1954 (9) TMI 45 - HC - Indian Laws

Summary

Issues Involved:
1. Rejection of goods by the buyer.
2. Right to retain possession of rejected goods.
3. Breach of contract and claim for damages.
4. Alternative remedies under the Sale of Goods Act.
5. Calculation of damages for breach of warranty.

Detailed Analysis:

1. Rejection of Goods by the Buyer:
The defendants, who are the buyers, rejected 180 gross fountain pens of solid color, asserting that they did not conform to the description stipulated in the contract. The description "De Luxe" was understood in the trade to mean pens with barrels of pearl color, which was higher priced. The defendants communicated their rejection to the plaintiff, who accepted it both orally and in writing. The rejection was thus acknowledged as valid by both parties.

2. Right to Retain Possession of Rejected Goods:
The defendants argued that they had the right to retain possession of the rejected goods until they were paid their value by the plaintiff. However, the court noted that under Section 43 of the Sale of Goods Act, there is no obligation on the buyer to return the goods to the seller. Moreover, a buyer who has rejected goods after paying for them does not have a lien on the goods to retain possession and effect a resale. The defendants' refusal to deliver the goods without payment was not lawful, and their subsequent sale of the goods without the plaintiff's consent was deemed improper.

3. Breach of Contract and Claim for Damages:
The defendants filed a counterclaim for damages, arguing that the plaintiff breached the contract by not paying for the 180 gross pens and taking delivery. They calculated the damages based on the difference between the landed cost and the market price of the pens. However, the court found that the defendants' claim was inconsistent with their earlier position of valid rejection and a separate contract for the pens. The court also noted that the defendants did not produce evidence of the exact price for which they sold the goods, and the learned judge dismissed the counterclaim based on the lack of credible evidence.

4. Alternative Remedies under the Sale of Goods Act:
The court emphasized that the remedies of rejection and damages for breach of warranty under Section 59 of the Sale of Goods Act are alternative and not cumulative. Once the defendants elected to reject the goods, they could not subsequently accept them and claim damages for breach of warranty. The defendants' argument that they accepted the goods by selling them privately was not legally sustainable, as they could not unilaterally divest the seller of the title and re-appropriate the goods to the contract.

5. Calculation of Damages for Breach of Warranty:
The court explained that the measure of damages for breach of warranty is the difference between the value of the goods as delivered and their value if they had conformed to the contract description. The contracted price is irrelevant in this calculation. In the present case, the defendants' claim was based on the difference between the landed cost and the market price of solid color pens, which was not a valid basis for calculating damages. The court concluded that the defendants were not entitled to any relief on their counterclaim, as they failed to establish any damages on the footing of a valid rejection and subsequent independent contract.

Conclusion:
The court dismissed the appeal and upheld the judgment of the learned judge, who had dismissed the defendants' counterclaim and granted the plaintiff a decree for the commission due on the accepted pens. The court reiterated that the defendants' remedies of rejection and damages for breach of warranty are alternative and not cumulative, and their claim for damages was not legally sustainable.