P L D 1964 (W (PLP)

QADEERUDDIN AHMED, J.

‑This appeal arises from Suit No. 380 of 1955 which was partially decreed by our learned brother A. S. Faruqui, J., vide his judgment dated the 27th of November 1961.

2. Briefly, the facts are that the appellant sold 10 tons of Pakistani shelled almonds of the 1952‑crop and was paid through a letter of credit, which was opened by the respondent. The ship reached Liverpool on the 26th of October 1953, and the respondent inspected the goods on the 3rd of November 1953. They were firstly surveyed by professional surveyors on the 7th of November 1953 and again, after they were cleaned and fumigated, on the 10th of December 1963. The respondent complained to the appellant that the goods were defective and demanded refund of the price, payment of the incidental charges and expenses as well as damages. The appellant did not acknowledge the letters of the respondent, and its stand is that they were not received by it. The finding of the learned Single Judge in this respect is that this plea is not factually correct, and the finding has not been questioned before us by counsel for the appellant.

3. The case of the respondent was that the consignment having been found to contain "a heavy percentage of grub and/or vermin eaten almonds, traces of web, live weevils, a percentage of dust, a small percentage of empty shell pieces" and about 10 per cent. broken almonds, the appellant had committed breach of the contract. The respondent had, therefore, cleaned and fumigated them and sold them at a loss. Its claim in the suit was that the price paid by it, together with the charges and expenses incurred by it, as well as damages were recoverable from the appellant, together with interest at the rate of 5.5 per cent. per annum from the date of the breach of the contract until the date of the suit, and interest at the rate of 6 per cent. per annum from the date of the suit until judgment or such longer time as the Court may consider proper. The learned Single Judge has disallowed damages and interest from the date of the suit until judgment, but has allowed interest from the date of the judgment until recovery. The appellant has, therefore, preferred this Letters Patent Appeal with the object of getting the suit of the respondent dismissed and the respondent has filed cross -objections to get the decree modified so as to be able to recover the disallowed interest.

4. Counsel for the appellant has argued that the almonds which were shipped by the appellant were defective, but that they conformed to the sample which was sent to the respondent; therefore, they were in proper fulfilment of the contract. As tile contract was to supply the goods according to the sample, there could not be any warranty that they would be edible or edible but actually they were both edible and because they have been sold in the market where, accord ing to the evidence produced by the respondent, only edible almonds were imported. Even if they were unmerchantable and inedible, the judgment and decree could not be upheld, according to counsel for the appellant, because the claim of the respondent amounted to a demand for damages which have not been proved according to the measure which is recognised by law. He explained this argument by saying that the damages, as alleged by the respondent, had resulted from the low price of the resale of the almonds. Resale proves acceptance of the goods by the respondent; therefore, the suit can be taken to have been founded only on the breach of a warranty relating to the accepted goods. If it is held that there was such a breach, then the correct measure of damages was the difference between the market price of sound almonds prevailing at the place of delivery at the time at which the delivery was made and the price recovered by‑ the resale. This being the measure, it was necessary for the respondent to prove the market price of the imported almonds at Liverpool prevailing on the date of their arrival and then to claim the difference between that price and the price that was recovered by the resale. The respondent has, however, not proved the prevailing market price at Liverpool at the relevant time; therefore, there are two courses open to this Court: one is to dismiss the suit and the other, to remand the case for retrial in terms of the judgment given in the case of Muthukrishna v. Madhavji Devichand & Co. (A I R 1953 Mad. 817).

5. As a general rule, the method explained by counsel of calculating damages resulting from the breach of a warranty is correct. But in this case it is not correct to say that the claim of the respondent was for the recovery of damages only. Here we may usefully reproduce section 59 of the Sale of Goods Act, on which counsel for the appellant has relied:‑ "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." Under subsection (2) of the above section it was open to the buyer to set up the breach of a warranty against the seller in diminution or extinction of the price as well as to demand damages. The claim of the respondent thus could be and was for the recovery of the amounts paid to the appellant and the incidental expenses and charges incurred by the respondent as well as for damages. The claim for damages having been disallowed by the learned Single Judge, the respondent has been granted a decree for the recovery of the price together with other out‑of‑pocket charges and expenses minus the proceeds of the resale. We were impressed by the technical efficiency of the contentions raised by counsel for the appellant, but feel with respect to the measure of damages that it was not relevant to this appeal. The relevant parts of his argument were: (i) that the almonds were merchantable and edible; (ii) that even if they were not, there was no breach of warranty in this case because the sale was by sample and the considerations of the edibility and merchantability of almonds had no significance if the goods that were supplied conformed to the sample, and (iii) that resale of the goods necessarily meant that the suit was on breach of warranty only.

6. The arguments advanced by counsel, to which reference has been made above, in support of his contention that the almonds were edible as well as merchantable, are obviously unsound because the mere fact that they were sold does no establish that they were merchantable or edible. Rotten, inedible and useless goods can be sold, but that does not prove their merchantability as the merchandise acquired by the buyer for his trade. If this was not the sense of merchantability in this context, then even pythons supplied to a stevedore as robes would be saleable to a zoo. There is, of course, evidence on the record that only edible almonds were imported, but that does riot necessarily mean that inedible almonds could not be sold in that market at all.

7. As to the emphasis on the sample, the respondent has pointed out in its letter dated the 29th of October 1953 (Exh. 8/10) as follows: ‑ "It is no use sending just a few almonds weighing about half an ounce; we shall require half pound samples of each line, otherwise we cannot give a proper judgment. We know the postage is heavy, but if we are buying several thousand pounds worth of goods, we must ask you to bear the expense of sending large size samples properly packed by air‑mail. The sample tin you sent which had four varieties in it was so mixed up on arrival that we did not know what to do with these and we have thrown these away as they were simply valueless." There is no rebuttal of the above allegation on behalf of the appellant, either in the correspondence or in the oral evidence that was produced in Court. It follows from the above facts that a sample consisting of a few almonds could not contain a percentage of grub and/or vermin eaten almonds, traces of web, live weevils, a percentage , of dust or a small percentage of empty shell pieces. The sample on which counsel for the appellant has relied was; therefore, no sample at all, and it is, to our mind; incorrect for him to take the stand that this sale was by sample and not by description.

8. If we are right in coming to the conclusion that this was a sale by description, then in terms of clause (2) of section 16 of the Sale of Goods Act, merchantability was an implied condition of the sale and not merely a warranty. The respondent had complained against the very inferior quality of the goods that were supplied by the appellant and demanded refund of the price, payment of the expenses and charges incurred by it as well as compensation. It amounted to the rejection of the goods owing to the breach of a condition of sale. But this line of thought became complicated when counsel for the appellant pressed before the learned Single Judge that the goods could not be said to have been rejected because rejection would have meant re‑vesting of the property of the goods in the seller and would have resulted in the inability of the purchaser to resell it. Faced with this argument, counsel for the respondent conceded that the suit of his client was based on the breach of a warranty. We may mention here that in certain circumstances it is open to a buyer to reject the goods and also to resell them. Such circumstances exist, for instance, the goods are perishable; the market is fluctuating sharply or when they are left on the hands of the buyer who has to incur expenses on their storage. Prof. Samuel Williston has, in his well‑known treaties on The Law Govern ing Sales of Goods stated in section 498 of Volume III as follows:‑ "It not infrequently happens that the seller, when notified that the goods are nox in conformity with the contract and when requested to remove them, fails to do so, claiming that the contract has been properly fulfilled. Under these circum stances it may be clearly the best thing to do, from a business standpoint, for the buyer in whose possession the goods are to sell them at once and leaves the question whether the goods fulfilled the terms of the contract or not to subsequent determination. Where goods are perishable or expensive to keep, or of fluctuating value, any other course is attended with loss to one party or the other. Accordingly it has been held, and it seems reasonable, that the buyer though refusing to take title because the goods are not what he bargained for may, after notifying the seller of his rejection and requesting him in vain to remove the goods, resell them on the account of the seller. Unless a sale is imperative to save the goods before notice can be given to the seller and a reply received, a sale by the buyer will constitute an acceptance."

9. In the present case, the goods were not only perishable but were actually in the process of perishing; they were expensive for the respondent to retain; their price was admittedly fluctuat ing and information of their defect had been communicated to the appellant who did not acknowledge any letter much less send any replies. The sale of the goods in these circumstances was not an indication of the exercise of dominion inconsistently with the ownership of the appellant but an act which was necessary for the benefit of both the parties and in particular to mitigate the loss of the appellant in terms of the Explanation to section 73 of the Contract Act which is applicable to the sale of goods in terms of section 3 of the Sale of Goods Act, 1930. The explanation is as follows: "In estimating the loss or damage arising from a breach of contract, the‑means which existed of remedying the incon venience caused by the non‑performance of the contract must be taken into account."

10. Counsel for the appellant saw our point of view and acknowledged that this aspect was not considered by him or counsel for the respondent during the course of arguments before the learned Single Judge, as a result of which counsel for the respondent conceded that this was a suit on the breach of a warranty; but he pressed two more contentions which were that the respondent‑ (i) ought to have informed the appellant of its intention to resell, and (ii) ought to have proved the loss which had resulted from the resale, by producting better evidence than his own statement. The first contention is not based on any statute, but is clearly reasonable. Its' reasonableness, however, is diminished to a major extent when we realise that the appellant has denied the receipt of any letter and has not replied to any communica tion sent by the respondent as to the defects of the goods. The absence of a notice in particular, of the intention to resell does not, in these circumstances, strike to us of recognizable signi ficance. The second contention relates to the sufficiency of proof and has been rejected by the learned Single Judge. We find no reason to disagree with him in this respect.

11. The conclusion of the above discussion is that the respondent has been granted a decree only for the recovery of its actual out‑of‑pocket expenses minus the sum of money recovered by it by the resale of the goods. This decree does not include damages; therefore, all contentions in respect of the calculation of damages are valueless in this appeal. Merchan tability of the goods was a condition of the transaction on the basis of which the goods were rejected and the resale does not, in the circumstances of this case, detract from that position. Even if it is held that there was merely a breach of warranty, or that the breach of a condition has been treated by the respondent as that of a warranty, for which there are no good reasons to our mind, the argument advanced by counsel for the appellant relating to the calculation of damages cannot be of any importance because no damages have been awarded.

12. Turning now to the cross‑objections of the respondent, we find that the respondent has been awarded nothing excepting for its net expenditure. Interest from the date of the judgment until recovery has been granted, but interest from the date of the institution of the suit until judgment has been disallowed by the learned Single Judge. The reason for taking that view was that counsel for the parties were regarding the entire claim that was made in the suit to consist of damages and no notice under the Interests Act had been given by the respondent to the appellant; therefore the delay caused in the recovery of the money owing to the delays of the litigation were not considered to warrant entitlement of the respondent to recover interest for the period of the trial. As we are of the view that the respon dent has not been granted a decree for damages in terms of section 59 of the Sale of Goods Act, 1930, and as we see that interest from the date of the breach of the contract upto the date of the institution of the suit as well as from the date of the judgment up to the recovery of the decretal amount has been allowed, we feel strongly inclined not to omit the period during which the trial was held, that is, from March 1955 to November 1961. During this period, the appellant had retained the money of the respondent and being a businessman has presumably made good use of it.

13. In conclusion of the foregoing, we dismiss the appeal with costs and accepting the cross‑objections of the respondent, respectfully, modify the decree of the learned Single Judge to the extent of granting interest at the rate of six per cent. per annum on the principal amount that has been decreed from the date of the institution of the suit until judg ment. Costs of the cross‑objections are not allowed sepa rately. K. B. A. Appeal allowed.