Delhi District Court
C.S. No:31/13 vs M/S Expomark on 31 October, 2014
IN THE COURT OF MS. JASJEET KAUR, CIVIL JUDGEI
NEW DELHI DISTRICT, NEW DELHI
C.S. No:31/13
Unique Case ID No.
M/s Setlite Engineers Limited
Through its authorized representative
Sh. Kamal Kishore (Account Ex.) .....Plaintiff
Versus
M/s Expomark
32, Ezra Street,
7th Floor, Kolkata700 001 ....Defendant
Date of Institution : 23.02.2013
Date of Reserving Judgement : 31.10.2014
Date of Judgement : 31.10.2014
SUIT FOR RECOVERY OF RS. 85,484/ (RUPEES EIGHTY FIVE
THOUSAND FOUR HUNDRED AND EIGHTY FOUR ONLY)
JUDGEMENT
1. By instituting the present suit, plaintiff has sought recovery of a sum of Rs.85,484/ from the defendant.
2. The brief facts of the case from the perspective of plaintiff as discernible from the plaint are that the plaintiff is a limited company duly incorporated under the Companies Act, 1956, having its registered office at 5 G, 5th Floor, Vandana Building, 11 Tolstoy Marg, Connaught Place, New Delhi and Sh. Kamal Kishore, accounts executive of the plaintiff company had been duly authorized to sign, verify and file the present suit vide board resolution dated 21.11.2012. The defendant is a firm engaged in the business of manufacture and supply of transmission filters and was involved in trade transactions with the plaintiff whereby the plaintiff company had placed orders for purchase of transmission filters/ equipments from time to time against advance payment towards the sale price of the said filters. It is the case of the CS No. 31/13 1 / 22 plaintiff that all six transmission filters / equipments purchased by the plaintiff vide the first purchase order dated 22.06.2012 were rejected by clients of the plaintiff company on account of defects in the same and therefore, the defendant firm was under an obligation to refund advance amount of Rs.24,939/ charged by the defendant for supply of the said six transmission filters. It is further the case of the plaintiff that in the meantime, plaintiff had placed another (second) purchase order on 12.07.2012 for purchase of 10 more filters having sale price of Rs.41,565/. However, the said order was subsequently cancelled by the plaintiff company vide email dated 01.08.2012 due to sudden increase in sale price of the filters by the defendant and therefore, the plaintiff had called upon the defendant to refund the advance amount of Rs.41,565/ paid by the plaintiff for purchase of the said 10 filters vide second purchase order.
3. It is therefore the case of the plaintiff that the defendant had illegally retained an amount of Rs.41,565/ which had been paid by the plaintiff as advance deposit for purchase of 10 filters despite cancellation of purchase order for purchase of the same and had also retained an amount of Rs.24,939/ towards the sale price of six rejected defective filters. It is further the case of the plaintiff that consequent upon the failure of the defendant to refund to the plaintiff a sum of Rs.41,565/ towards cancellation of purchase order dated 12.07.2012 for purchase of 10 filters as well as the failure of the defendant to refund to the plaintiff an amount of Rs.24,939/ towards sale price of six rejected defective filters despite service of legal notice dated 05.09.2012, the present suit for recovery of the principal amount of Rs.66,504/, notice charges for service of legal notice on the defendant by the counsel for plaintiff amounting to Rs.11,000/ and an interest of Rs.7980/ calculated @ 24% per annum on the principal amount had been filed by the plaintiff. Hence, by instituting the present suit, plaintiff has sought recovery of a total amount of CS No. 31/13 2 / 22 Rs.85,484/ from the defendant.
4. Upon receipt of summons for settlement of issues, the defendant had appeared and had filed a written statement wherein it had been claimed by the defendant that the present suit was not maintainable as the plaintiff had not approached the Court with clean hands and had suppressed material facts from the Court. It had been submitted by the defendant that this Court had no jurisdiction to entertain the present suit as all purchase orders were placed by the plaintiff to the defendant through email at Bangalore and the advance amount deposited for purchase of filters had also been paid to defendant by the plaintiff company through bank draft at Bangalore. The defendant had admitted that the plaintiff had placed an order dated 22.06.2012 for purchase of six transmission filters. However, the defendant firm had categorically denied in its written statement that the said filters supplied by the defendant firm were defective rather it had been claimed by the defendant firm that the said six filters were in good condition and there was no reason for rejection of the same. It had been further claimed by the defendant that the plaintiff had placed next order dated 12.07.2012 for purchase of 10 filters. However, till the date of placement of the said next order, no objection had been raised by the plaintiff company regarding the quality of the transmission filters supplied by the defendant nor any material defect or reason for rejection of the filters already supplied by the defendant had been pointed out by the plaintiff company. Hence, the defendant firm had submitted in its written statement that the six filters already supplied by the defendant were subsequently rejected by the plaintiff company vide letter dated 28.07.2012 as the plaintiff company did not want to clear its liability to pay dues for the purchase of said filters by issuing form C to the defendant. The defendant firm had further admitted that the plaintiff company had placed an order for purchase of 10 filters on 12.07.2012 and had subsequently cancelled the said order due to increase in price of the CS No. 31/13 3 / 22 filters by the defendant. It had been submitted in the written statement that the plaintiff company had paid a sum of Rs.41,447/ through demand draft dated 12.07.2012 instead of the requisite advance deposit, which was required to be paid at the increased rate according to the letter dated 23.06.2012 whereby the defendant had given prior information to the plaintiff about amendment or increase in price of filters. However, despite being informed about the increase in price of filters on 23.06.2012, the plaintiff had paid the advance deposit of Rs.41,447/ to the defendant at the old rate vide demand draft bearing no.919955 dated 12.07.2012 drawn on Syndicate Bank, Kashmere Gate, Delhi 110006. The defendant firm had admitted its liability to refund a sum of Rs.41,447/ to the plaintiff in respect of cancellation of purchase order dated 12.07.2012 for purchase of 10 filters. However, the defendant firm had disputed its liability to refund Rs.24,939/ to the plaintiff in respect of rejection of six filters supplied by the defendant on account of defects in the same on ground that the said rejection had been made at a belated stage after placement of next order for purchase of 10 more transmission filters.
5. In replication filed by the plaintiff to the written statement of the defendant, the averments made in the written statement were denied and the contents of the plaint were reiterated by the plaintiff.
6. On the basis of the pleadings of the parties, following issues were framed on 04.06.2014 :
1. Whether this court has jurisdiction to entertain the present suit? OPD.
2. Whether the plaintiff is entitled to cost of six rejected filter/ equipment? OPP.
3. Whether the said six filters have been legally rejected by the plaintiff ? OPD.
4. Relief.
7. After the framing of issues, opportunity was granted to the plaintiff as well as to the defendant to prove their respective versions of the case by CS No. 31/13 4 / 22 leading evidence in support of their respective versions of the case.
8. Plaintiff had examined one witness in order to prove its case. A brief account of the deposition made by the witness of the plaintiff is reproduced below.
9. PW1 Sh. Kamal Kishore, accounts executive of plaintiff company deposed by way of affidavit Ex.PW1/A wherein he had reiterated the facts and averments made in the plaint. He had relied upon following documents in support of the averments made in his affidavit Viz:
(i) Board resolution dated 21.11.2012 authorizing him to institute and pursue the present suit Ex.PW1/1.
(ii) Statement of ledger account of plaintiff company depicting outstanding liabilities of the defendant firm Expo Mark Ex.PW1/2.
(iii) Copy of demand draft bearing no. 919955 in the sum of Rs.41,447/ drawn on Syndicate Bank, Kashmere Gate Ex.PW1/3 whereby the plaintiff had made advance payment of Rs.41,447/ to the defendant for purchase of ten filters (admitted document).
(iv) Copy of letter dated 28.07.2012 Ex.PW1/4 whereby the plaintiff had demanded refund of Rs.24,939/ paid by the plaintiff as sale price of six rejected filters as well as refund of Rs.41,565/ paid by the defendant as advance towards the sale price for purchase of ten filters.
(v) Tax invoicecumchallan dated 25.06.2012 raised by the defendant against purchase of six filters by the plaintiff Ex.PW1/5 (admitted document).
(vi) Purchase order dated 12.07.2012 whereby plaintiff had placed an order for purchase of ten transmission filters @ Rs.4075/ per filter Ex.PW1/6 (denied document).
(vii) Computer generated printout of email dated 16.07.2012 sent by employee of the defendant firm to the representative of the plaintiff company informing the plaintiff company about increase in price of filters and for demanding payment of outstanding dues towards purchase order dated 12.07.2012 Ex.PW1/7 (admitted document).
(viii) Computer generated printout of email dated 23.06.2012 sent by employee of the defendant firm to the representative of the plaintiff company informing the plaintiff about increase in price of filters Ex.PW1/8 (admitted document).
(ix) Email dated 23.06.2012 for placing purchase order for purchase of six transmission filters having cost of Rs.24,939/ sent by employee of the plaintiff company to the representative of the defendant firm Ex.PW1/9.
(x) Legal notice dated 05.09.2012 Ex.PW1/10 issued by the plaintiff demanding CS No. 31/13 5 / 22 refund of Rs.24,939/ being the price of six rejected filters and another sum of Rs.41,565/ being the advance deposit for supply of ten filters, the purchase order for purchase of which was subsequently cancelled by the plaintiff company.
PW1 deposed through his affidavit that the plaintiff company had placed a purchase order on 12.07.2012 whereby the plaintiff had requested the defendant to supply ten transmission filters/ equipments having total cost of Rs.41,565/ and subsequently, vide email dated 01.08.2012 the plaintiff company had cancelled the said purchase order on ground that the defendant firm had suddenly increased the price of said filter / equipment firm. However, instead of refunding the advance deposit made by the plaintiff company for purchase of ten filters, the defendant had called upon the plaintiff to make payment of an additional sum of money for supply of the said ten filters due to increase in price of the filters. It has been further stated by PW1 that subsequently, the defendant had refused to refund the advance deposit sum of Rs.41,447/ paid by the plaintiff for purchase of ten transmission filters on the pretext of nonsupply of C forms by the plaintiff. PW1 had also claimed that plaintiff company was entitled to recovery of a sum of Rs.11,000/ from the defendant as the charges for issuance of legal notice along with the principal sum of Rs.66,504/ towards the cost of six rejected filters as well as the advance deposit given by plaintiff company to the defendant firm for purchase of ten filters, the purchase order for purchase of which was subsequently cancelled.
10. In his cross examination by Sh. V.K. Goyal, learned counsel for the defendant, PW1 admitted that the purchase order had been placed by his company at Bangalore and all equipments were delivered to his company from Bangalore office of the defendant. He deposed that on 23.06.2012, the defendant firm had informed his company about increase in rate of filters. He admitted that his company had demanded refund of an amount of Rs.41,565/ CS No. 31/13 6 / 22 in respect of its demand draft although, the sum payable in the said demand draft dated 12.07.2012 was only of Rs.41,447/. He voluntarily clarified that the amount of Rs.41,565/ demanded by the plaintiff included bank charges of Rs.118/. He deposed that the materials supplied to his company by the defendant firm was checked by them at the time of receiving the same. Immediately thereafter, he voluntarily stated that the material received by his company from the defendant was sent to the workshop. He admitted that there was no return regarding any of the defective filter/ equipment. He expressed his inability to tell whether any filter had ever been replaced by the defendant. He stated that he had no knowledge regarding the nature of defects in the alleged defective filters and he had never seen the said defective filters. He denied the suggestion that no filter supplied by the defendant were ever rejected by his company on account of defects. He voluntarily stated that the customers to whom the said filters were supplied had rejected the same due to problems faced at the time of installation. He deposed that the stock of filters received was directly sent to the workshop from where it was supplied to the customers without any prior inspection for defects as the filters were received in duly sealed and packed condition and were sent to the customers without tampering with the seals of the filters. He admitted that the defendant had agreed to replace all six alleged defective filters. He, however, deposed that it was not feasible for his company to procure the said filters from the customers who had rejected the same and send the same back to the defendant firm. He expressed his inability to tell whether the defendant firm used to provide any guarantee for the filters purchased from the said firm or not. He admitted that neither the legal notice Ex.PW1/10 contained any details about the nature or kind of defects in the six rejected filters due to which the same had been rejected nor he had filed any report of engineer or laboratory about the kind of defects in the rejected filters. He admitted that all six defective filters had been rejected by a single CS No. 31/13 7 / 22 customer of the plaintiff company but expressed his inability to recall the name of the said customer as well as the date on which the rejected filters had been delivered to the said customer.
11. The defendant had preferred not to lead any evidence in support of its case. Final arguments were heard on 15.10.2014 as well as today on 31.10.2014 from the learned counsel for the plaintiff as well as from the learned counsel for the defendant after the plaintiff closed its evidence.
12. Learned counsel for the plaintiff has argued that the plaintiff has proved its case against the defendant by placing on record documents Ex.PW1/1 to Ex.PW1/10 whereby it has been established that six filters supplied by the defendant to the plaintiff were rejected by the plaintiff on account of defects in the same. However, the defendant had failed to refund the sale price of the said six filters amounting to Rs.24,939/. Besides, learned counsel for plaintiff has further argued that the plaintiff company has also proved from the aforementioned documents placed on record by the plaintiff that the purchase order dated 12.07.2012 for purchase of ten transmission filters was subsequently cancelled by the plaintiff company due to sudden increase in price of the filters by the defendant firm. However, the defendant has failed to refund the advance deposit of Rs.41,565/ paid by the plaintiff for purchase of the said ten filters, which were never delivered by the defendant to the plaintiff due to cancellation of the purchase order by the plaintiff company.
13. Learned counsel for the defendant has on the other hand argued that the plaintiff company has not placed on record any documentary proof of rejection of six filters on account of defects in the same by any of the customer of the plaintiff company. Learned defence counsel has further submitted that the nature of defects detected in the alleged rejected filters has not been explained by the plaintiff either in the legal notice or in the plaint. Besides, no report of engineer or laboratory regarding the defect, if any detected in the six CS No. 31/13 8 / 22 rejected filters has been placed on record by the plaintiff and in these circumstances, the six filters were not legally or lawfully rejected by the plaintiff. Moreover, learned defence counsel has also submitted that since the plaintiff had failed to return the alleged rejected filters to the defendant firm, therefore, the plaintiff company is not entitled to refund of the sale price of the six rejected filters amounting to Rs.24,939/ and the case of plaintiff is liable to be dismissed.
14. I have considered the rival submissions of parties and perused the entire evidence led by the plaintiff in support of its case. My issuewise findings in respect of the issues framed are detailed hereunder. ISSUE WISE FINDINGS:
Issue No. 1: Whether this court has jurisdiction to entertain the present suit? OPD.
15. The onus of proving this issue was on the defendant. The defendant has not led any evidence in support of its claim that this Court does not have jurisdiction to entertain the present suit. As regards the pecuniary jurisdiction of this Court, a perusal of Court record shows that the present suit is for recovery of a sum of Rs. 85,484/ with pendentelite and future interest. Therefore, the monetary value of the suit is within the limits of pecuniary jurisdiction of this Court.
16. In respect of territorial jurisdiction of this Court to entertain the present suit, it has been submitted by the defendant that the address of the defendant is located in Bangalore and all transactions between the parties had taken place at the Bangalore address of the defendant. It has been submitted in the written statement that the plaintiff had placed a purchase order with the defendant through email at Bangalore and had made advance payment to the defendant through bank draft at the Bangalore office address of the defendant. Therefore, no cause of action has arisen in Delhi. However, the defendant has CS No. 31/13 9 / 22 not substantiated the averments made in the written statement by leading any evidence to corroborate the same. A perusal of purchase order dated 12.07.2012 Ex.PW1/6 reveals that same has been placed from the Delhi office of the plaintiff and has been signed by the authorized representative of the plaintiff company at Delhi. Besides, the tax invoice raised by the defendant on the plaintiff has been addressed to the plaintiff company at its Delhi address. Therefore, vide tax invoice dated 25.06.2012 Ex.PW1/5, six filters have been sent to Delhi address of the plaintiff company by the defendant. Further, a perusal of email dated 22.06.2012 Ex.PW1/9 reveals that vide the said email sent by an employee of the plaintiff company, named, Amitabh working at Delhi office of the plaintiff company, the said company had placed an order for purchase of six filters from Delhi. The print out of the said email Ex.PW1/9 also bears the address of Connaught Place office of the plaintiff company. Thus, from a perusal of the invoice Ex.PW1/5, it is evident that the six rejected filters were sent by the defendant to the office of plaintiff company at Delhi. Since the six rejected filters, that is, a part of the goods purchased were delivered at Delhi office of the plaintiff, therefore, a part of the cause of action had arisen at Delhi. In this context, it has been held by Hon'ble Supreme Court of India in the case of A.B.C. Laminart (P) Ltd. and Another Versus A.P. Agencies, Salem (1989) 2 SCC 163 that a suit in respect of breach of a contract can be filed at place where the contract was executed or where it was supposed to be performed. Besides, if any goods are supposed to be delivered at any place in compliance of any contract then the courts situated at the place where goods are supposed to be delivered also has jurisdiction entertain a suit arising out of the contract. Observations made in paras 15 and 22 of the judgement are reproduced below :
15. In the matter of a contract there may arise causes of action of various kinds. In a suit for damages for breach of contract the cause of action consists of the making of the contract, and of its breach, so that the suit may be filed either at the place where the contract was made or at the place where CS No. 31/13 10 / 22 it should have been performed and the breach occurred. The making of the contract is part of the cause of action. A suit on a contract, therefore, can be filed at the place where it was made. The determination of the place where the contract was made is part of the law of contract. But making of an offer on a particular place does not form cause of action in a suit for damages for breach of contract. Ordinarily, acceptance of an offer and its intimation result in a contract and hence a suit can be filed in a court within whose jurisdiction the acceptance was communicated. The performance of a contract is part of cause of action and a suit in respect of the breach can always be filed at the place where the contract should have been performed or its performance completed. If the contract is to be performed at the place where it is made, the suit on the contract is to be filed there and nowhere else. In suits for agency actions the cause of action arises at the place where the contract of agency was made or the place where actions are to be rendered and payment is to be made by the agent. Part of cause of action arises where money is expressly or impliedly payable under a contract. In cases of repudiation of a contract, the place where repudiation is received is the place where the suit would lie. If a contract is pleaded as part of the cause of action giving jurisdiction to the court where the suit is filed and that contract is found to be invalid, such part of cause of the action disappears. The above are some of the connecting factors.
22. We have already seen that making of the contract was a part of the cause of action and a suit on a contract therefore could be filed at the place where it was made. Thus Kaira Court would even otherwise have had jurisdiction. The bobbins of metallic yarn were delivered at the address of the respondent at Salem which, therefore, would provide the connecting factor for court at Salem to have jurisdiction.
17. In another case decided by Hon'ble High Court of Karnataka, it has been held that a suit arising from a breach of contract between the parties can be filed either at the place where the contract was made, or at the place where the breach of the contract was made. The Hon'ble High Court further observed that the suit arising out of such a contract can also be filed at the place where money is to be paid or also at place where the goods are to be supplied. Observations made in Para 8 of the judgment passed in the case of M/s Republic Medico Surgical Company, Bangalore Vs Union of India and another 1979 SCC OnLine Kar 226 : AIR 1980 Kar 168: (1979) 2 Kant LJ 410 is noteworthy and are reproduced below :
The contract is completed when an offer made is accepted. It is the acceptance that gives rise to the cause of action and not merely an offer. Hence, even though an offer is made from Bangalore, it can not be said that a CS No. 31/13 11 / 22 part of the cause of action arises in Bangalore. In a suit the cause of action will consist of making of the contract and its breach at the place where it is to be performed. Therefore, a suit for breach of contract can, at the option of the plaintiff be brought either at the place where the contract was made or at the place where the breach was committed. It can also be said that the place where money is to be paid or goods are to be supplied are also the places where parts of the cause of action arise, but certainly not the place where offer is made.
18. Applying the ratio of abovecited decision of Hon'ble Apex Court and Hon'ble High Court of Karnataka to the facts of the present case, it can be safely concluded that since the purchase order sent by the plaintiff had been accepted by the defendant at its Bangalore office, therefore, the Courts situated in the city of Bangalore would be one of the Court having jurisdiction to entertain the present suit. However, as per invoice Ex.PW1/5 the goods, that is, six transmission filters supplied by the defendant to the plaintiff were delivered at the Delhi office of the plaintiff, therefore, the Courts at Delhi would have also territorial jurisdiction to entertain the present suit as a part of cause of action has arisen in Delhi on account of delivery of goods at Delhi office of the plaintiff by the defendant as well as on account of sending of purchase order by the plaintiff to the defendant from its Delhi office. The issue is accordingly decided in favour of the plaintiff and against the defendant by arriving at a finding that the Courts in Delhi have territorial as well as pecuniary jurisdiction to try the present case.
Issue No.2 Whether the plaintiff is entitled to cost of six rejected filter/ equipment? OPP.
19. The onus of proving this issue was on the plaintiff. Plaintiff has relied upon documents Ex.PW1/4 and Ex.PW1/10 in support of its case that the plaintiff company is entitled to refund of a sum of Rs. 24,939/ towards the cost of six rejected transmission filters. While Ex.PW1/4 is a letter written by the plaintiff company to the defendant firm informing the defendant that six filters supplied by the defendant had been rejected by the client of the plaintiff CS No. 31/13 12 / 22 company whereas Ex.PW1/10 is the legal notice whereby the plaintiff company had demanded refund of Rs.24,939/ from the defendant towards the cost of six rejected filters. However, none of these documents contain any material details about the reasons for rejection of the filters by the client of the plaintiff company or the nature of defects found in the filters delivered to the plaintiff company by the defendant. Apart from failing to point out the nature of defects found in the six rejected filters, the plaintiff company has also failed to tell the name of the customer of plaintiff company who had rejected the alleged six defective filters. Moreover, the plaintiff company had also not returned the filters purchased from the defendant before demanding return of their sale price. Even otherwise, a perusal of documents annexed with the plaint reveals that vide email dated 16.07.2012 Ex.PW1/7 written by employee of Expomark to the plaintiff company, the defendant had informed the plaintiff company about the increase in sale price of transmission filters and had demanded an additional amount of Rs.4644/ from the plaintiff company and intimation of rejection of six filters already purchased by the plaintiff from the defendant has been given to the defendant vide letter dated 28.07.2012 Ex.PW1/4. Therefore, from the face of record, it appears that the six filters already purchased from the defendant firm had been rejected 12 days after the defendant had demanded additional payment of Rs.4644/ towards sale price of ten filters subsequently ordered by the plaintiff company vide purchase order dated 12.07.2012. The law relating to acceptance and rejection of goods is unambiguous and is governed by the provisions of Sale of Goods Act 1930. An act of resale or an attempt to resell purchased goods by a buyer indirectly amounts to acceptance of the goods by the said buyer. Thereafter, no buyer is entitled to claim refund of sale price of goods or reject the same on ground of any defects in the same. Section 42 of the Sales of Goods Act details circumstances in which a buyer can be deemed to have accepted the goods sold to him. When a buyer deals with goods in CS No. 31/13 13 / 22 such a manner which is inconsistent with the ownership rights of seller over the said good and creates an impression that the buyer is exercising his right over the goods as the owner of the goods in question or when the buyer simply retains goods supplied to him by a seller for prolonged periods without intimating the seller of intention to return the same, then, the said buyer cannot subsequently return the same goods on any ground including the ground that the goods were subsequently found to be defective. An act of resale or an attempt made to resell any goods by a buyer amounts to dealing with goods in question in a manner which is inconsistent with the ownership of the seller. In fact the act of resale of any goods by a buyer is an act whereby the buyer exercises his right over the good as an owner. In other words, an attempt made to resale certain goods without inspecting them for defects amounts to unconditional acceptance of the said goods and waiver off right to reject the same on the grounds of defect. Relevant provision of Section 42 of Sales of Goods Act is reproduced below in this context :
42. Acceptance 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 the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them.
20. While endorsing the mandate of provisions of section 42 of the Sale of Goods Act 1930, it has been held by the Hon'ble High Court of Madras that a buyer is deemed to have accepted the goods, when either he intimates the seller of his intention to accept the goods or does any act which is inconsistent with the ownership of the seller and gives an impression that the buyer has exercised his right of ownership over the said goods. It had been further observed by Hon'ble High Court of Madras that the act of the buyer of taking delivery of first four installments of goods and sending the said goods further from Calcutta to Buckingham and Carnatic for rubberisation in the mills CS No. 31/13 14 / 22 of the buyer was inconsistent with the ownership of the seller. The Hon'ble High Court of Madras observed that if only a small quantity of goods had been sent for testing purpose to the mills of the buyer, then it could have been deemed that buyer had not waived his right of inspection of the quality of goods before accepting the same. However, the act of the buyer in accumulating and sending huge quantity of goods purchased by him for rubberization to the buyer's mills was ample justification for a finding that the buyer had duly accepted the goods. The Hon'ble High Court had further observed that even otherwise the buyer had retained the purchased good upto three weeks from the date of receipt of first instalment and upto 11 days from the date of receipt of last instalment without exercising his right to inspect and reject the goods in question. Therefore, the good had not been rejected within a reasonable time. Relevant observations made in paras 15, 16, 17 and 18 of the judgement passed in the case of The Province Of Madras vs C.A. Galia Kotwala And Co., Ltd. (1945) 2 MLJ 418 decided on 6 August, 1945 are relevant in this context and are reproduced below: "15. Section 42 of the Sale of Goods Act says that 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 an act in relation to them which is inconsistent with 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. There was here no intimation on the buyer's part that he had accepted the goods; but did the buyer do something in relation to them which was inconsistent with the ownership of the seller, and/or did he intimate his rejection of them after the lapse of a reasonable time?
16. We agree with Chandrasekhara Aiyar, J., that the plaintiff did accept the goods delivered under this contract. As we have pointed out, each instalment was accompanied by a letter requiring rejection, in case of rejection, to be intimated within three days. This was not done. The plaintiff paid in full for the first four instalments soon after the goods had been received and the fact that the plaintiff sent this large quantity of the goods to the Buckingham and Carnatic Mills for rubberization in itself is inconsistent with the ownership of the sellers. If a small quantity had been sent for testing purposes the position might perhaps have been different.
17. Mr. Molyneaux's evidence shows that the defect in quality could have been ascertained by looking at the goods. But, instead of having them examined by an expert as and when they were delivered, the plaintiff allowed them to CS No. 31/13 15 / 22 accumulate until a greater part of the contract had been fulfilled and paid for them. We consider that the evidence amply justifies the finding that the plaintiff did in fact accept the goods. There was, no doubt, lack of care on the part of the plaintiff's servants. If they had taken proper steps, they would have quickly ascertained that the goods were of inferior quality; but no such steps were taken.
18. Even if it cannot be said that there was acceptance of the goods, the failure on the part of the plaintiff to reject them until the 7th July, 1942, puts the plaintiff out of Court. We will assume that the plaintiff was acting within its rights in having an examination of the goods made at the Buckingham and Carnatic Mills; but that right would avail the plaintiff of nothing unless it was promptly exercised. The goods were not sent for processing to the Buckingham and Carnatic Mills until three weeks after the receipt of the first instalment and eleven days after the receipt of the fourth instalment, all of which had been paid for. The defendant had, without protest, insisted on the right of rejection being exercised within three days. The rejection did not take place until the 7th July, 1942 and therefore not in our judgment within a reasonable time."
21. In a similar case the Hon'ble High Court of Gujarat had observed that when any buyer deals with goods purchased by him in such a manner which is inconsistent with the ownership of the seller or which amounts to the buyer exercising his right of ownership over the same then the buyer can be deemed to have accepted the said goods without inspecting the same. The Hon'ble High Court of Gujarat had observed that selling the goods to a sub purchaser is one such act whereby a buyer waives his right to inspect the goods before accepting the same and the act of selling the goods to a sub purchaser is a deemed act of acceptance of the goods in question. Relevant observations made by Hon'ble High Court of Gujarat in the case of Shah Mohanlal Manilal Vs. Firm of Dhirubhai Bavajibhai Laws (GJH) 1961219 decided on February 21, 1961 is reproduced below : 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 lawmaker 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 CS No. 31/13 16 / 22 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 and Company v. Hillerns and 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 subpurchasers 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 subpurchasers. It was immaterial whether the act of selling and delivering a part of the goods to the subpurchasers 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 subpurchasers 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.
CS No. 31/13 17 / 2222. In the light of aforecited opinions expressed by Hon'ble High Court of Madras in the case of The Province Of Madras vs C.A. Galia Kotwala And Co., Ltd. (Supra) and Hon'ble High Court of Gujarat in the case of Shah Mohanlal Manilal Vs. Firm of Dhirubhai Bavajibhai (Supra), it can be safely concluded that when a purchaser or buyer of goods deals with the goods in a manner so as to exercise his rights of ownership over the same, he can be deemed to have accepted the said goods even without exercising his right to inspect the same. An act of resale of goods to a subsequent purchaser or an attempt made to resell the said goods is one of the acts through which a buyer negates the ownership rights of the seller and exercises his own right of ownership over the goods purchased by him. The present case is similar in facts to the abovecited case of The Province Of Madras vs C.A. Galia Kotwala And Co., Ltd. (Supra) decided by Hon'ble High Court of Madras. In the present case, six transmission filters were sold by the plaintiff company to the defendant vide tax invoicecumchallan dated 25.06.2012 Ex.PW1/5. After the receipt of said goods, the plaintiff had placed order for purchase of another ten transmission filters vide purchase order dated 12.07.2012. In the meantime, the plaintiff company had also resold its earlier consignment of six transmission filters purchased from the defendant firm and on 28.07.2012, the plaintiff company had for the first time informed the defendant about its intention to reject the earlier consignment of six filters purchased from the plaintiff on the ground that the same had been rejected by the clients of the plaintiff. Therefore, the plaintiff had a reasonable opportunity to inspect the first consignment of filters between 25.06.2012 and 28.7.2012. However, the plaintiff had chosen not to inspect the first consignment of six filters purchased by the plaintiff company for any defects but had also elected to deal with the said six filters in such a manner so as to exercise the right of ownership of the plaintiff company to over the said filters. By reselling the filters to its clients, the plaintiff company had CS No. 31/13 18 / 22 chosen to deal with the six filters as owner and had accepted the said six filters purchased from the defendant by their conduct.
23. After exercising the rights of ownership over the six filters, the plaintiff company was not entitled to return the same to the defendant. Consequently, the plaintiff company was also not entitled to refund of cost of six filters rejected by the plaintiff company. Hence, this issue is decided in favour of the defendant and against the plaintiff by arriving at a finding that the plaintiff company was not entitled to refund of cost of six filters rejected by it. Issue No.3 Whether the said six filters have been legally rejected by the plaintiff ? OPD.
24. The onus of proving this issue was on the defendant. Although, defendant had led no independent evidence to prove that the six filters were not legally rejected by the plaintiff company, however, in cross examination of PW1 Kamal Kishore, Account Executive of the plaintiff company, questions were put by learned counsel for the defendant in respect of nature of defects in the rejected filters and PW1 had admitted that the legal notice sent to the defendant by the plaintiff company did not contain any details about the kind of defects detected in the rejected filters. PW1 had further admitted that his company had not placed on record any report of any engineer or laboratory to explain the nature of defects in the rejected filters. PW1 had even failed to recall the name of the customer of the plaintiff company who had rejected the six filters in question as well as the date of rejection of the said filters. Hence, from the cross examination of PW1, it is evident that plaintiff company had not explained the nature of defects in the rejected filters and had not given any legally acceptable reason for rejection of filters in the evidence of the plaintiff company.
25. Moreover, in view of the findings of issue no.2 above, it can be concluded that the rejection of any goods can only be effected in accordance with the provisions of Section 42 of Sales of Goods Act and as already decided CS No. 31/13 19 / 22 in issue no.2 above, when a person deals with the goods purchased by him in a manner which is inconsistents with the ownership of the seller over the said goods and rather creates an impression that the buyer is exercising his rights of ownership over the said goods, then the said buyer can be deemed to have accepted the goods in question. An act of resale of purchased goods or an attempt made to resell the same is one of the acts by which one exercises his right of ownership over goods purchased, as was held by Hon'ble High Court of Madras in the case of The Province Of Madras vs C.A. Galia Kotwala And Co., Ltd. (Supra) and Hon'ble High Court of Gujarat in the case of Shah Mohanlal Manilal Vs. Firm of Dhirubhai Bavajibhai (Supra). In the present case, six transmission filters had been sold to plaintiff company by the defendant vide tax invoicecumchallan dated 25.06.2012 Ex.PW1/5 and thereafter, the plaintiff company had placed a second purchase order for purchase of another ten transmission filters vide purchase order dated 12.07.2012 Ex.PW1/6 and subsequently, on 28.07.2012, the plaintiff company had first informed the defendant about its intention to reject the six filters purchased vide tax invoice cumchallan dated 25.06.2012 Ex.PW1/5 on the ground of defects in the same. In the said letter dated 28.07.2012 Ex.PW1/4 intimating the plaintiff about rejection of earlier consignment of six filters by the plaintiff company, it has been mentioned that the six filters purchased by the plaintiff had been rejected by the clients of the plaintiff due to defects in the same. Therefore, in the time between 25.06.2012 and 28.07.2012, the plaintiff had got reasonable opportunity to inspect the six filters purchased by the plaintiff company. However, instead of exercising its right to inspect the purchased six filters, the plaintiff company had resold the same to its clients.
26. As already decided in issue no.2 above, by reselling the purchased six filters to its clients, the plaintiff company had not only waived its right to inspect the filters but had also accepted the said filters as an act of CS No. 31/13 20 / 22 resale of any goods purchased by a party is an act of dealing with the said goods as an owner. Hence, in view of the findings of issue no.2 above, it can be concluded that after exercising its rights of ownership over the six filters by reselling the same, the plaintiff company accepted the said goods as per the provisions of Sales of Goods Act 1930 and the said goods, that is, six transmission filters were not legally rejected by the plaintiff subsequently. Therefore, the issue no.3 is accordingly decided in favour of the defendant and against the plaintiff by arriving at a finding that the six filters were not legally rejected by the plaintiff company.
Issue No.4 Relief.
27. In view of the findings of issues no.2 and 3 above, it is decided that the plaintiff company is not entitled to recovery of costs of six rejected filters. However, plaintiff is entitled to the other reliefs claimed in the prayer including refund of advance amount of Rs.41,447/ for purchase of ten filters on account of cancellation of the purchase order for purchase of ten filters along with 18% interest on the advance amount of Rs.41,447/ from the date of issuance of legal notice till the date of filing of the suit amounting to Rs.3730.23/. Besides, the plaintiff company is also entitled to notice charges amounting to Rs.11,000/. Hence, the suit is partially decreed in favour of the plaintiff company and against the defendant for a total sum of Rs.56,177.23/. Plaintiff company is also entitled to pendentelite and future interest @ 10% per annum on the decreetal amount of Rs.56,177.23/ with costs to the extent of decreetal amount. The suit is partially decreed in favour of the plaintiff and against the defendant on above terms. Decreesheet be prepared accordingly. File be consigned to record room after due compliance of necessary formalities.
Announced in the open Court (Jasjeet Kaur) on 31st October, 2014 Civil JudgeI, New Delhi District CS No. 31/13 21 / 22 New Delhi CS No. 31/13 22 / 22