory is a firm having
its registered office at Jodhpur (Rajasthan) and dealing in
the manufacture and sale of tents and tarpaulins. The firm
is a regular supplier of these goods to the defence services
of India.
On March 13, 1986 tenders were invited for the supply of
tents by the Directorate General of Supplies and Disposals,
the respondent No. 2. Accordingly, the appellant submitted a
tender which was accepted by the officer of the Directorate
General of Supplies and Disposals on behalf of the President
of India. The said contract was of two kinds of tents ’Flies
Inner’ and ’Flies Outer’. The agreed rate for the ’Flies
Outer’ was Rs.225 per tent and the quantity was 19,100. In
accordance with the said terms of the contract the goods
were to be inspected at the premises of the firm at Jodhpur
and after the same being passed by the Inspector, the goods
had to be despatched to the Commandant, C.O.D. Kanpur. It
was further agreed between the
130
parties that 95% of the price was payable on proof of des-
patch and production of the inspection note. The balance 5%
was to be paid after receipt of the goods in good condition
by the C.O.D., Kanpur.
On October 14, 1968, one consignment of 1500 tents was
despatched to the C.O.D., Kanpur by the appellant under
Railway receipt No. 502671 dated 14.10.1968 and 95% of the
price was paid by demand drafts dated 17.10.1968 and
19.5.1969. The Commandant, C.O.D., Kanpur reported that 224
tents out of a sale consignment had not been received at
Kanpur and consequently a sum of Rs.51,912 (being the full
price of those 224 tents inclusive of sales tax) was deduct-
ed from the amounts due to the appellant under another
contract.
The appellant made repeated requests and sent repeated
reminders for payment of the said sum of Rs.51,912 from the
respondent but without any effect. As such, the appellant
filed a suit being Suit No. 50 of 1972 in the High Court at
Delhi for recovery of the said principal sum as well as
interest on the principal. The appellant further claimed
interest on two other consignments as the price of the said
consignments was paid after a great delay. The two consign-
ments were of 700 and 1400 tents despatched on August 10,
1968 and August 27, 1968 respectively. Though 95% of the
price was paid, the balance 5% amounting to Rs.24,357 was
not paid till December 1, 1971 despite repeated requests and
reminders. The said payment of Rs.24,357 was wrongfully
delayed by about three years and a sum of Rs.8,525 was,
therefore, claimed as interest @ 12% per annum from 1.1.1969
to 1.12.1971 on the said amount. The total claim of the
appellant was of Rs.74,972 i.e. Rs.51,912 principal sum and
Rs. 14.535 as interest on this and Rs.8,525 as interest on
the sum of Rs.24,357 wrongfully withheld for three years.
A joint statement was filed by the respondent Nos. 1, 2
& 5 as their interest were identical. The defence was that
224 tents were received short under railway receipt No.
502671 and the sum of Rs.51,9 12 was rightly deducted from
the payment due to the appellant under other contracts.
The respondent Nos. 3 and 4 also filed a joint written
statement stating inter alia that only 11 tents were deliv-
ered short under railway receipt No. 502671 for which the
admitted liability was to the tune of Rs.2,475. This sum had
been paid to the C.O.D., Kanpur by debit adjustment.
131
T.P.S. Chawla, J by his judgment and order dated Febru-
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ary 12, 1982 though dismissed the claim of the appellant
substantially but in so far as the amount of Rs.2,475 re-
garding the shortage of 11 terms admitted by respondent Nos.
3 and 4 was concerned, decreed the said sum in favour of the
appellant with interest @ 12% per annum from 1.4.1972 till
the date of judgment and further interest @ 6% from the date
of judgment till the realisation of the amount. Against the
said judgment and decree the appellant preferred an appeal
being R.F.A. (OS) No. 3 of 1983 before the Division Bench of
the said High Court. The said appeal was, however, dismissed
by the High Court of Delhi by order dated March 14, 1983.
The instant appeal on special leave has been preferred by
the appellant against the aforesaid judgment and decree.
The crucial question that requires consideration in this
appeal is whether 1500 tents which were loaded in the rail-
way wagons on October 14, 1968 at Jodhpur for delivery to
the respondent No. 5, the Commandant, C.O.D., Kanpur under
railway receipt No. 502671 were actually delivered to the
respondent No. 5. It has been held by the Trial Court i.e.
learned single Judge, High Court, Delhi that the tents were
carried in 3 wagons upto Agra. The railway line from Jodhpur
to Agra was a meter gauge. Thereafter, from Agra to Kanpur
which is a broad gauge line the tents were put into four
broad gauge wagons at Agra for onward transmission to Kan-
pur, as evident from the transmission, register. It has been
found that the railways could not establish the delivery of
224 tents under railway receipt No. 502671 to the Comman-
dant, C.O.D., Kanpur from the unloading register. The short-
age certificate issued by the railways corroborates the
entries in the unloading register. The particulars of the
consignment are set out in the heading of this document. The
railway receipt is No. 502671 and the names of the sendor
and consignee are also mentioned. The Traffic Officer,
Commandant, C.O.D., Kanpur filed a claim with the railways
on February 10, 1969 for 224 packages received short and
this claim was made under railway receipt No. 502671. The
plea of the railways was that the shortage was of 11 tents
and not of 224 tents. It has been found by the Trial Court
that this plea is falsified by the unloading register, the
shortage certificate and the reconciliation statement as
also the report made by their Traffic Inspector on December
9, 1970. Accordingly, it was held that under railway receipt
No. 502671 the appellant delivered the full quantity of 1500
tents to the railways but the latter failed to deliver 224
tents out of this consignment to the Commandant, C.O.D.,
Kanpur and as such the railways are estopped from contending
that it was under some other railway
132
receipt. The Trial Court, however, held that no decree could
be passed against the railways because the plaint did not
contain any claim for loss or non-delivery against the
railways. Secondly, the suit against the railways was barred
by time and thirdly since no notice under Section 78-B of
the Indian Railways Act was served on the railways by or on
behalf of the appellant. The appellant, however, submitted
that the title of the goods passed on to the respondent No.
5, Commandant, C.O.D., Kanpur, the moment the tents were
lodged on rail head, Jodhpur as the term of delivery under
the contract was F.O.R., Jodhpur. For any short delivery of
the goods made by the railways at Kanpur, the appellant was
not responsible and the respondent No. 5, under the terms of
the contract is not entitled to deduct the price of the
short delivery of tents i.e. 224 tents. It was for the
Commandant, C.O.D., Kanpur to claim damages from the rail-
ways and the Commandant had actually made a claim as stated
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hereinbefore to the railways in respect of the short deliv-
ery. The learned single Judge, however, found that the
abbreviation F.O.R. meant Free on Rail meaning simply that
the cost of the carriage of the goods upto the railway wagon
is included in the price and must be borne by the seller and
the cost of carriage thereafter is to be borne by the buyer.
It has also been held that the risk in the goods would not
pass at Jodhpur as expressly stipulated in the general
conditions of contract contained in Form DGS & D-68. These
were made applicable by clause 7 in the Schedule of accept-
ance of tender. Special emphasis was laid to the condition
No. 4 entitled "responsibility of contractor for executing
the contract". The learned Judge has with reference to sub-
clause (10) of this condition held that the goods shall
remain in every respect at the risk of the contractor until
their actual delivery to the consignee at the stipulated
place and as such the risk of the appellant remains until
the goods were actually delivered to the Commandant, C.O.D.
Kanpur. The argument as regards condition No. 14 of the
general conditions of contract as well as its sub-clause (2)
entitled "passing of property" was negatived on the ground
that the risk was governed by condition 4(1) of the general
conditions of contact. The claim before the railways being
time barred and also no notice under Section 78-B of the
Indian Railways Act having been served on the Railways
within the stipulated period, the appellant could not claim
for damages for breach of contract and for the price of the
tents not delivered. However, in respect of the price of 11
tents the shortage of which was admitted by the railways and
for which a sum of Rs.2,475 was paid to the respondent No. 5
by the appellant, it was decreed with interest @ 12% per
annum from 1.4.1972 till the date of passing of the decree
and also further allowed interest on the said sum @ 6% per
annum thereafter till the date of
133
payment. The respondents, however, did not question the
finding of the Trial Court regarding the short delivery of
224 tents at the railway station at Kanpur. Admittedly,
there has been a short delivery of 224 tents out of the
consignment of 1,500 tents loaded at Jodhpur railway station
in the railway wagon under the said receipt No. 50267 1.
In order to decide and fix the responsibility for pass-
ing of the decree in respect of the sum of Rs.51,912 being
the full price of 224 tents inclusive of sales tax deducted
from the amount due to the appellant under another contract
by the respondent No. 5, it is pertinent to consider the
question when the property in goods passed from the seller
to the buyer at Jodhpur when the goods were loaded in rail-
way wagons for delivery to the consignee at Kanpur. The
learned counsel for the appellant drew our attention to the
condition No. 11 of the Schedule of acceptance of tender
dated February 29, 1968. It has been mentioned therein that
the terms of delivery was F.O.R., Jodhpur i.e. free on rail
at Jodhpur railway station. It has also been mentioned that
before the goods are loaded on railway wagons for delivery
to the respondent No. 5 at Kanpur, the Inspector, I.G.S.
North India will inspect the same at firm’s premises at
Jodhpur and after approval the said goods will be despatched
to its destination by placing them in the railway wagons at
Jodhpur railway station and the railway receipt has to be
sent to the consignee under registered cover immediately
after despatch of the stores with full details. It is also
stipulated that 95% of the price of the goods will be paid
by the respondent No. 5 on receipt of the railway receipt
and the inspection note and the balance 5% will be paid
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after the same reached at the destination in goods condi-
tion. Referring to this term for delivery under clause 11 of
the Schedule of acceptance of tender, it has been urged by
the learned counsel for the appellant that the delivery was
complete at Jodhpur when the/goods were loaded in the goods
train for delivery to the respondent No. 5 at Kanpur and
property in the goods passed to the buyer as soon as the
goods were despatched by railway at Jodhpur. Thereafter, the
risk in respect of the goods despatched remained with the
consignee. The appellant, the consignor is entitled to get
the entire price of the 224 tents which were short delivered
by the respondent Nos. 3 and 4 to respondent No. 5 at Kanpur
in view of the clear finding by the Trial Court that though
the entire consignment of 1500 tents was actually loaded in
the railway wagons for despatch to the consignee, the re-
spondent No. 5. The respondent No. 5 duly filed a claim to
the railways, the respondent Nos. 3 and 4 for the short
delivery to the tune of 224 tents immediately after taking
delivery of the goods. In order to decide the question as to
whether the rights in the goods passed from
134
the seller to the buyer i.e. from the appellant to the
respondent No. 5 as soon as the goods were loaded in railway
wagons at Jodhpur and the railway receipt was sent to the
consignee, it is pertinent to refer to the meaning of the
words F.O.R. Jodhpur. In Haulsbury’s Law of England, 4th
Edition (Volume 41) at page 800, para 940 it has been men-
tioned that:
"Under a free on rail contract (F.O.R.) the
seller undertakes to deliver the goods into
railway wagons or at the station (depending on
the practice of the railway) at his own ex-
pense, and (commonly) to make such contract
with the railway on behalf of the buyer as is
reasonable in the circumstances. Prima facie
the time of delivery F.O.R. fixes the point at
which property and risk pass to the buyer and
the price becomes payable."
In Benjamin’s Sale of Goods (2nd Edition), at page 1799
it is stated as under:
"Stipulations as to time of ’delivery’--provi-
sions as to the time of delivery in an f.o.r.
contract are taken to refer to the time of
shipment and not to the time of arrival of the
goods; and this may be so even though the
provision in question contemplates the arrival
of the goods by a certain time. Thus in Fre-
bold and Sturznickel (Trading as Panda O.H.D.V
v. Circle Products Ltd. German sellers sold
toys to English buyers f.o.b. Continental Port
on the terms that the goods were to be deliv-
ered in time to catch the Christmas trade. The
goods were shipped from Rotterdam and reached
London on November 13; but because or’ an
oversight for which the sellers were not
responsible the buyers were not notified of
the arrival of the goods until the following
January 17. It was held that the sellers were
not in breach as they had delivered the goods
in accordance with the requirements of the
contract by shipping them in such a way as
would normally have resulted in their arrival
in time for the Christmas trade."
The question as to the meaning of F.O.R. contract fell
for consideration in the case of Girija Proshad Pal v. The
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National Coal Co. Ltd., AIR 1949 (Calcutta) 472. P.B. Muk-
harji, J. as His Lordship then was observed in para 11 as
follows:
135
"The words f.o.r. are well known words in
commercial contracts. In my judgment they mean
when used to qualify the place of delivery,
that the seller’s liability is to place the
goods free on the rail as the place of deliv-
ery. Once that is done the risk belongs to the
buyer."
Reference may also be made in this connection to the
decision of this Court rendered in The Commissioner of
Sales-Tax, Eastern Division, Nagpur v. Husenali Adamji and
Co., [1959] 2 Supp. SCR 702. In that case under the terms of
the contract the respondent Company whose place of business
was situate in Chanda in the erstwhile Central Provinces had
to load diverse quantities of ’sawar’ logs on railway wagons
and to despatch the same from Chanda and other railway
stations in the Central Provinces to Ambernath, a town in
the erstwhile Province of Bombay. Clause 2 of the contract
reserved the right of the consignee to examine the goods on
arrival at Ambernath and to reject the same if they were
found, in the opinion of the factory manager, not to conform
with the specifications. Clause 6 also provided that the
goods shall be measured under the supervision of the facto-
ry’s representative, the decision of the factory manager at
Ambernath would be binding on the contractor and by clause 7
the prices of the goods shall be ’F.O.R. Ambernath’. The
question arose was as to when and where the property in the
logs passed from the respondent to the consignee and whether
the respondent was liable to pay sales tax under the provi-
sions of the Central Provinces and Berar Sales Tax Act,
1947. The Sales Tax Department levied the tax on the re-
spondent on the ground inter alia that the property in the
logs passed from the respondent to the factory consignee
under section 23 of the Indian Sale of Goods Act, 1930 when
the logs were loaded in the wagons at railway stations
within the Central Provinces and the railway receipts taken
in the name of the factory were forwarded to the latter. It
was held:
"that on a proper construction of the contract
as a whole the intention of the parties was
that the respondent would send the logs by
rail from the different stations in the Cen-
tral Provinces to Ambernath where the factory
manager would inspect, measure and accept the
same if in his opinion they were of the de-
scription and quality agreed upon. Consequent-
ly, as the respondent sent the logs and left
it to the factory to appropriate to the con-
tract such of them as they accepted as of
contract, quality and description, the proper-
ty in the logs did not pass to the buyer by
136
the mere delivery to the railway for carriage
but passed only at Ambernath when the logs
were appropriated by the factory with the
assent of the seller within the meaning of
section 23 of the Indian Safe of Goods Act,
1930."
It is also convenient to refer*to the provision of
Section 23(2) of the Indian Sale of Goods Act, 1930. This
sub-section provides that:
"(2) Where, in pursuance of the contract, the
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seller delivers the goods to the buyer or to a
carrier or other bailee (whether named by the
buyer or not) for the purpose of transmission
to the buyer, and does not reserve the right
of disposal, he is deemed to have uncondition-
ally appropriated the goods to the contract."
In the instant case, in view of the terms and conditions
of the contract embodied in clause 11 of the Schedule of
acceptance of tender regarding the place of delivery ’F.O.R.
Jodhpur’, the property in the goods passed immediately on
from the seller after delivering the goods and loading the
same in the railway wagons at Jodhpur for transmission to
the buyer, the consignee, without reserving any right of
disposal. The seller is deemed to have unconditionally
appropriated the goods to the contract only under section 26
of the said Act, the goods remained at seller’s risk until
the property therein is transferred to the buyer. As stated
earlier that the property in goods has been transferred to
the buyer by the seller by delivery of the goods and loading
the same at Jodhpur in railway wagons. In this connection
reference may be made to Section 39(1) of said Act. Consid-
ering the aforesaid provisions of The Sale of Goods Act,
1930 as well as the terms and conditions of delivery i.e.
’F.O.R. Jodhpur’ the irresistible conclusion that follows is
that the property in the goods together with the risk passed
from the seller to the buyer i.e. from consignor to the
consignee as soon as the goods were loaded in the railway
wagons at Jodhpur as per the terms of delivery i.e.F.O.R.
Jodhpur. Therefore, the finding of the Trial Court that the
risk throughout ramained with the appellant until the goods
were actually delivered to the Commandant, C.O.D., Kanpur is
wholly wrong and illegal. The further finding of the Trial
Court that the risk was governed with the condition No. 4(1)
of the Schedule of Acceptance of Tender and the property in
the goods i.e. the tents did not pass until the same were
actually delivered to the Commandant, C.O.D. Kanpur and the
Commandant, C.O.D. Kanpur was not liable for loss of the
tents during the period of transit by the railways is also
illegal and bad. As stated hereinbefore on considera-
137
tion of the place of delivery as well as the terms of deliv-
ery embodied in clause 11 of the Schedule of Acceptance of
Tender, the property in the goods along with the risk in the
goods passed from the appellant to the respondent No. 5 when
the goods were delivered and despatched by railway wagons at
Jodhpur i.e. F.O.R., Jodhpur. The consignee, Commandant,
C.O.D., Kanpur is therefore, liable for the price of 224
tents which was deducted by him from the other bills of the
appellant. The findings of the Trial Court which were con-
firmed by the Division Bench of the High Court are, there-
fore, liable to be set aside and the claim of the
plaintiff-appellant should be decreed.
As regards the claim of interest on the unpaid price of
224 tents amounting to Rs.51,912 for the period from
1.1.1969 to 1.12.1972 @ 12% per annum, the Courts below
disallowed the claim on the findings that no claim for the
price of the goods had been made against the railways, nor
any notice under Section 78-B of the Indian Railways Act had
been served on respondent Nos. 3 and 4, and the suit was
barred by limitation against the Railways. We have already
held hereinbefore that the appellant is entitled to get not
only the price of the goods but also the interest thereon
for not making the payment of the price of the goods within
a reasonable time. The interest @ 12% per annum was claimed
by the plaintiff-appellant on Rs.51,912 being the price of
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224 tents for the period from 1.1.1969 to 1.12.1972. It is
appropriate to refer in this connection to the relevant
provisions of Section 61(2) of the Sale of Goods Act, 1930
(Act 3 of 1930) which reads as follows:
"61(2): In the absence of a contract to the
contrary, the Court may award interest as such
rate as it thinks fit on the amount of the
price--
(a) to the seller in a suit by him
for the amount of the price--from the date of
the tender of the goods or from the date on
which the price was payable,
(b) to the buyer in a suit by him
for the refund of the price in a case of a
breach of the contract on the part of the
seller--from the date on which the payment was
made."
In the instant case, undoubtedly, it has been found by
the Courts below that the short delivery of 224 tents oc-
curred during the transmit of the said goods by the rail-
ways. It is also an admitted fact that the respondent No. 5,
the Commandant, C.O.D. Kanpur deducted the price of the said
224 tents from the other bills of the contractor i.e. the
138
appellant and did not pay the same The appellant has claimed
interest in respect of the price of the said goods being not
paid to the appellant within a reasonable time from the date
of delivery of the goods i.e. for the period from 1.1.1969
to 1.12.1971. The respondent No. 5 did not dispute the claim
of the appellant in this regard. His only plea was that in
the notices under Section 80 of the Code of Civil Procedure
served on the respondents the claim of interest was not made
and as such the claim of interest could not be allowed. In
the case of B.B. Bose v. National Coal Trading Company, AIR
1966 (Patna) 346, the plaintiff filed a suit for recovery of
price of goods sold to the defendant. Before filing the suit
the plaintiff served a demand notice on the defendant. In
the demand notice Ex. 2, no claim for interest was put by
the plaintiff. It was urged on behalf of the defendant that
there was no stipulation for payment of interest in case the
price remained unpaid in the contract and as such the plain-
tiff could not claim any interest on the unpaid amount. This
was negatived by the High Court, Patna and it was held:
" .......... That is, no doubt, true, but
the demand clearly was for the outstanding
balance price of coal which the plaintiff had
supplied to the defendant. The supplies had
been effected upto the 26th June, 1954, and in
the normal course, the price ought to have
been paid by the defendant within a reasonable
time of the deliveries, but the payment had
been delayed for nearly three years and plain-
tiff was obliged to institute the present suit
for recovery of the price. In such circum-
stances, it was within the discretion of the
court to award interest to the plaintiff at a
reasonable rate on the amount of the price
under S. 61(2) of the Sale of Goods Act. The
price was undoubtedly payable when the notice
of demand (Ex. 2) was served by the plaintiff
upon the defendant and there can be no doubt
that the rate of 6 per cent per annum which
the Court awarded was a reasonable rate."
Similar question cropped up for decision in the case of
M/s M.K.M. Moosa Bhai Amin, Kota v. Rajasthan Textile
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 10
Mills, Bhawanimandi, AIR 1974 Raj. 194=1974 Raj LW 77. In
this case the plaintiff filed the suit for price of the
goods delivered as well as for interest on the unpaid price.
The claim regarding interest was disallowed by the District
Judge on the ground that there was no stipulation for pay-
ment of interest in case the price of the goods supplied
remained unpaid. It was contended on behalf of the plaintiff
that even
139
in the absence of the contract, the plaintiff was entitled
to reasonable interest under Section 61(2) of the Sale of
Goods Act, 1930. The supply had been effected upto September
18, 1962 and in normal case the price of the goods ought to
have been paid by the defendant within a reasonable time of
the deliveries but the payment had been delayed for nearly a
year which compelled the plaintiff to bring the suit for
recovery of the price. It has been held that in such circum-
stances, the lower courts should have exercised discretion
in favour of the plaintiff and awarded interest on the
amount of the price of the goods under Section 61(2) of the
Sale of Goods Act. The High Court of Rajasthan allowed
interest @ 6% per annum which was considered to be a reason-
able rate of interest.
On a conspectus of all the decisions referred to before
as well as the provisions of Section 61(2) of the Sale of
Goods Act, we are constrained to hold that the plaintiff is
entitled to get a decree of interest on the unpaid price
from 1.1.1969 to 1.12.1971 @ 6% per annum which is consid-
ered to be a reasonable rate of interest, as claimed by the
plaintiff-appellant.
In the premises aforesaid the appeal is allowed and the
judgments and the decree of the Courts below in so far as
they rejected the claims regarding the price of 224 tents
and interest thereon are set aside. The plaintiff-appel-
lant’s claim for the price of the said goods as well as
interest thereon @ 6% per annum for the period from 1.1.1969
to 1.12.1971 is hereby decreed. The appeal is thus allowed
with costs quantified at Rs.4,000. The claim for interest @
6% per annum for the period from 1.1.1972 till date of
payment of amount unpaid is allowed.
Y. Lal Appeal allowed.
140