P L D 1957 (W (PLP)

"Section

42. 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 with the ownership of the seller, or when, after a lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them". And has argued that the buyer in this case has done an act in relation to the goods which is inconsistent with the owner ship of the seller and, therefore, this action of the respondent should be taken as acceptance of the goods under this section. He has referred us to Exhs. 12 and 13 at pp. 26 and 27 of the paper book respectively and has urged upon us that these documents clearly show that the goods were sold by the respondent in his own name and the money was also credited in his own name, that is to say, he sold the goods as his own and not on behalf of the seller. He has invited our attention to a number of cases on this aspect of the question, particu larly to the case of Chapman v. Morton (1). The learned judges held on the facts of that case that the conduct of the defendant showed that he had accepted the goods after which he could not treat the contract as rescinded; that he was not to be considered an agent of the plaintiffs from necessity, to dispose of the goods, and that he could not, in an action against him for another debt, set off money paid by him on bills which he had accepted on account of the disputed cargo before its arrival. In the above-mentioned case, the contract in dispute was not C. I. F. Therefore, I was doubtful about the application of this case to the facts of this case. The learned counsel however invited our attention to another case reported in A. R. Mathukrishan v. Messrs. Madhavji Devichand (A I R 1953 Mad. 817) and in this case the entire case law on the subject was considered by the learned judges of the Madras High Court, and they held: "In a C. I. F. contract the purchaser is entitled to reject P L D 1957 (W. P.) Karachi 747 Before Constantine and Wahid-ud-Din, JJ Messrs. YUSUF and RAZAK-Appellants versus ABDULLA-Respondent First Appeal No. 32 of 1951, decided on 30th October 1956. (a) Sale of Goods Act (III of 1930), S. 42-Buyer selling goods in his own name is deemed to have accepted them. The buyer by selling the goods in dispute in his own name and by receiving the price is deemed to have accepted the goods within the meaning of section 42 of the Sale of Goods Act. Chapman v. Morton 152 E R 917, A. R. Mathur Krishna v. Messrs. Madhavji Devichand A I R 1953 Mad. 817, J. L. Lyons Co. v. May & Baker Ltd. (1923) 1 K B 685 ref. (b) Sale of Goods Act (111 of 1930), S. 59-Breach of warranty-Measure of damages. The measure of damages in cases of breach of warranty is the difference in the market price of the contracted goods at the time of delivery and the market price of the inferior quality goods supplied to the buyer at the titre of the delivery of the goods, or their value as ascertained by a re-sale within a reasonable time. Loder v. Kekule 11 Revised Reports 575, Mathur Krishna v. Messrs. Madhavji Devichand A I R 1953 Mad. 817 ref. (c) Contract Act (IX of 1872), Ss. 151, 170-Disposal of goods by bailer to recover his remuneration-Principle governing such disposal different from that governing sale of goods after breach of warranty. Osman Memon for Appellants. M. A. Lakhani for Respondents. WAHID-UD-DIN, J.-This is an appeal against the judg ment of our learned brother Muhammad Bakhsh, f., dated 27th March 1951. The facts leading to the present appeal, briefly stated, are that the respondent agreed to purchase under contract dated 14th February 1949, Exh. 6,300 pieces of Good Luck Brand Grey Sheeting C. I. F. Karachi for Rs. 9,

600. On the date of the contract, full price was paid by the respondent and according to the material placed on the record the steamer arrived at Karachi on 20th February 1949. The respondent inspected the goods in the Mansfield Yard and found them to be not in accordance with the description given in the contract, but of a different and inferior quality. By letter dated 30th March 1949, Exh. 8, the respondent informed the appellant that the goods are not of the description and quality mentioned in the contract and, therefore, they are not prepared to accept the goods and that the money paid by them should be returned. The respondent did not reply to this letter. There after on 5th April 1949, Exh. 8/1, a letter, was sent by the respondent's advocate reiterating the position adopted in their letter dated 30th March 1949, and the appellant was called upon to pay the price paid by them and they were informed that the goods are lying with them at their risk and responsibility. On 7th April 1949 the appellant replied that the allega tion of the respondent is wrong, the goods are of the descrip tion mentioned in the contract and that as the prices have fallen down they are now resoling from the contract. The appellant refused to take delivery of the goods. Conse quently, on 16th April 1949, the respondent got the goods surveyed by Messrs. Potts & Co. Ltd. and a report of the same date was submitted by them to the effect that the des cription of the goods mentioned in the contract and those inspected by them are different, and that the appellants have committed breach of the contract. The respondents sold the goods at the risk of the appellant and filed a suit for the recovery of Rs.2,220 as damages. The matter came up before our learned brother Muhammad Bakhsh. J, and after appre ciating the evidence of the parties, he came to the conclusion that the defendant has suffered damages to the extent of Rs.2,025, and awarded a decree of the said amount with costs, and interest at 6010 per annum from the date of suit till realisation. Mr. Osman bhai, the learned advocate for the appellant, has raised before us two questions for consideration: (152 R R 917) that even if it is accepted for the purpose of argument that the breach was committed by the appellant, then as the respon dent did not exercise the right of rejection of the goods, they are not entitled to claim any damages and (2), that, in any case, as the defendant sold the goods on 8th of August 1949, the conduct of the defendant was inconsistent with the position taken by them by the rejection of the goods and, therefore under section 42 of the Sale of Goods Act, it should be taken that they have accepted the goods and the measure of damages in such cases should be treated as on the basis of breach of warranty, contemplated under section 59 of the Sale of Goods Act, The argument of the learned counsel is that from the correspondence placed on the record, it is apparent that at no time the respondents specifically asserted in their communica tion that they have rejected the goods, and the goods are lying with them for the benefit of the appellant and that the appellants are entitled to take them back and refund the price of the goods. The learned counsel has further argued that the letters written by the respondent's advocates also show the same intention on the part of the respondent. There is no doubt that in the correspondence passed between the parties, there appears to be no specific assertion to the effect that the goods were rejected by the respondent on account of the fact that they were not in accordance with the description mentioned in the contract Exh.

6. The learned counsel has invited our attention to section 42 of the Sale of Goods Act, which reads as follows :- "Section

42. 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 with the ownership of the seller, or when, after a lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them". And has argued that the buyer in this case has done an act in relation to the goods which is inconsistent with the owner ship of the seller and, therefore, this action of the respondent should be taken as acceptance of the goods under this section. He has referred us to Exhs. 12 and 13 at pp. 26 and 27 of the paper book respectively and has urged upon us that these documents clearly show that the goods were sold by the respondent in his own name and the money was also credited in his own name, that is to say, he sold the goods as his own and not on behalf of the seller. He has invited our attention to a number of cases on this aspect of the question, particu larly to the case of Chapman v. Morton (1). The learned judges held on the facts of that case that the conduct of the defendant showed that he had accepted the goods after which he could not treat the contract as rescinded; that he was not to be considered an agent of the plaintiffs from necessity, to dispose of the goods, and that he could not, in an action against him for another debt, set off money paid by him on bills which he had accepted on account of the disputed cargo before its arrival. In the above-mentioned case, the contract in dispute was not C. I. F. Therefore, I was doubtful about the application of this case to the facts of this case. The learned counsel however invited our attention to another case reported in A. R. Mathukrishan v. Messrs. Madhavji Devichand (A I R 1953 Mad. 817) and in this case the entire case law on the subject was considered by the learned judges of the Madras High Court, and they held: "In a C. I. F. contract the purchaser is entitled to reject the goods as not being in accordance with the terms of the contract notwithstanding that the property in the goods has passed to him by delivery of the bills of lading if he had no opportunity to inspect the goods before. It is only when buyer does any act which is inconsistent with the ownership of the seller that buyer loses his right of rejecting under section 42, Sale of Goods Act. In determining the amount of damages tp be awarded to the buyer under section 59 for breach of warranty as to quality the question of inspection of goods has no relevance and the buyer would be entitled to damages notwithstand ing that he did not avail himself of the opportunity of inspecting the goods on delivery. In the case of breach of warranty as to merchantable quality of the goods "damages must be assessed on the basis of the market rate at the place of delivery. Where the goods have been re-sold by the buyer without any reason able delay on his part at a place other than the place of delivery, the price realised at such auction may fairly be taken as the basis for determining the value of such goods, provided due allowance is made for circumstances affecting its value such as the absence of proper market at such place or the depreciatory conditions of sale". The learned counsel has invited our attention to the authorities cited in this case, particularly J. L. Lyons & Co. v. May di Baker Ltd. ((1923) 1 K B 685). Applying the principles of law enun ciated in the above-mentioned authorities, we are satisfied that the position in the present case is the same as in the Madras case and the respondent by selling the goods in dispute in his own name and by receiving the price accepted the goods within the meaning of section 42 of the Sale of Goods Act. So far as the question of damages is concerned, the learned counsel for the appellant has strenuously argued that the measure of damages in such cases is to be, governed by section 59 of the Sale of Goods Act. Section 59 of the Sale of Goods Act reads as follows :- "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." According to the learned counsel for the appellant, the measure of damages will be the difference between the market price of the contracted goods and the market price of the goods supplied to the buyer on the date of the breach of contract. In support of his contention he has again relied on the observations made in the abovementioned Madras case. The other authority on which he has relied is reported in Lorder v. Kekule (11 Revised Reports 575). The decision in A. R. Mathur Krishana, v. Messrs. Madhavji Devichand (A I R 1953 Mad. 817) also lays down the same principles as enunciated in Lorder v. Kekule. The learned Judges in the last mentioned authority held that "in an action for a breach of the contract by delivering goods of a quality inferior to that contracted for, the proper measure for damages is the difference between the value of the goods of the quality contracted for at the time of delivery and the value of the goods then actually delivered or their value as ascertained by a resale within a reasonable time." We are in respectful agreement with the observations made in A I R 1953 Mad. 817 and have no hesitation in holding that the measure of damages ill such cases is the difference in the market price of the contracted goods at the time of delivery and the market price of the inferior quality goods supplied to the buyer at the time of the delivery of the goods, or their value as ascertained by, a resale within a reasonable time. On the facts of the present case it is abundantly clear that the" respondents by selling the goods extinguished their right to reject the same and could only claim damages on the basis of breach of warranty, and not as breach of condition. The learned counsel for the parties have admitted before us that the value of the goods of the inferior quality delivered to the appellant in this case on the date of delivery was Rs. 26 per piece. The evidence on the record establishes that the goods were resold at Rs. 25-4-0 per piece. Applying the above-mentioned test for measuring the damages, the respondent is only entitled to 0-12-0 annas per piece as damages for breach of warranty. The learned counsel for the respondent, however, con tended that the present case is not governed by section 42 and section 59 of the Sale of Goods Act, but by sections 151 and 170 of the Contract Act. His contention ii that he was a bailee of the goods in dispute, and that he sold the goods for the recovery of the amount due from the appellant for keeping the goods in his warehouse. This contention was not raised before the trial Court. No plea to this effect was taken. Moreover the letter dated 8th July 1949, relied upon by the learned counsel for the respondent does not at all mention that any information or intimation was given to the appellant that the goods will be sold for the recovery of the amount due from the appellant for keeping the goods in his warehouse as a bailee. In our opinion the buyer of the goods having rejected them and thereafter selling them as the goods belonging to him, stands on a different footing than the bailee contemplated under sections 151 and 170 of the Contract Act. The principle on which a bailee is entitled to dispose of the goods or has lien on the goods bailed with him are entirely different and are not applicable to the case of the sale of goods. As discussed above, the buyer of the goods after rejecting them, has no lien on the goods in dispute and must place them at the disposal of the seller for dealing with them in any manner he likes. The contention of the learned counsel for the respondent is not therefore, well founded, and is untenable in law. In our opinion the learned judge below misdirected him self on the question of measure of damages. The learned Judge for measuring the damages has taken into consideration the rate of the contract instead of the value of the goods on the date of the breach. The measure of damages in this case will be at 0-12-0 annas per piece and on calculation it amounts to Rs.

225. The decree of the lower Court will be modified to this extent, and the respondent will be entitled to a decree of Rs. 225 with interest at 6 /o and costs throughout on this amount. The appellant will also be entitled to proportionate costs throughout. A. H. Decree modified.