Kalka Prasad Ram Charan vs Harish Chandra on 2 January, 1956

Allahabad High Court

Kalka Prasad Ram Charan vs Harish Chandra on 2 January, 1956
Equivalent citations: AIR 1957 All 25
Author: B M Lall
Bench: R Dayal, B M Lall
JUDGMENT Brij Mohan Lall, J.

1. The suit which has given rise to this first appeal was instituted by the respondent, a cloth
merchant at Farrukhabad, to recover a sum of Rs. 6,108/1/3 from the appellant, which is a firm of
cloth merchants at Kanpur. The respondent's case was that a partner of the appellant firm
purchased for the firm 67 thans of Anda Boski silk from him on 20-4-1945 at the rate of Rs. 5/5/9
per yard, took immediate delivery of 10 thans and left the remaining 57 thans with the respondent
saying that Messrs. Raghubar Dayal Ram Charan of Farrukhabad would take delivery of those thans
on the appellant's behalf and would pay the price thereof at the time of delivery.

It was, further, alleged that interest was agreed to be paid at ten annas per cent, per mensem. The
respondent went on to allege that Messrs. Raghubar Dayal Ram Charan did not take delivery of the
remaining 57 thans and made no payment. According to him, the appellant firm was given notice
but it still refused to take delivery of the thans. Then follows a very material allegation in the plaint,
viz. that after informing the appellant firm the respondent sold the remaining 57 thans.

But since the. Government had by that time imposed a control on the sale price of the aforesaid kind
of silk, the sale fetched price at the rate of Rs. 2/3/- per yard only. After deducting the amount so
fetched from his claim, the respondent brought the suit to recover the aforesaid amount which
included interest also.

2. The defence of the appellant firm was a complete denial of the contract. Further, it alleged that no
notice of the intended sale was given to it. Lastly it was contended that no interest was agreed to be
paid. The receipt of 10 thans was, however, admitted, but it was alleged that they were taken by the
appellant's representative at the request of the respondent who was anxious to have them sold at
Kanpur. In other words, the suggestion was that the appellant's representative obtained the said
thans from the respondent to sell them, if possible, at Kanpur as his agent.

3. The learned Civil Judge framed no issue on the question whether notice of the intended sale was
or was not given to the appellant. In other respects, he found the respondent's case proved to the hilt
and, disbelieving the defence, he decreed the suit in 'toto'.

4. The defendant has now come up in appeal to this Court, and his learned counsel has not chosen to
reiterate the plea about the denial of the contract. He is reconciled to the finding recorded by the
Court below, viz., that a valid contract was made as alleged in the plaint. The learned counsel has,
however, taken his stand on Section 54, Sale of Goods Act (3 of 1930) and has contended that no
notice of the intended sale was given to his client and therefore his client is not bound to pay any
damages whatsoever to the respondent.

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 Kalka Prasad Ram Charan vs Harish Chandra on 2 January, 1956

5. In order to entertain this plea a finding has to be recorded as to whether of not notice was given
by the respondent to the appellant about the intended sale. The learned counsel for the respondent
has made a request to us that an issue be remitted to the Court below on this point. After having
given our best consideration to this request, we do not find ourselves in a position to accede to it.
Both parties had stated their cases on this point in unmistakable terms in the pleadings.

The respondent had said in para 7 of the plaint that information of the intended sale had been given
to the appellant. The latter had, in categorical terms, denied in para 15 of the written statement the
receipt of any such notice. It is true that no issue was framed on this point by the Court below, but
both parties produced evidence relating to this point. Thus each party knew what its case was and
availed of the opportunity' of producing evidence. We can, therefore, record a finding on this point
ourselves.

Order 41, Rule 24, Civil P. C., lays down that where the evidence upon the record is sufficient to
enable the appellate Court to pronounce judgment, the appellate Court may record a finding itself
although the lower Court might have left the point undetermined. In exercise of this power, we
proceed to examine the evidence on the record with a view to record a finding as to whether or not
notice of the intended sale was given by the respondent to the appellant.

6. On 7-6-1945 a notice was sent by registered post by the respondent to the appellant and a
grievance was made therein of the fact that delivery had not been taken by the appellant or its agent.
The appellant was called upon in this notice to either take immediate delivery of the remaining 57
thans or to pay damages. No indication was given whatsoever about the intention to re-sell the
goods in case delivery was not taken.

The next notice given by the respondent to the appellant is dated 8-7-1945. In this notice intimation
was given that a resale had already taken place. In his deposition the respondent stated that he had
written to the appellant firm that if it would not take delivery he would sell the goods. But in the very
next breath he added that he did not remember as to when he gave that intimation to the appellant.
He did not summon that notice from the appellant, nor did he produce any secondary evidence of
that notice. He is contradicted by his own Munim, Purshottam Narain, who says in his deposition
that no written notice was sent to the appellant.

The case put forward by Purshottam Narain is that he had orally told the appellant that goods would
be sold away. This is denied by Mana Lal, one of the partners of the appellant firm. He swears that
Munim Purshottam Narain never met him and that whatever communications were addressed by
the respondent to the appellant firm were received by registered post. In this state of evidence, we
have no hesitation in holding that no notice, written or oral, was given by the respondent to the
appellant about his intention to re-sell the goods.

7. Section 46, Indian Sale of Goods Act enumerates the unpaid seller's rights. One of these rights is a
lien on the goods for the price while he is in possession thereof. Section 47 explains what the unpaid
seller's lien is. It runs as follows :

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 Kalka Prasad Ram Charan vs Harish Chandra on 2 January, 1956

"(1) Subject to the provisions of this Act, the unpaid seller of goods who is in possession of them is
entitled to retain possession of them until payment or tender of the price in the following cases,
namely :

(a) where the goods have been sold without any stipulation as to credit;

(b) where the goods have been sold on credit, but the term of credit has expired;

(c) where the buyer becomes insolvent.

(2) The seller may exercise his right of lien notwithstanding that he is in possession o

Sub-section (2) of Section 54 is in the following terms :

"'Where the goods are of a perishable nature, or where the unpaid seller who has exercised his right
of lien or-stoppage in transit gives notice to the buyer of his intention to re-sell, the unpaid seller
may, if the buyer does not within a reasonable time pay or tender the price, re-sell the goods within
a reasonable time and recover from the original buyer damages for any loss occasioned by his breach
of contract, but the buyer shall not be entitled to any profit which may occur on the re-sale. If such
notice is not given, the unpaid seller shall not be entitled' to recover such damages and the buyer
shall be entitled to the profit, if any, on the re-sale."

The last sentence of this sub-section imposes a penalty on the seller in case he exercises the right of
re-sale without giving notice of his intention to resell to the buyer. This is a new clause which did not
find place in the old Section 107, Contract Act.

The object of introducing this sentence is obvious. If notice is given to the buyer, he can arrange for
purchasers or can otherwise take steps to secure better price for his goods. But if the seller deprives
him of this opportunity and sells the goods behind his back, he cannot saddle him with damages
which, if he had been informed, he might have taken steps to avoid. The position, therefore, is that if
Section 54 applies and the sale takes place without notice to the buyer, the seller cannot claim any
damages from him.

8. The learned counsel for the respondent has, however, contended that in this case there was no
exercise of the right of seller's lien and therefore Sub-section (2) of Section 54 did not come into
play. In other words, he maintains that the penalty clause which is found embodied in Sub-section
(2) of Section 54 did not come into operation. He has elaborated his contention by arguing that a
seller's exercise of the right of lien begins when a demand for delivery is made from him by the
buyer and is followed by a refusal by him.

This contention is, to our mind, not well-founded. It puts a very narrow interpretation on the
language of Section 47. The result of accepting this interpretation will be that if the buyer chooses

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 Kalka Prasad Ram Charan vs Harish Chandra on 2 January, 1956

never to make a demand the seller's exercise of the right of lien would never commence. In other
words, by simply keeping quiet the buyer can deprive the seller of his exercise of the right of lien.
This could never have been the intention of law.

9. There were 67 thans in all with the respondent and all these thans were agreed to be sold. Thus
the goods were ascertained and were in a deliverable state. Under Section 20, Sale of Goods Act the
property in the goods passed to the buyer as soon as the contract was made. But the seller was
allowed to retain possession of 57 thans till the payment of price. No period of credit was given to
the seller in respect of them. Therefore, the case fell under Sub-section 1 (a) of Section 47 in respect
of these 57 thans and the seller's lien commenced from the time of the making of the contract, We,
therefore, find no force in the contention that the seller was not exercising his right of lien and that
Sub-section (2) of Section 54 did not come into operation. As a matter of fact, the respondent's
notice and the frame of the plaint both indicate that the respondent's case throughout had been that
he was exercising his right of lien and the right of re-sale conferred by Section 54(2), Sale of Goods
Act.

In the notice he gave credit to the extent of the price realised by there-sale of the goods. Similarly, in
the plaint he adjusted that amount in part satisfaction of his claim and sued for the balance. We are,
therefore, of opinion that the respondent did exercise his right of lien and he was purporting to act
under Sub-section (2) of Section 54 of the Act, although in doing so he neglected to perform a most
material condition laid down by that sub-section and has therefore to bear the penalty imposed by
that sub-section.

10. The next contention put forward by the learned counsel for the respondent is that if a buyer
falsely denies the making of a contract, he cannot claim the benefit of the penalty clause of Section
54(2). This contention also is not well-founded. Section 54(2) confers a right on a seller, although
that right is subject to a certain limitation.

The learned counsel for the respondent has hot been able to point out to us any provision of the Act
which says that because a false defence has been put forward by the buyer any one of the seller's
rights is to be curtailed. Nor has he been able to cite any decided case in support of the contention
put forward by him. We are, therefore, of opinion that the mere fact that the appellant firm falsely
denied the making of the contract is not sufficient to take the case out of the purview of Section
54(2).

11. It is next contended by the learned counsel for the respondent that he had two rights, viz., a right
of re-sale under Section 54(2) and an independent right under Section 55 to sue for the price of the
goods. This contention is perfectly correct. It was open to him not to sell the goods and to sue for the
price leaving it to the purchaser to take delivery of the goods lying with him (the seller) at his own
convenience.

Moreover, he should have in that case sued for the entire amount and not for the amount that
according to him remained due to him after deducting the price fetched by the goods sold. He did
not adopt this course. His suit, as it is framed, is not one under Section 55 of the Act. If we decree

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 Kalka Prasad Ram Charan vs Harish Chandra on 2 January, 1956

the claim on the basis of the right conferred by Section 55, we would be giving him a decree for an
amount larger than that for which a claim was put forward in the plaint.

12. As a result of the above discussion, we are of opinion that no damages can be claimed in respect
of these 57 thans of silk. The case about the remaining 10 thans stands on a different footing.
Admittedly the appellant firm has taken delivery of them. Its version, viz., that it had taken delivery
as the respondent's agent, has been disbelieved by the lower Court and that finding has not been
challenged before us.

We, therefore, take it that these 10 thans were taken as part of the sale transaction and had not been
paid for. Their price comes to Rs. 1,353-3-9. The interest from the date of contract till the date of
institution of the suit at the stipulated rate of ten annas per cent, per mensem on Rs. 1,353-3-9
comes to Rs. 44-8-0.

13. We, therefore, allow this appeal in part, modify the decree of the Court below and decree the suit
for a sum of Rs. 1,397-11-9 with interest at 3 per cent, per annum from the date of the suit till the
date of deposit of the amount in Court. Parties shall receive and pay costs in proportion to then-

success and failure in both Courts.

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