1989 (11) TMI 287 - SC - VAT and Sales Tax

Whether 1, 500 tents which were loaded in the railway wagons on October 14 1968 at Jodhpur for delivery to respondent No. 5 the Commandant C.O.D. Kanpur under railway receipt No. 502671 were actually delivered to respondent No. 5? Held that - Appeal allowed. The judgments and the decree of the courts below in so far as they rejected the claims regarding the price of 224 tents and interest thereon are set aside. The plaintiff-appellant s claim for the price of the said goods as well as interest thereon at 6 per cent per annum for the period from January 1 1969 to December 1 1971 is hereby decreed. The appeal is thus allowed with costs quantified at 4, 000. The claim for interest at 6 per cent per annum for the period January 1 1972 till date of payment of amount unpaid is allowed.

Issues Involved:
1. Short delivery of 224 tents.
2. Liability for the short delivery.
3. Passing of property and risk in goods.
4. Claim for the price of short-delivered tents.
5. Claim for interest on unpaid price.

Issue-wise Detailed Analysis:

1. Short Delivery of 224 Tents:
The appellant, M/s. Marwar Tent Factory, supplied 1,500 tents to the Commandant, C.O.D., Kanpur, under a contract. The Commandant reported that 224 tents were not received, leading to a deduction of Rs. 51,912 from the appellant's payment under another contract. The trial court found that the railways failed to deliver 224 tents, as evidenced by the unloading register and shortage certificate. However, the trial court did not pass a decree against the railways due to the suit being time-barred and lack of notice under section 78-B of the Indian Railways Act.

2. Liability for the Short Delivery:
The appellant argued that the property in the goods passed to the buyer when the tents were loaded on the railway at Jodhpur (f.o.r. Jodhpur), making the buyer responsible for any short delivery. The trial court, however, held that the risk remained with the appellant until actual delivery to the Commandant, C.O.D., Kanpur, based on the general conditions of contract.

3. Passing of Property and Risk in Goods:
The Supreme Court analyzed the contract terms, particularly the f.o.r. Jodhpur clause, and relevant legal principles. It concluded that the property and risk passed to the buyer once the tents were loaded on the railway at Jodhpur. The court referred to Halsbury's Law of England and other precedents to support this interpretation, emphasizing that f.o.r. terms generally transfer risk to the buyer upon loading.

4. Claim for the Price of Short-Delivered Tents:
The Supreme Court found that the appellant was entitled to the price of the 224 tents as the property and risk had passed to the buyer at Jodhpur. The deduction of Rs. 51,912 by the Commandant, C.O.D., Kanpur, was deemed wrongful. The court set aside the trial court's findings and decreed the appellant's claim for the price of the tents.

5. Claim for Interest on Unpaid Price:
The appellant claimed interest on the unpaid price of Rs. 51,912 from January 1, 1969, to December 1, 1971, at 12% per annum. The court, referring to section 61(2) of the Sale of Goods Act, 1930, and relevant case law, held that the appellant was entitled to interest at 6% per annum for the specified period, considering it a reasonable rate. The court also allowed interest at 6% per annum from January 1, 1972, until the date of payment.

Conclusion:
The Supreme Court allowed the appeal, set aside the judgments of the lower courts, and decreed the appellant's claim for the price of the 224 tents and interest thereon. The appellant was awarded costs of Rs. 4,000. The appeal was allowed with interest on the unpaid amount at 6% per annum from January 1, 1972, until payment.

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