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1956 Supreme(All) 1

IN THE HIGH COURT OF ALLAHABAD
Raghubar Dayal and Brij Mohan Lall, JJ.
KALKA PRASAD RAM CHARAN - Appellant
Versus
HARISH CHANDRA - Respondents
First Appeal 234 Of 1947
Decided On : 01/02/1956

Advocates Appeared:
AMBIKA PRASAD, J.Swarup, K.C.SAKSENA, K.N.Seth, S.N.SETH

Headnote:

SALE OF GOODS ACT - SECTION 54(2) - NOTICE OF INTENDED SALE - DAMAGES - INTERPRETATION - PENALTY CLAUSE - EXERCISE OF SELLER'S LIEN - FALSE DEFENCE BY BUYER - RIGHT OF RE-SALE AND RIGHT TO SUE FOR PRICE - DISTINCTION.

Fact of the Case:

A cloth merchant, the respondent, sued a firm of cloth merchants, the appellant, to recover the price of 67 thans of silk sold to them. The appellant admitted receiving 10 thans but denied the contract for the remaining 57 thans. The respondent claimed that he had informed the appellant of his intention to resell the goods but failed to provide evidence of such notice.

Finding of the Court:

The court found that the appellant had falsely denied the contract but held that this did not deprive them of the protection of Section 54(2) of the Sale of Goods Act, which imposes a penalty on sellers who resell goods without giving notice to the buyer. The court also found that the respondent had exercised his right of lien over the goods and was purporting to act under Section 54(2) but had failed to give the required notice.

Issues: 1. Whether the appellant was liable to pay damages for the respondent's resale of the goods without notice under Section 54(2) of the Sale of Goods Act? 2. Whether the respondent's right to resell the goods under Section 54(2) was affected by the appellant's false denial of the contract? 3. Whether the respondent could sue for the price of the goods under Section 55 of the Sale of Goods Act instead of relying on Section 54(2)?

Ratio Decidendi: 1. Section 54(2) of the Sale of Goods Act imposes a penalty on sellers who resell goods without giving notice to the buyer. This penalty clause is intended to protect buyers from being saddled with damages that they could have avoided if they had been informed of the seller's intention to resell. 2. The false denial of a contract by a buyer does not deprive them of the protection of Section 54(2). The penalty clause is intended to apply to all cases where a seller resells goods without giving notice, regardless of the buyer's conduct. 3. The respondent could have sued for the price of the goods under Section 55 of the Sale of Goods Act, but he chose to rely on Section 54(2). By doing so, he limited his claim to the amount that remained due after deducting the price fetched by the goods sold.

Final Decision: The court allowed the appeal in part, modified the decree of the lower court, and decreed the suit for the price of the 10 thans of silk that the appellant had taken delivery of, along with interest. The court also awarded costs to the parties in proportion to their success and failure in both courts.

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 respondents 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 appellants 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 appellants representative at the request of the respondent who was anxious to have them sold at Kanpur. In other words, the suggestion was that the appellants 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 respondents 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.

( 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 appell















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