Kailash Sharma vs.

The Patna Municipal Corporation

and Ors

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 Table of Contents

 Case Overview

 Arguments

 Analysis
 Case Overview

Kailash Sharma vs The State Of Bihar & Ors on 11 August, 2014

IN THE HIGH COURT OF JUDICATURE AT PATNA

Civil Writ Jurisdiction Case No.14958 of 2013

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Petitioner/s Kailash Sharma

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Versus

Respondent/s The State of Bihar & Ors

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Appearance :

For the Petitioner/s : Mr. Sanjeev Kumar

For the Respondent/s : Mr. Roy Shivaji Nath

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CORAM: HONOURABLE MR. JUSTICE SHIVAJI PANDEY

ORAL ORDER
In this case, an Appellant-Company entered into an agreement to sell fogging machines to a
Respondent-Corporation. According to the agreement, the Respondents were obligated to
make the payment for the machines within one week of their delivery. However, the
Respondents failed to make the payment within the stipulated timeframe and did not
communicate with the Appellants regarding the outstanding payment.

After a period of six months, during which the Respondents used the machines, they finally
contacted the Appellants. However, their communication was solely to complain about the
inefficiency of the fogging machines. The Respondents alleged that the machines were
defective and expressed their intention to return them. Consequently, the Appellants initiated
a lawsuit seeking to recover the payment owed for the machines.

The judgment in this case was delivered three years after the delivery of the goods, implying
a substantial delay in resolving the dispute.
Issue:

The primary issue in this case is whether the Respondents are legally liable to make the
payment for the fogging machines despite their attempts to repudiate the transaction based on
alleged defects.
 Arguments Given

Appellants' Arguments:

The Appellants in this case present counterarguments to the claims made by the Respondents.
Their arguments are as follows:

Adherence to Agreed Terms: The Appellants argue that they fulfilled their obligation by
delivering the fogging machines to the Respondents in accordance with the agreed terms.
They assert that the Respondents accepted the machines and used them for a significant
period of time without raising any complaints or issues regarding their efficiency. By making
this argument, the Appellants seek to establish that the Respondents had initially accepted the
machines without objection.

Breach of Payment Agreement: The Appellants contend that the Respondents' failure to make
the payment within the specified time period constitutes a clear breach of the agreement.
They emphasize that the agreed-upon terms explicitly stated that the payment should be made
within one week of delivery. The non-payment, in their view, supports their claim for
payment and highlights the Respondents' failure to fulfill their contractual obligation.

Non-communication Regarding Payment: The Appellants further argue that the Respondents'
lack of communication regarding the outstanding payment strengthens their claim for
payment. They may assert that the Respondents' silence or failure to address the payment
issue after the specified one-week period indicates their acceptance of the payment
obligation. This argument aims to demonstrate that the Respondents' non-communication
regarding payment does not absolve them of their payment obligation.

Inadequate Justification for Return: The Appellants assert that the Respondents' attempt to
return the machines after six months of usage is not justified under the Sale of Goods Act.
They argue that the Respondents had a responsibility to make the payment for the machines
as they had already accepted and used them for an extended period. The Appellants may
argue that the Respondents' complaints about efficiency do not entitle them to repudiate the
transaction or seek a return of the machines without fulfilling their payment obligation.

In summary, the Appellants argue that they fulfilled their delivery obligation and that the
Respondents accepted and used the machines without raising any complaints initially. They
assert that the Respondents' failure to make the payment within the specified time period
constitutes a breach of the agreement. They also contend that the Respondents' attempt to
return the machines after a significant period of usage is not justified under the Sale of Goods
Act. These arguments support the Appellants' claim for payment and challenge the validity of
the Respondents' attempts to repudiate the transaction.

Respondents' Arguments:

The Respondents in this case present several arguments to justify their non-payment and the
intention to return the fogging machines. These arguments are as follows:

Defective and Inefficient Machines: The Respondents claim that the fogging machines sold
by the Appellants were defective and inefficient. They argue that the machines did not meet
the expected standards or specifications and were not suitable for their intended purpose. By
asserting this, they imply that the Appellants did not fulfill their obligation to deliver
functional and effective machines.

Timely Complaint: The Respondents contend that they communicated their concerns about
the machines' inefficiency after six months of usage. They argue that this timeframe is still
within a reasonable period for lodging complaints. By making this argument, they seek to
establish that they acted reasonably in raising the issue of machine inefficiency within a
reasonable time.

Failure to Address Complaints: The Respondents further argue that the Appellants failed to
address their complaints and rectify the alleged defects within a reasonable time. They claim
that the Appellants' inaction in resolving the issues relieved them from their obligation to
make the payment for the machines. This argument suggests that the Appellants' failure to
respond to and rectify the alleged defects entitles the Respondents to reject the machines and
withhold payment.
Repudiation of Transaction and Breach of Warranty: The Respondents assert that the
provisions of Section 13(2) of the Sale of Goods Act support their position. They argue that if
the fogging machines did not conform to the agreed-upon specifications or warranties, they
have the right to repudiate the transaction or seek damages for the breach of warranty. By
invoking this section, they seek to establish their entitlement to reject the machines and avoid
the payment obligation based on the alleged non-conformity of the goods.

In summary, the Respondents argue that the fogging machines were defective and inefficient,
justifying their non-payment. They contend that their complaints were timely and that the
Appellants' failure to address the issues relieved them from their payment obligation. They
also rely on Section 13(2) of the Sale of Goods Act to support their claim for repudiation of
the transaction or damages for breach of warranty. These arguments aim to challenge the
Appellants' claim for payment and seek resolution in their favour.

Analysis

In the given case, the legal issues revolve around the non-payment by the Respondents for the
fogging machines sold by the Appellants, the alleged defects in the machines, and the
potential repudiation of the transaction. While the case primarily relates to the Sale of Goods
Act, 1930, we can analyse the legal issues from the perspective of the Indian Contract Act,
1872, which governs the formation, performance, and enforcement of contracts in India.
Here's an analysis of the legal issues involved:

Formation of Contract:

Under the Indian Contract Act, a valid contract requires the presence of essential elements
such as offer, acceptance, consideration, and intention to create legal relations. In this case, it
is assumed that a valid contract was formed between the parties when the Appellants sold the
fogging machines to the Respondents, as there is no indication to the contrary.

Breach of Contract:

The main legal issue arises from the Respondents' failure to make the payment within one
week of delivery, as agreed upon in the contract. Non-payment within the stipulated time
frame constitutes a breach of contract under Section 73 of the Indian Contract Act. The
Appellants can seek remedies for the breach, such as claiming the outstanding payment.

Acceptance and Defective Goods:

The Respondents' acceptance of the fogging machines is significant in this case. Section 42 of
the Sale of Goods Act states that acceptance occurs when the buyer receives the goods,
demonstrates their usage, and retains them for a considerable period. By using the machines
for six months without raising any complaints, the Respondents impliedly accepted the
goods. However, they later alleged that the machines were defective.

Warranty and Repudiation:

Section 13(2) of the Sale of Goods Act is relevant in determining the Respondents' rights in
case of alleged defects. This section clarifies that in the presence of a warranty, the buyer
may claim damages but cannot repudiate the transaction itself. Section 59 of the Act
reinforces this principle, stating that the buyer cannot reject the goods solely due to a breach
of warranty and can only sue for damages or breach of warranty.

In this case, the Respondents' attempt to return the machines and repudiate the transaction
after six months of usage could be contrary to the provisions mentioned above. The
Appellants can argue that the Respondents' complaints about the machines' inefficiency are
irrelevant since they cannot repudiate the transaction under the law. Instead, the Respondents
may have the right to seek damages for any breach of warranty.

Communication and Dispute Resolution:

Another issue in this case is the lack of communication between the parties regarding the
non-payment and subsequent complaints. Communication plays a crucial role in contract law,
as parties must express their concerns and attempt to resolve disputes. The failure of the
Respondents to communicate their issues with the Appellants in a timely manner may
weaken their position when seeking remedies or repudiation.

In conclusion, while the primary legal analysis of the case revolves around the Sale of Goods
Act, several aspects of the Indian Contract Act are intertwined. The issues include breach of
contract, acceptance of goods, warranty provisions, repudiation, and the importance of
communication in resolving disputes. Analysing the case from the perspective of the Contract
Act helps highlight the legal principles and considerations relevant to the dispute between the
parties.