A seller is liable for damages for breach of the implied warranty of merchantability even if the buyer has inspected the goods, if the inspection does not reveal latent defects and the goods are not of merchantable quality.

UMAMAHESWARAM, J.:-

This appeal is brought by the defendants Hasanbhoy Jetha, a firm carrying on business as stockists and suppliers of hardware goods and second-hand machinery in Bombay. The suit was instituted in March 1946 by the respondents herein for recovery of damages of a sum of Rs.8187-8-0 on the ground that the appellants firm was guilty of "breach of contract, breach of condition and breach of warranty and false representations and assurances as detailed in paras.4, 5, and 7 of the plaint". By a subsequent amendment in 1948, the respondents claimed that they were entitled to the return of the sale consideration of Rs.11,500 plus the amounts expended by them by way of repairs, or in the alternative to recover damages already claimed by them in the original plaint plus a sum of Rs.858-8-0 spent for repairs on 30-6-1947 making in all Rs.9046. The appellants herein contended that they were not liable to return the sale consideration, or pay any amount by way of damages, as the second-hand stone-crusher was purchased by the plaintiff company after inspection and that no assurances, express or implied, were given by them.

The suit was heard by Mack, J. and the main issue for determination was whether the appellants were guilty of breach of warranty at the time they sold the crusher to the respondent. The learned Judge believed the plaintiffs evidence that the appellants gave an assurance that the crusher was in a satisfactory working order, that the appellants sold as a rebuilt and re-conditioned second-hand crusher, one which was in fact perfectly useless in breach of "their assurances and the implied, if not, specific warranty contained in the correspondence". On the basis of that finding the learned Judge held that the respondents were clearly entitled to a refund of the entire purchase price that they paid, viz., to this Rs.11500 plus Rs.1458-8-0 spent by them for repairing the crusher.

A decree was passed declaring that the crushing machine sold by the appellants to the respondents was the property of the appellant firm and that the appellants should pay to the plaintiffs a sum of Rs.12,958-8-0 with interest at six per cent. from the date of the decree till the date of payment. The decree further provided that if the crushing machine was not removed from its present site by the appellants on or before 18-2-1950, the respondents were entitled to bring it to sale in execution as scrap iron and appropriate the net sale proceeds towards their decree. As against the judgment and decree of Mack, J., the appeal was filed by the defendants-appellants.

2. The first contention of the learned advocate for the appellants was that as per the contract entered into by the appellants with the respondents evidenced by Ex. D-10 dated 22-8-1945, the entire sale consideration of Rs.11,500 was paid by the respondents and the stone-crusher was delivered to the respondents in October 1945 and that the sale was completed and title passed to the respondents and that consequently the decree declaring that the appellants were the owners of the crushing machine and directing the refund of the sale consideration was wholly erroneous. We agree with this contention of the appellants and we do not see how the breach of any assurances or warranty, as found by the learned Judge, entitles the respondents to a refund of the purchase price. The title in the second-hand crusher having passed to the respondents, they are entitled only to recover damages for breach of contract or warranty, express or implied, as pleaded by them. We therefore set aside the decree of the learned Judge directing the appellants to return the sale consideration of Rs.11,500.

3. The next and main question that arises for consideration is as to whether the appellants are liable to pay any damages, and if so, what amount. It is necessary to set out the relevant facts for deciding this question. The case of the respondents is that on or about 22-8-1945 the appellants agreed to