JUDGMENT
(1) The appellant herein is the defendant in the suit. They are a firm at Amraoti in Madhya Pradesh engaged in selling toor dhal and other commodities. The plaintiff in the suit is a firm of dealers in Salem. Between 3-8-1953 and 5-8-1953, a contract war, catered into between the plain-tiff and defendant under which the defendant agreed to supply dhal of the description of Damangan Toor dhal at Rs. 52 a bag under the “Bilty” system as it is known in common parlance. The goods were booked at Amaraoti by rail on or about 6-8-1953 and the railway receipt along with the Invoice for Rs. 12,033/- was sent by the defendant to the plaintiff through the Central Bank of India. The plaintiff paid the price of the hundi as well as the railway freight (Rs. 838-14-0) and took delivery of the goods at Salem on 13-8-1953. Re found that the goods were damaged by moisture. The railway receipt itself contained a note that at the time the goods were loaded in the train in Madhya Pradesh they had been drenched by rain. They were also. mixed with broken bits and husk but with this part of the damage to the goods we are not concerned in this second appeal. We are only concerned with the damage to the goods caused by rain at the time it was loaded at Amraoti in Madhya Pradesh. The plaintiff sent a telegram, to the defendant on stating that all the bags were wet through rain damage, and that there were also broken bits and husk, that the go were stocked as the seller’s and, requested the seller to send his agent with the hundi amount. To this telegram the defendant replied on 15-8-1953 by wire stating that when the dhal was loaded it was not wet that the plaintiff should not take delivery but keep the goods in the railway station, and, that a party of Damangan was really to come with the amount.
This was followed by another telegram by the defendant on 17-8-1953, to the plaintiff:
“You have. not telegraphed us before taking delivery and have stocked. Hence Damangan party not admitting.”
The plaintiff replied, on 19-8-1953 to this saying “Cannot (be) accepted; see registered letter. Accordingly remit amount”. On 19-8-1953 a registered letter was accordingly sent by the plaintiff stating that he could not accept the contract and asking the defendant to take back the goods, failing which the. plaintiff would sell the goods and that the defendant would be responsible for the loss. These claims were denied by the defendant in the reply letter sent on 29-8-1953. To thin last mentioned letter the plaintiff sent a reply on stating that the defendant was liable for the damage to the goods, that the goods have been examined by the Chamber of Commerce, Salem, in the meanwhile who had certified to the damage and that if the defendant did not take delivery of the goods within seven days of the receipt of the notice, after paying the plaintiff an amount arrived at by adding to the price of the goods, the other expenses like freight and so on, the plaintiff would be compelled to sell the goods in public auction at the defendants risk and that the defendant would he liable for all costs and damages. To this letter, the survey report of the Salem Chamber of Commerce dated 9-9-1958 wag enclosed. To this also the defendant replied stating that the fault was with the plaintiff in taking delivery of the goods and on not complying with the defendant’s wire to leave the goods at the railway station and, therefore, the defendant was not liable for the damages claimed.
(2) The goods were sold by auction between, 7-10-1953 and 20-10-1953 and they fetched err amount of Rs. 12002-2-0. The plaintiff filed the suit for recovery of Rs. 2881/- and odd representing the loss suffered by him on account of the go not being in accordance with the description, based upon the lesser value realized on the re-sail and the expenses incurred by the plaintiff over railway freight and so on.
(3) The defendant denied that the goods were wet and asserted that the goods were dispatched according to description. There was no warranty as regards the quality and no breach of the warranty. Since the plaintiff did not comply with the defendant’s request, i. e., not to take delivery of the goods, the plaintiff had no right to sell the goods at the risk of the defendant. The claim of Rs. 500/- towards damages was unsustainable. The other charges also could not he claimed. Their was also a question of want, of jurisdiction to try the suit by the Salem Court.
(4) The trial Court found that it had jurisdiction to try the suit. The goods were sold by description of quality as best toor dhal of Damangan quality on the bilty arrangement. The goods were wet when they arrived, and the cause of it was stated in the railway receipt “Loaded by Sender in rain. Bags partly wet by rain.” The trial Court also accepted the plea that the goods contained some broken bits and husk. But the trial Court was not prepared to accept the presence of these broken bits and husk as broach of warranty of quality of the goods but it found that there was breach of warranty In regard to the dhal be-coming wet at the time of loading at Amraoti. The trial Court then found that in view of this breach of warranty, the plaintiff was entitled to sell the goods at the risk of the defendant and under section 59 of the Sale of Goods Act, the plaintiff can recover damages from the defendant for breach of warranty. The quantum of damages was determined as per the following calculation.
Amount paid by tile plaintiff to tile defendant for the consignment Rs. 13033 0 0
Railway freight 839 14 0
Total amount spent by the plaintiff for the consignment 13872 14 0
Total amount realized from auction 12002 0 0
Add 8% as allowance for the delay in conversion 960 0 0
Estimated value as on 13-8-53 of the goods sold 12962 0 0
Deduct the expenditure incurred h the plaintiff in respect of the goods till the date of conversion 188 11 0
Net amount 12773 5 0
The suit was decreed for Rs. 1100 (Rs. 13872-14-0-12,773-5-0) with interest and proportionate costs.
(5) The defendant appealed to the Subordinate Judge, Salem, who confirmed the findings of the trial Court on all the points except in regard to the calculation of the quantum of damage. According to the Subordinate judge, the delay in effecting the sale of the goods was not due to the plaintiff’s default, but, in fact, by such delay, the defendant was able to reduce the amount of damages as a major value of. the goods was realized. The defendant had not also pleaded that he suffered any loss on account of the delay on the part of the plaintiff. In view of these, there was no justification to add 8 per cent to the amount realized by the auction to the detriment of the plaintiff who had aced bona fide in the matter. Therefore, the addition of s per cent was deleted, with the result, that the quantum of damages awarded to the plaintiff was increased by Rs. 960. This second appeal is filed by the defendant.
(6) Though in the memorandum of second appeal, the ground was taken that the Courts below had no jurisdiction to decide the suit, this contention was not pressed before me at the hearing of the second appeal. It was next contended that since the plaintiff did not comply with the defendant’s request not to take delivery of the goods pending the arrival of the defendant’s agent, the defendant was exonerated from liability for any damages. it was also contended that the survey of the goods by the District Chamber of Commerce, Salem, was made behind the back of the defendant without notice to him, and, therefore, it is not binding on the defendant. Finally, it was urged that the proper method of determining the quantum of damages was to calculate the difference in the price between the contract rate and the market rate on the date of the breach, and since the plaintiff did not lead any evidence about the value of the goods on the date of its arrival it should have dismissed the suit. In fact, the market rate for toor dhal had fallen considerably by the time the auction sales were field in this case. Therefore the prices fetched at the auction sale were no proper indicia to the quantum of damages.
(7) The summary of the correspondence given at the earlier portion of this judgment clearly shows that the goods were found to he damaged by moisture because it was loaded at Amaraoti in rain by the defendant. This fact has been recorded in the railway receipt itself. Therefore, it is idle for the defendant to contend that the goods were not wet or that it became wet through no fault of his. The fact that the goods were wet was promptly reported by the plaintiff by telegram as soon as he examined the goods on arrival at Salem on 13-8-1953. in the case of a stuff like toor dhal moisture affects its quality and it begins to deteriorate if it becomes wet. The report on the-survey by the Salem Chamber of Commerce amply bears out the further deterioration in the condition of the dhal due to moisture. Under section 16(2) of the Sale of Goods Act,
“There is no implied warranty or Condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except where the goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be of merchantable quality; provided that, if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed”.
Here, admittedly, the buyer has not examined the goods and the goods have been sold by description as Damangan toor dhal of the best variety. Therefore, there is a warranty of merchantable quality. Now, in every contract to supply goods of a specified description, which the buyer has had no opportunity to inspect, the goods must not only answer the description, but must he sale-able and merchantable under that description (vide Jones v. Just, (1868) 3 QB 197). Merchantability does not, therefore, mean that the goods will fetch an price or even some price. The goods must fetch the price which they would fetch if they had been sold, as per the description. Here the goods could not be sold as toor dhal of the best quality, but only as toor dhal which bad become damaged by moisture. Therefore, it is clear that they were no longer of merchantable quality and, there was therefore, an implied breach of warranty of merchantable quality, by reason of the. defendant having allowed the goods to become wet while it was loaded in the train at Amaraoti.
(8) The next question to be considered is the effect of the correspondence between the parties which ensued on arrival of the goods and what effect it has on the liabilities inter se between the parties. The first reaction of the plaintiff was to intimate the defendant to take back the goods and pay the price. So initially, this is not a case of acceptance of the goods by the buyer in terms of section 42 of the Sale of Goods Act. At that stage the plaintiff was prepared to allow the defendant to take back the goods on payment of the price. But the defendant was not agreeable to this course. He relied on what appear to me to be an unsubstantial ground that since the buyer had taken delivery of the goods from the railway the offer to take back the goods could no longer be accepted. This obviously, was a very unreasonable course to take, because of the nature of the goods which were susceptible to damage, theft and so on; and further before he took delivery, the plaintiff could have bad no opportunity of examining the goods and finding out about their. quality. So delivery had necessarily to be taken by the plaintiff. To state as the defendant did in his reply telegram, that as the plaintiff had taken delivery of the goods it was no longer possible to take back the goods, was therefore, an unreasonable course for the defendant to adopt.
(9) under sec. 59 of the Sale of Goods Act,
“Were 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 sue the seller for damages for breach of warranty”.
This section enables the buyer to sue the seller for breach of warranty. In a decision of this court reported in Sha Trilokchand Poosaji v. Crystal and Co. it has been held that
“the right of rejection of a buyer and his right to sue for damages for a breach of warranty are alternative remedies and can never be cumulative, for they proceed upon contrary state of facts. and when once the buyer has exercised an election to reject and ‘the seller has accepted the rejection’ (italics (here in ‘ ‘) mine) the buyer cannot, subsequently by any unilateral act of his own, divest the seller of his title to the property and purport to accept the goods as in performance and delivery of the original contract.”
No doubt, in the present case the buyer made ail offer to the defendant to reject the goods, if the seller would take the goods back and pay the price. But the seller did not agree to this course and did not accept the rejection; and the buyer was left with no other option but to accept the goods and rely upon the remedy which the law gives him under S. 59 to sue for damages for breach of warranty. Therefore, I hold that the plaintiff is entitled to damages.
(10) Regarding the quantum of damages, decisions have made it clear that the damages will be measured by the difference between the value of the goods as delivered and their value if any answered to the contractual description, but the price contracted for was wholly irrelevant and immaterial (vide . In another decision of this court in Muthukrishna Reddiar and Sons v. Madhavji Devichand and Co., chillies were sent by ship from Calcutta, and they arrived at Cuddalore on 2-10-1945. The chilies were found not to be in accordance with the description. After some correspondence they were ultimately sold at Alandur near Madras on 28-1-1946 by the buyer. The High Court observed that for estimating the quantum of damages the difference between the market rate for good chilies on 26-1-1948 and the amount realized at the auction on that date might be taken as furnishing a workable basis for assessing the damages, due allowance being made for the absence of a proper market at Alandur and the depreciatory character of the sale condition and the difference in the market ruling at Madras and Cuddalore. There was also the finding in that case that there was no unreasonable delay on the part of the plaintiffs in bringing the goods to sale.
Now in the present case, the trial court found that the delay in effecting the sale was not due to any default on the part of the plaintiff. Then it adopted a method of calculation which required an addition of 8% to convert the price on the date of the auction, to the price on the date of the contract. But there is no authority for taking the price on the date of the contract as the basis. As pointed out by the learned counsel for the appellant, the second of the decisions mentioned above has ruled out the contract price as an element for estimating the quantum of damages. The. pro-per way is to take the difference, on the reference to either the date of delivery of the goods or the date of the auction, between the price of the goods as per description and the price of the damaged goods. The judgment of the lower appellate court deleted this addition of 8%. By adding 8 per cent the trial court at least made an attempt to correct the price of the damaged goods fetched in October, by bringing it back to a comparable price, because the date of delivery is very close to the date of the contract. There is evidence to show that at this period the price of toor dhal was failing. Therefore, the basis for the quantum of damages could either be the difference between the price of dhal of the contracted quality or description on the date of delivery, and the price which the damaged goods would have fetched if sold on that date; or, if the above course is not feasible, or proper circumstances of the case, the difference between the price of dhal of the contracted quality and description on the date of sale and the price fetched by the damaged dhal on the date of the sale.
If, as is found by both the courts, the delay in effecting the sale was not due to the default of the plaintiff, and if in the meantime the prices had fallen to such an extent that the estimate of the difference in prices on the date of the sale, would he to plaintiff’s disadvantage that factor also could be taken into account for the purpose of making an estimate of difference in the prices, if the sale had taken place immediately after delivery. No doubt the railway freight and other charges which the plaintiff had to incur could also be taken into account for finding the quantum of damages.
(11) The case will, therefore, be remanded to the trial court for refixing the quantum of damages in the light of the foregoing observations. It will be open to the parties to adduce any additional evidence for this purpose. The appeal is, therefore, allowed as stated above and the decree of the trial court is set aside and the trial court is directed to pass a fresh decree in the light of the, above directions. Costs to abide the result. No leave. The appellant will be entitled to a refund of court fee paid on the memorandum of appeal.
(12) Appeal allowed.