Indian Textiles Company Ltd. v. Kanhaiya Lal Agarwalla
1957-12-02
RAJ KISHORE PRASAD, V.RAMASWAMI
body1957
DigiLaw.ai
Judgment 1. This appeal is brought on behalf of the defendant against the judgment of the District Judge of Muzaffarpur dated 22-5-1952, affirming the decision of the Additional Subordinate Judge of Muzaffarpur. 2. The case of the plaintiff is that the defendant, Indian Textiles Company limited, which is a big firm, widely advertised in all important papers of Calcutta that "Arkon" pens were very serviceable and useful pens and were guaranteed for three years, A representative of the defendant came to Muzaffarpur and represented to the plaintiff that the aforesaid pens were very good and were lying in the Calcutta office. The representative also showed the plaintiff the advertisements of the Calcutta papers. Thereafter the representative secured an order from the plaintiff for 150 pens worth Rs. 4556/4/-. The contract was entered into on 24-10-1946. Later on the plaintiff paid the amount to the defendant and took delivery of the "Arkon" pens. It appears that the plaintiff sold some of these pens to different customers, but in a few days they returned the pens to the plaintiff, complaining that they were useless, Thereafter the plaintiff returned 100 out of the 150 pens to the defendant and, according to the plaintiffs case, the defendant agreed to return their price. The plaintiff also asked the defendant to take back the remaining 50 pens and to return their price. The defendant however, did not do so in spite of repeated requests and in spite of a lawyers notice. The plaintiff, therefore brought the suit for recovery of a sum of Rs. 4562/13/- as damages for breach of contract. The defendant contested the suit on the ground that there was no contract of sale between the parties, but there was only a contract of agency. The defendant also alleged that there was no representation made to the plaintiff at Muzaffarpur by any agent. The defendant also denied that he agreed to refund the price of the 100 pens which were deposited with him by the plaintiff. Upon an examination of the evidence adduced in the case and after consideration of the pleadings the trial Court did not accept the plaintiffs case that the defendant agreed to take the 100 pens back and refund their price.
Upon an examination of the evidence adduced in the case and after consideration of the pleadings the trial Court did not accept the plaintiffs case that the defendant agreed to take the 100 pens back and refund their price. But the trial Court found that there was a representation made by the agent of the defendant to the plaintiff with regard to the quality of the "Arkon" pens, and apart from the advertisements there was an express representation orally made by Mr. Pal, the agent of the defendant that the pens were of good quality and were guaranteed for three years. It was also found that the plaintiffs placed the order with the defendant on the strength of this representation. As there was a breach of contract, the trial Court gave a decree in favour of the plaintiff for the amount of Rs. 4562/- and odd which was the price paid by the plaintiff and which represented the quantum of damages for the breach of the contract. The decree of the trial Court has been affirmed by the lower appellate Court. 3. In support of this second appeal the learned Advocate General made the submission in the first place that there was no contract of sale between the plaintiff and the defendant, that they were not in law in the position of purchaser and seller, but there was only a contract of agency. It was contended that the defendant was an agent for the plaintiff to procure the goods on indent from the American manufacturers. In support of this argument learned Counsel referred to the contract, exhibit A at p. 4 of the supplementary paper book. The relevant portion of this indent (exhibit A) is as follows : "We hereby authorise you to import on our account and risk subject to the terms and conditions printed overleaf. This authority is to remain in force and be irrevocable during 60/90 days after the receipt thereof by you in Calcutta." "We hereby deposit with you Rs. 5200.00 as 25 per cent, advance towards our order and the balance will be paid against delivery of goods or documents concerning this indent. This is clearly understood that we will accept the goods or documents against payment but in case of failure you are fully authorised to dispose of goods or documents to your best interest.
5200.00 as 25 per cent, advance towards our order and the balance will be paid against delivery of goods or documents concerning this indent. This is clearly understood that we will accept the goods or documents against payment but in case of failure you are fully authorised to dispose of goods or documents to your best interest. We agree to pay the loss if incurred through our non-compliance. This indent is placed with you subject to the confirmation of the shippers Or manufacturers." On the back of this letter of indent there are certain printed terms and conditions. Conditions Nos. 3 and 5 are important and should be quoted in full : "3. In case of late shipment I/we shall have no right against you other than rejecting the goods. But if any monopoly right is attached to this indent I/we agree to take up the goods in any event unless I/we permit the goods to be sold in our market. But I/we agree to take without raising any objection or claim in respect of any goods shipped late owing to force majeure by which is meant causes over which the shippers or yourselves have no control. In case of non-delivery and non-shipment over which the shippers or yourselves have no control I/we agree not to raise any claim against you or them whatsoever for damage or otherwise. 5. In the event of my/our refusal to accept any draft or goods against payment of acceptance and our failure to pay at maturity you are authorised to give three days notice to me/us, you are at the option either to cancel the indent or to demand and sue for the invoice amount plus charge and interest or result the document, and or goods on my/our account and risk at their discretion as to time either by auction private contract or in such manner as may appear best to you charging 5 per cent, reselling commission and interest at 9 per cent, per annum. I/we waiving all advantage thereon and I/we will make good on demand, and without .dispute any deficiency arising from such sale." 4.
I/we waiving all advantage thereon and I/we will make good on demand, and without .dispute any deficiency arising from such sale." 4. The argument on behalf of the appellant is that the effect of this contract was that the defendant was not liable for the mercantile quality of the goods sold; and even if "Arkon" pens were worthless and unsaleable, the defendant was not liable to pay damages to the plaintiff. In support of this proposition learned Counsel referred to two authorities: Mahomadally Ebrahim Pirkhan V/s. Schiller, Dosogne and Co., ILR 13 Bom 470 and Holmes Wilson and Co. Ltd. V/s. Bata Kristo De ILR 54 Cal 549: (AIR 1927 Cal 668). We are unable to accept the argument of the learned Advocate General on this point. In our opinion, the contract we are concerned with in this case is not a pure contract of indent which was the subject-matter of consideration in the two authorities, ILR 13 Bom 470 and ILR 54 Cal 549: (AIR 1927 Cal 668). In our opinion, therefore these authorities are not in point. It has been expressly pleaded in the present case by the plaintiff in paragraphs 1 and 2 as follows : "1. That the plaintiff carries on a business of General Merchants in Mohalla Saraiyaganj in the town of Muzaffarpur under the name and style of Messrs, Agarwalla Brothers. 2. That the defendant who is a big firm widely advertised in all important papers of Calcutta the "Arkon pens" were very serviceable and useful pens and were guaranteed for 3 years. A representative of the defendant came to Muzaffarpur and after showing the advertisements, represented that the said pens were very good and were lying in Calcutta office, secured an order from the plaintiff for 150 pens worth Rs. 4556/4/- on 24-10-46 and the plaintiff took delivery of the said Arkon pens through bank on paying Rs. 4562/13/-." 5. There is a finding of the lower appellate Court that the fountain pens turned out to be unserviceable and the customers returned the pens to the plaintiff and obtained refund of the price for this reason.
4556/4/- on 24-10-46 and the plaintiff took delivery of the said Arkon pens through bank on paying Rs. 4562/13/-." 5. There is a finding of the lower appellate Court that the fountain pens turned out to be unserviceable and the customers returned the pens to the plaintiff and obtained refund of the price for this reason. There is also a clear finding of the lower appellate Court that it has been established in this case that though the plaintiff signed on exhibit A, he really placed the order without seeing the sample of the pens and relying upon the representation made by the agent of the appellant that the "Arkon" pens would work satisfactorily for three years without being refilled with ink. Here, therefore we have a finding that there was an oral representation made by the agent of the defendant that the "Arkon" fountain pens would work satisfactorily for three years without being refilled with ink, and upon that oral representation the plaintiff placed the indent for the fountain pens with the defendant. That is the finding of fact of both the lower Courts. It is manifest, therefore, that in the present case there is an oral representation in addition to the clauses contained in the contract of indent (Ext. A). It was argued on behalf of the plaintiff by the Advocate-General that the evidence with regard to this oral representation is not admissible and is not consistent with the terms of the main contract (Ext. A) entered into between the parties. We do not accept this argument. On the contrary, we are convinced that the evidence of oral representation has been properly admitted by both the lower Courts and that the evidence of oral agreement is not inconsistent with the terms of the main contract of indent (Ext. A). Such evidence is admissible under the second proviso to Section 92 of the Evidence Act, which states as follows : "Proviso (2): The existence of any separate oral agreement as to any matter on which a document is silent, and which is not inconsistent with its terms, may be proved. In considering whether or not this proviso applies the Court shall have regard to the degree of formality of the document." Illustration (g) of Section 92 also shows that such evidence is admissible.
In considering whether or not this proviso applies the Court shall have regard to the degree of formality of the document." Illustration (g) of Section 92 also shows that such evidence is admissible. In the course of argument the Advocate-General also referred to the first paragraph of the indent which states that the plaintiffs "hereby authorise the defendant to im-port on our account and risk subject to the terms and conditions printed overleaf." This paragraph must be read and construed in the context of the other paragraphs of the indent, especially paragraphs 3 and 5 of the terms and conditions printed at the back of the form. There is nothing in the whole of this indent which shows that the defendant is exempted from liability with regard to the quality of the "Arkon" pens which were sold by the defendant to the plaintiff. There are clauses in the indent with reference to the shipment and non-shipment and also with regard to non-delivery and with reference to acceptance of the goods and mode of payment but there is nothing in this contract (Ext. A) to suggest that the defendant was exempted from liability for breach of contract with regard to the quality of the goods which were the subject-matter of the contract. We are, therefore, of opinion that the proviso (2) to Section 92 of the Evidence Act is attracted in this case and the lower Courts properly admitted this evidence to show that there was a separate oral agreement containing the guarantee of quality with regard to the goods sold by the agent of the defendant and that upon the strength of that guarantee the. plaintiff placed an indent of the goods with the defendant. The learned Advocate-General has, therefore, been unable to make good his submission on this point and we, therefore, reject his argument on this point. 6. There is, however, one modification which should be made in the decree passed by the lower Courts. It is the admitted position that the plaintiff has still in his possession 49 "Arkon" pens, and we were informed in the course of the argument in this case that the plaintiff is prepared to deliver these pens back to the defendant at any time. We, therefore, make a direction that the plaintiff should give the 49 "Arkon" fountain pens plus Rs.
We, therefore, make a direction that the plaintiff should give the 49 "Arkon" fountain pens plus Rs. 30/6/-in cash (being the agreed price of one pen) to the defendant within a month from this date, and subject to this condition the plaintiff will be entitled to get a decree for Rs. 4562/13/- from the defendant with costs of the suit and pleaders fee at 5 per cent, and also future interest at 6 per cent, per annum from the date of the decree of the trial Court, namely, 6-6-1951. In other words, we affirm the decree of the lower appellate Court subject to the modification that the plaintiff will hand over the 49 pens to the defendants and Rs. 3076/- in cash within a month from this date. If the defendant does not accept the pens or cash within the time given, it would be open to the paimtiff to deposit these pens and cash of Rs. 30/6/- in the court of the Subordinate Judge of Muzaffarpur. We should also make it clear that it would be open to the defendant to appropriate the 100 Arkon" fountain pens deposited by the plaintiff on 21-1-1947, and to appropriate the sale proceeds of those pens or deal with them in any way he likes. 7. Subject to this modification in the decree of the lower appellate Court, we dismiss this ap peal with costs.