SHAH MOHANLAL MANILAL Vs. FIRM OF DHIRUBHAI BAVAJIBHAI

JUDGEMENT

(1.) This Second Appeal raises a short question of law regarding the right of a buyer to reject goods taken delivery of by him from the seller and supplied by him to his sub-purchases before he has had a reasonable opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the contract. the facts which are admitted or found to have been proved by the first appellate Court may be briefly stated as follows. On or about 24/03/1952 a contract was entered into between the plaintiffs and the defendant whereby the plaintiffs agreed to sell to the defendant one wagon load of pure dundi coal at the rate of Rs. 2-1-3 per deshi maund. The plaintiffs despatched to the defendant under the contract 397 bags containing 345 Bengali maunds of coal on 1/05/1952. The plaintiffs thereafter delivered the railway receipt in respect of the consignment to the defendant on 3/05/1952 against payment of a cheque for Rs. 1 0 and Rs. 100/in cash. The consignment was received by the defendant at Baroda on 6/05/1952. It appears that on the strength of the contract with the plaintiffs the defendant had entered into contracts with various sub-purchasers for sale of pure dundi coal. The defendant therefore immediately on receipt of the consignment delivered some of the goods out of the consignment to the sub-purchasers on the same day and removed the rest of the goods to his warehouse. The defendant admittedly did not examine the goods before delivering the same to the sub-purchasers and the reason was that delivery of the goods was considerably delayed by the plaintiffs and as a result thereof the defendant had not been able to deliver the goods to the sub-purchasers in time and the sub-purchasers were therefore clamouring for the goods. Whatever be the reason it is an admitted fact that the defendant did not examine the goods for the purpose of ascertaining whether they were in conformity with the contract and delivered the same to the sub-purchasers before examination. On the next day i. e. 7/05/1952 the defendant received complaints from the sub-purchasers that the goods which had been delivered to them by the defendant were not pure dundi coal. The defendant thereupon immediately sent a telegram to the plaintiffs and also addressed a letter to the Plaintiffs complaining that the goods supplied by the plaintiffs to the defendant under the contract were not pure dundi coal as provided by the contract. The defendant rejected the goods and stopped payment of the cheque for Rs. 1 0 which had been given by the defendant to the plaintiffs against delivery of the railway receipt in respect of the goods. The plaintiffs thereupon filed the present suit against the defendant claiming to recover from the defendant the sum of Rs. 2 299 being the balance of the price in respect of the goods. The defendant by his written statement contended that since the goods were not of the contract description he was entitled to reject the goods and the goods having been rejected by him on 7/05/1952 he was not liable to pay the price of the goods to the plaintiffs. The defendant also claimed damages from the plaintiffs for breach of the contract committed by the plaintiffs by their failure to deliver goods of the contract description to the defendant. The learned trial Judge dismissed the plaintiffs suit and passed a decree in favour of the defendant awarding Rs. 1 485 as and by way of damages. he plaintiffs filed an appeal against this decree of the learned trial Judge and the defendant also filed cross-objections. The learned District Judge who heard the appeal and the cross-objections held that though the goods delivered by the plaintiffs to the defendant were not pure dundi coal as stipulated under the contract and the defendant was therefore entitled to reject the goods the defendant had lost his right of rejection by selling and delivering a part of the goods to his sub-purchasers. The learned District Judge held that the act of the defendant in selling and delivering a part of the goods to his sub-purchasers was an act in relation to the goods which was inconsistent with the ownership of the plaintiffs and the defendant must therefore be deemed to have accepted the goods and the defendant could not thereafter reject the goods. The learned District Judge held that the defendant was entitled to claim only damages from the plaintiffs and accordingly passed a decree in favour of the plaintiffs for the balance of the price of the goods after deducting therefrom the amount of damages suffered by the defendant as a result of the breach committed by the plaintiffs of the condition of the contract that the goods should be pure dundi coal. It is against this decree of the learned District Judge that the defendant has come up in Second Appeal before this Court.

(2.) The short and interesting point which arises in this Second Appeal is whether the defendant lost his right to reject the goods by selling and delivering a part of the goods to his sub-purchasers. The goods were received by the defendant on 6/05/1952 and on the same day the defendant sold and delivered a part of the goods to the sub-purchasers. Before delivering a part of the goods to the sub-purchasers the defendant did not examine the goods for the purpose of ascertaining whether they were in conformity with the contract. It was only on receiving complaints from the sub-purchasers that the defendant learnt that the goods were not pure dundi coal and the defendant immediately rejected the goods on 7/05/1952. It was argued by Mr. M. R. Barot learned advocate on behalf of the defendant that under sec. 41 of the Indian Sale of Goods Act the defendant was entitled to a reasonable opportunity of examining the goods for the purpose of ascertaining whether they were in conformity with the contract and that the defendant could not be deemed to have accepted the goods unless and until he had a reasonable opportunity of examining the goods Mr. M. R Barot argued that it was no doubt true that under sec. 42 of the Indian Sale of Goods Act the defendant was deemed to have accepted the goods when he did any act in relation to the goods which was inconsistent with the ownership of the plaintiffs but that act in order to result in acceptance of the goods should have been done by the defendant after he had a reasonable opportunity of examining the goods. Mr. M. R. Barot urged that having regard to the facts and circumstances of the case the reasonable opportunity of examining the goods did not expire until 7/05/1952 and that the act of the defendant in selling and delivering a part of the goods to his sub-purchasers which was relied upon by the plaintiffs as an act of the defendant in relation to the goods inconsistent with the ownership of the plaintiffs was therefore an act done by the defendant before the reasonable opportunity of examining the goods had expired and could not result in acceptance of the goods by the defendant so as to deprive the defendant of his right to reject the goods. The contention of Mr. M. R. Barot was that though the act of the defendant in selling and delivering a part of the goods to the sub-purchasers was an act inconsistent with the ownership of the plaintiffs it was an act done before the expiration of the reasonable opportunity of examining the goods which reasonable opportunity did not expire until 7/05/1952 and that the defendant could not therefore be deemed to have accepted the goods by doing the act. If the defendant could not be deemed to have accepted the goods by selling and delivering a part of the goods to the sub-purchasers argued Mr. M. R. Barot the defendant was entitled to reject the goods and as soon as the defendant had a reasonable opportunity of examining the goods the defendant immediately rejected the goods on 7/05/1953. If this contention of Mr. M. R. Barot is correct it is obvious that the plaintiffs are not entitled to claim the balance of the price of the goods from the defendant. This contention of Mr. M. R. Barot raises an important question as to the relation between secs. 41 and 42 of the Indian Sale of Goods Act.

(3.) Section 41 provides that: Where goods are delivered to the buyer which he has not previously examined he is not deemed to have accepted them unless and until he has had a reasonable opportunity to examining them for the purpose of ascertaining whether they are in conformity with the contract. Then sec. 42 says: The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them or when the goods have been delivered to him and he does any act in relation to them which is inconsistent wit the ownership of the seller or when after the lapse of a reasonable time he retains the goods without intimating to the seller that he has rejected them. The construction contended for by Mr. M. R. Barot requires that sec. 41 should be read as limiting the provisions of sec. 42. According to Mr. M. R. Barot the buyer is not even in the events specified in sec. 42 to be deemed to have accepted the goods unless he has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract. The contention of Mr. M. R. Barot is that sec. 42 contemplates a later stage of the transaction than sec. 41. under sec. 41 where the buyer has not previously examined the goods he is not deemed to have accepted them unless and until he has had a reasonable opportunity of examining them and under sec 42 it is necessary to prove some further facts in order to show that the buyer has accepted them. If this view of the section suggested by Mr. M. R. Barot is correct it would mean that before the buyer can he said to have accepted the goods it would have to be proved that he has had a reasonable opportunity of examination under sec. 41 as well as that he did one of the acts mentioned in sec. 42. This view is in my opinion incorrect and the contention of Mr. M. R. Barot in support of this view must be rejected. And I think the reason is obvious. One of the acts upon the doing of which the buyer is deemed to have accepted the goods is that he intimates to the seller that he has accepted them It is clear that such an intimation may be made by the buyer before he has had a reasonable opportunity of examination and if such intimation is made it is obvious that without more sec. 42 would operate and the buyer would be deemed to have accepted the goods. In the same way when the buyer does an act in relation to the goods which is inconsistent with the ownership of the seller sec. 12 must be treated as coming into operation notwithstanding that the reasonable opportunity of examining the goods has not expired. Suppose the buyer after taking delivery of the goods and before he has had a reasonable opportunity of examining them consumes them or turns them or part of them at once into his mill and uses them in the manufacture can it be said in such a case that the buyer is not deemed to have accepted the goods because he used or consumed them before he had a reasonable opportunity of examining them for the purposes of ascertaining whether they were in conformity with the contract ? The act of the buyer in using or consuming the goods would certainly be deemed to constitute acceptance of the goods by the buyer. Sec. 42 is in my opinion independent of sec. 41 and must be given effect to whenever any one of the acts specified in that section is done by the buyer irrespective of the question whether such act is done during the currency or after the expiration of the reasonable time for examination of the goods. Even if during the currency of the reasonable time within which the examination of the goods is to be made the buyer does any one of the acts specified in sec. 42 he must be deemed to have accepted the goods. The language of sec. 42 is plain and simple. There is no ellipsis and no redundance nor is there anything vague or ambiguous about the language. That being so I must read sec. 42 in its natural and ordinary sense. Sec. 42 expresses a meaning which is single and sensible and I see no reason why the precise words used by the law-maker in that section should not be given their full meaning and effect. Sec. 42 declares in clear and unambiguous language that when any one of the acts specified therein is done by the buyer the buyer shall be deemed to have accepted the goods and does not introduce or admit any qualification or exception. Under these circumstances I do not see why the plain meaning and effect of sec. 42 should be cut down by introducing a qualification by reference to sec. 41. Sec. 41 confers on the buyer a right of examination of the goods for the purpose of ascertaining whether they are in conformity with the contract. On principle this right is conferred on the buyer for no acceptance can properly be said to take place before the purchaser has had an opportunity of rejection and a right of inspection to ascertain whether such condition has been complied with is in the contemplation of both parties to such a contract: and no complete and final acceptance so as irrevocably to vest the property in the buyer can take place before he has exercised or waived that right. Now the last words of the preceding sentence provide the answer to the apparent conflict between secs. 41 and 42. The right of examination of the goods for the purpose of ascertaining whether they are in conformity with the contract is a right which is conferred on the buyer for the purpose of enabling him to decide whether to accept the goods or to reject them. But it is open to him to waive that right and he may choose to accept the goods without exercising that right. It will thus be seen that no conflict is created between secs. 41 and 42 by reading sec. 42 as independent of sec. 41 and not limiting the provisions of sec. 42 by sec. 41. Where the buyer does any of the acts specified in sec. 42 before the reasonable opportunity of examining the goods has expired the buyer waives the right of examination of the goods conferred by sec. 41 and is deemed to have accepted the goods. This is in my opinion the only construction which can be placed on secs. 41 and 42. I am fortified in this opinion by a decision of the Court of Appeal in England in Harby & Company v. Hillerns & Fowler (1923) 2 K. B. 490 where the Court of Appeal has taken the same view regarding the construction of secs. 3 and 35 of the English Sale of Goods Act which are in the same terms as secs. 41 and 42 of the Indian Sale of Goods Act which I am concerned in the present case. In this view of the matter it is clear that the defendant must fail. The act of the defendant in selling and delivering a part of the goods to the sub-purchasers was an act in relation to the goods which was inconsistent with the ownership of the plaintiffs anal the defendant was therefore deemed to have accepted the goods by selling and delivering a part of the goods to the sub-purchasers. It was immaterial whether the act of selling and delivering a part of the goods to the sub-purchasers was done by the defendant before the reasonable opportunity of examining the goods had expired or was done by the defendant after the expiration of the reasonable time for examination of the goods. Even if the reasonable opportunity of examining the goods did not expire until 7th May 1952 when the defendant purported to reject the goods the act of the defendant in selling and delivering a part of the goods to the sub-purchasers on 6/05/1952 resulted in the acceptance of the goods by the defendant and the defendant was thereafter not entitled to reject the goods. The rejection of the goods by the defendant on 7/05/1952 was therefore invalid and not binding on the plaintiffs and the goods being deemed to have been accepted by the defendant the plaintiffs were entitled to claim the balance of the price from the defendant. No doubt the description of the goods was a condition of the contract and since the plaintiffs committed a breach of the condition by delivering goods which were not of the contract description the defendant was entitled to treat the breach of the condition as a breach of warranty on the part of the plaintiffs and to claim damages from the plaintiffs for the loss suffered by the defendant as a result of the breach committed by the plaintiffs. These damages I find have been awarded to the defendant by the learned District Judge and the decree passed in favour of the plaintiffs is for the balance of the price of the good after deducting therefrom the amount of damages awarded to the defendant. I must therefore negative the contentions urged on behalf of the defendant and refuse to interfere with the decree passed by the learned District Judge. The result is that this Second Appeal fails and will be dismissed with costs. Appeal dismissed.