9911796707
TMI Blog1977 (11) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... fendant under delivery notes to be supplied by the plaintiff for which payments were to be made by the defendant. But, that did not mean that the defendant accepted what the plaintiff alleges to be the contract between the parties with all its alleged implications. The crux of the whole matter was whether the plaintiff had carried out what it bad undertaken and tendered delivery notes in respect of the contracts still left for us to consider so as to comply with the conditions of the contract really admitted by the defendant. In other words, there is a dispute on what the parties understood the contract to provide or mean. While the defendant accepts that there was a contract, he does not accept the plaintiff's version about its due compliance by the plaintiff and a breach of it by the defendant. If this had not been so there could be no dispute. The whole dispute revolved round the question: Was tender of delivery ,variance with the contract between the parties ? The plaintiff realized fully that the difficulty in the way of an acceptance of its case was caused by the additional conditions sought to be attached to actual delivery by the delivery orders tendered by it. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Orders, are not Delivery Orders at all. The plaintiff in any event had no title to any of them. The documents described as Delivery Orders on the face of them relate to goods deliverable under contracts between third parties mentioned in the said alleged Delivery Orders. In any event, the goods mentioned in the alleged Delivery Orders are not goods of the description mentioned in the contracts between the parties herein. Further, the defendant called for the tender of inspection orders in terms of the said contracts, but the plaintiff wrongfully and in breach of contract failed and neglected to tender any inspection order even with the purported tender of the Documents described as delivery orders or otherwise. The alleged tenders were each and all invalid. 3. With further reference to the said paragraph 19A, the defendant denies that the alleged tenders of alleged Delivery Orders or any such alleged tender were or are, proper tenders by virtue of any alleged trade custom or usage of the jute trade in Calcutta. It is denied that there is any trade, custom or usage as alleged. The correctness of the alleged particulars of the alleged custom or usage is disputed and denied. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delivery order in respect of June 1952 portion of the contract mentioned in paragraph 17 of the plaint ? If so, was the tender valid? (b) Was there any wrongful failure or neglect by the defendant to accept and/or pay for the same ? (c) Did the defendant fail and neglect to pay for and take delivery of the said June 1952 portion of the goods ? The Trial Judge at the final stage, Mr. Justice A. N. Ray (as he then was), of the Calcutta High Court, then considered the whole of the law and evidence on these issues at considerable length and held that the plaintiff did not tender the delivery orders in accordance with the terms of the contract between the parties. 'the defendant 'did not bargain for delivery orders containing reservations or conditions entitling the mills or suppliers to refuse delivery to the holder of the delivery order unless the defendant complied with such other and additional terms or conditions as the suppliers imposer his, according to the defendant, was no delivery order . It was only an offer to deliver if certain conditions are fulfilled and new liabilities undertaken. The contract between the parties was for delivery without such additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of these delivery orders , the suppliers of jute were not bound to recognise the rights of the holder by mere endorsement of the order. It is only after the holder had applied for registration and undertaken payment of storage charges, and acknowledged the Hen of the supplying mills an the goods, that the holder could acquire the right to delivery. In other words, he had to enter into direct separate contracts with the mills before he, could demand deliveries. Such conditional delivery orders are certainly not documents of title as defined by section 2(4)of the Sale of Goods Act, which lays down: (4) document of title to goods includes a bill of lading, dock-warrant, warehouse keeper's certificate, wharfingers, certificate, railway receipt, warrant or order for the delivery of goods and any other document used in the ordinary course of business as proof of the possession or control of goods, or authorising or purporting to authorise, either by endorsement or by delivery, the possessor of the document to transfer or receive goods thereby represented. We have examined a number of cases cited before us, including Anglo-India lute Mills Co. v. Omademull, 38 Cal. I.L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very orders' are really delivery orders as known in law. The question arises on the following facts. The plaintiff and the defendant are both firms registered under the Indian Partnership Act, dealing in the sale and purchase of jute goods. By four different contracts entered into by and between the plaintiff and the defendant, the latter agreed to buy from the plaintiff diverse quantities of B twill deliverable in the months of April, May and June, 1952. By another contract, the defendant agreed to buy from the plaintiff a certain quantity of' hessian goods, also deliverable in April, May and June, 1952. The appeal before us concerns only the June quota of B twill and the May and June installments of hessian. The April and May installments of B twill and the April quota of hessian do not form the subject-matter of this appeal. It is not disputed that all the contracts were in the standard forms of the Indian Jute Mills Association. In all these contracts there is a clause for payment which is in the following terms: lm15 Payment to be made in cash in exchange for Delivery Orders on Sellers, or for Railway Receipts or for Dock's Receipts or for Mate's Receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and are used in the ordinary course of business authorising the holder thereof to receive the goods which they represent irrespective of the forms in which the Mills Pucca Delivery Orders are couched. (iv) That the tender of Mills Delivery Orders on due 'date to the buyer, irrespective of the form in which they may be couched, in exchange for cash was and is a fair and valid tender under the Standard India Jute Mills Association Contract Forms, and were and are treated as such. In the written statement the defendant asserts that the documents described as pucca delivery orders are not delivery orders at all and therefore all the tenders were invalid. The existence of any such trade custom or usage as alleged is also denied. It is further stated that the alleged usage or custom would in any event be inconsistent with the terms of the written contracts between the parties. The learned Judge of the High Court who heard the suit held that the tenders of pucca delivery orders made by the plaintiff were not inconformity with the contracts between the parties. He further found that on the evidence adduced the custom pleaded was not proved, that the custom alleged was cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence that transferees have to resister their names with the mills as buyers, and for this purpose the mills insist on an application being made in the following form (Ext. DDD) Dear Sirs, In requesting you to register us as the Holders of the above Delivery Order(s) we agree that all contract terms covering it are to be applicable and to have been signed by us that we accept all obligations of the original Buyers. Thus the mills insist on a new and separate contract, with the holder of a pucca delivery order accepting the obligations of the original buyer which are not necessarily identical with the obligations of the buyer under the contracts concerned in this case. The, new contract insisted on includes terms regarding insurance and godown charges which are not mentioned in the contracts between the parties. As an illustration, the High Court has referred to one such delivery order (Ext. 1) issued by the Fort Gloster Jute Mill which contains these terms: (i) That the company shall not be bound to recognise any transfer thereof. (ii) That the goods are held covered under the company's Insurance policies against risk of fire while at the Mill until 1st October, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he plaintiff, who was the seller, did not have the necessary control over the goods to be able to appropriate them to the contracts even with the consent of the buyer. It was next claimed that such pucca delivery orders are tendered and accepted following the trade custom and usage in the Calcutta jute market. It was suggested that the fact that the contracts were in the standard forms of the Indian Jute Manufacturers' Association was an indication of the existing custom. The forms are however not uniform. It has been found by the High Court that they differ in several particulars. The learned single Judge who disposed of the suit and the Division Bench that heard the appeal have found that no such custom or usage has been proved on the evidence. I find no reason to reconsider this finding of fact. It has been argued that several decisions of this Court and one of the Calcutta High Court accept the existence of the custom alleged in the plaint. The learned single Judge who decided the suit pointed out referring to the observation of Lord Birkenhead in Les Affreteurs Reunis Societe Anonyme v. Leopold Walford (London) Limited [1919] A.C. 801 (807) that a custom proved in o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined by this Court in Jute and Gunny Brokers Limited v. Union of India. [1961] 3 S.C.R. 820. Rejecting an identical argument that in spite of the absence of any appropriation of the goods to the contract or to the delivery orders, by the usage of the jute trade in Calcutta the holders of such pucca delivery orders are regarded as the owners of the goods specified therein, this Court pointed out that the Calcutta case merely laid down the rule of estoppel as between the mill and the holder of the pucca delivery order and that this did not mean that in law the title passed to the bolder of the pucca delivery order as soon as it was issued even-though it is not disputed that there was no ascertainment of goods at that time and that the ascertainment only takes place when the goods are appropriated to the pucca delivery orders at the time of actual delivery . In Jute and Gunny Brokers' case (Supra) this Court held that where the contract concerned in any such delivery order is a contract for the sale-of unascertained goods, in view of section 18 of the Sale of Goods Act, 1930, title cannot pass to the buyer until the goods are ascertained by appropriation. Jute and Gunny Brokers&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court under article II 33 (1) (c) of the, Constitution against the judgment of the Bench of that High Court. The appellant filed a suit No. 3282 of 1952 in the ordinary Civil Jurisdiction of the Calcutta High Court for the recovery of a sum of ₹ 2.52,968//11/- against the respondent with interest thereon at 6 per cent per annum until realisation or in the alternative an inquiry into damages and decree for the amount as may be found upon such inquiry. The suit was against the respondent for breach of several contracts mentioned in Paragraph 20 of the plaint. The suit was heard by a learned Judge of the Calcutta High Court and by a judgment delivered on 24th April, 1959, the learned Judge passed a decree for sum of ₹ 67,275/- with interest at the rate of 6% per annum and dismissed the suit with regard to the rest of the appellant's claim. The appellant preferred an appeal to a Bench of the Calcutta High Court and the Bench dismissed the appeal confirming the decree passed by the trial Judge. This appeal is preferred by the plaintiff against the decree by special leave. The appellant is the owner of Jute Mills and habitually ships and deals in the sale and pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elivery orders. The goods were resold after due notice to the respondent and the appellant suffered a loss of ₹ 57,381/4/-. By another contract dated 19th April, 1952, ex- changed between the appellant and the respondent the respondent agreed to buy from the appellant and appellant agreed to sell to the respondent certain quantities of B Twills at certain rates in June, 1952. Though the appellant delivered pucca Delivery Orders in respect of the goods deliverable in June, 1952, the respondent failed and neglected to accept and to pay for the goods or the Delivery Orders. The appellant sold the goods at the risk of the respondent at a loss of ₹ 37,203. The defence to the suit as disclosed in the, written statement is that the respondent has since discovered that the said Bought and Sold Notes and contracts were and are invalid and are void for the reasons stated in the written statement. The ground on which the Bought and Sold Notes and contracts are stated to be invalid and void is that under the west Bengal Act V of 1950 (West Bengal Jute Goods Act) which was promulgated on 15th March, 1950, and the notification issued thereunder. the making of contracts for sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. In respect of the hessian deliverable in June, 1952, it is alleged in the plaint that the appellant tendered the pucca delivery orders but the respondent failed' and neglected to accept and pay for the said goods or delivery orders. It may be noted that the specific allegation in the plaint is that regarding April delivery of Twills under the three contracts the claim was satisfied by the respondents. Regarding the three contracts for goods deliverable in May it is alleged in the plaint that the appellant submitted the bills but respondent did not honour it. In Paragraph 9 of the plaint it is stated regarding the goods deliverable in June, 1952 that The plaintiff duly and in terms of the contract tendered the Delivery Orders in respect of the said goods in respect of June Delivery but the plaintiff wrongfully failed and neglected to accept and/or to pay for the same. The allegation specifically is that delivery orders were tendered in terms of the contract. So also in the case of hessian contracts it is alleged in Paragraph 14 of the plaint that the appellant duly delivered the delivery orders and the respondent paid for and took delivery of the same. Regarding the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Mills' Pucca Delivery Orders were not delivery orders at all and in any event the appellant bad no title to any of them. It was also contended that the delivery orders related to goods deliverable under contract between third parties mentioned in the delivery orders and in any event the goods mentioned in the delivery orders are not goods of the description mentioned in the contracts-between the parties and that when the respondent called for the tender of inspection orders in terms of the contracts. the appellant wrongfully and in breach of contract failed and neglected to tender any inspection order. The custom pleaded was also denied. It was also contended that the delivery orders were not transferable by endorsement and that there were no appropriations of the goods relating to any contract or delivery order. The respondent also denied that the customs or usage ever existed and in any event the customs or usage is inconsistent with the terms of the written contracts and that it was not right to allege that the respondent was aware of! any such customs and dealt with the appellant on that basis. On the amended plaint and the additional written statement the suit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... title and that there could be no document of title in relation to unascertained goods. The document of title to goods is defined in section 2(4) of the Sale of Goods Act, 1930, as follows:- 2. (4) document of title to goods includes a bill of leading, dock-warrant, warehouse keeper's certificate, wharfingers' certificate, railway receipt, warrant or order for the delivery of goods and any other document used in the ordinary course of business as proof of the possession or control of goods, or authorising or purporting to authorise, either by endorsement or by delivery, the possessor of the document. to transfer or receive goods thereby represented; It is an inclusive definition and after enumerating a bill of lading, dock-warrant, warehouse keeper's certificate, wharfingers' certificate, railway receipt, it proceeds to include in the definition warrant or order for delivery of goods and any other document used in the ordinary course of business as proof of possession or control of goods or authorising or purporting to authorise either by endorsement or by delivery the possessor of the document to transfer or receive goods thereby represented. The second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nglo-India lute Mills Co. v. Omademull I.L.R. 38 Cal. 127 the- court was dealing with a delivery order and a common form of contract used by the Indian Jute Manufacturers Association. Clause 3 of the contract is similar to the clause in the present contract and runs as follows:- Payments to be made in cash in exchange of delivery order on sellers or for Railway Receipts. or for Dock Receipts or for Mates Receipts (which Mates Receipts are to be banded by Ships' Officer to the Sellers' representative) The Court found that it was established in evidence that delivery orders of the nature of the one in suit, passed from hand to hand by endorsement and were sold and dealt with in the market; that according to the invariable course of dealing in the Calcutta jute trade delivery orders were only issued on cash payment, and were dealt with in the market as absolutely representing the goods to which they related and free from any lien of the seller. In Duni Chand Rataria v. Bhuwalka Brothers Ltd., [1955] 1 S.C.R. 1071 while considering the provisions of the West Bengal Jute Goods Future Ordinance, 1949, this Court referred to the terms and conditions of the standard form o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possession of the goods. They in turn passed these documents from hand to hand until they rested with the ultimate buyer who took physical or manual delivery of possession of those goods. In the view that the delivery orders represented the goods this Court did not go into the question whether the delivery orders would be documents of title under section 2(4) of the Sale of Goods Act. The trial court distinguished this case on the ground 'chat it was not questioned before the Supreme Court that a Mills pucca delivery order was a document of title and in any event there is no decision that the delivery order is a document of title. The ground on which Supreme Court's decision was held to be not applicable cannot be supported for this Court has definitely held that the delivery order represents the goods. The appellate court held the decision of the Supreme Court as inapplicable because there was no evidence as to what were the actual terms of the contract or as to the terms and conditions which were to be fulfilled by the intermediate buyer at the time when the actual delivery of the goods was sought to be taken from the mills. The reference to the terms and conditions w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods specified therein and the pucca delivery orders pass from hand to hand by endorsement and are sold and dealt with in the market as absolutely representing the goods to which they relate. On that basis the Court proceeded to consider the question whether the property in the, good-, represented by the pucca delivery orders can be said to have passed to the holder of the pucca delivery orders when they receive them and answered the question that the title did not pass when there was no ascertainment of goods and only when the ascertainment of goods takes place the goods are appropriated to the pucca delivery orders at the time of actual delivery. It is clear therefore that while a delivery order would be a document of title to goods the property in the goods will not pass in the cast of unascertained goods- till ascertainment takes place. But that would not affect the question of the document of title to goods being transferred and delivered and confer on the possessor of the document a right to transfer or receive the goods thereby represented. In the State of Andhra Pradesh v. Kolla Sreerama Murthy, 1963] (1) SCR 184 the question that arose was whether a person who instead o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... document of title to goods. The other reason for holding that the buyer under the delivery order is not entitled to possession as he had to register his name and give an undertaking will be dealt with in due course. In this view the plea of the appellant that the delivery orders tendered in respect of the contracts are proper tenders would have to be accepted if the possessor of the documents is entitled to transfer or receive the goods thereby represented. In this connection it may be noted from Anglo-India Jute Mills Co. v. Omadenull, (1) the practice in the jute trade by the Indian Jute Mills' Association has been recognised. The practice of issuing delivery orders in pursuance of clause similar to clause 3 in the contract has also been recognised. The delivery orders that passed on from person to person by endorsement and delivery were construed as documents representing the goods by this Court in, (1955) 1 S.C.R. 1071 (supra). It was also recognised in Bayyana Bhimayya v, Govt. of Andhra Pradesh [1961] (3) S.C.R. 267 at 270 that deliver y orders are documents of title. The delivery order if it satisfies the requirements of section 2(4) either by the document being an or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to avoid the contract as the prices had fallen without any justification. The contents of the plaint have been set out at length at the beginning of the judgment. It may be noted that the appellant and the respondent entered into several contracts. The first 3 contracts were entered into on 22nd November, 1st December and 10th December, 1951. Under each of the contracts goods were to be delivered in April, May and June. The rates specified are ₹ 206/. per 100 bags according to the first contract, ₹ 210/4/- per 100 bags and ₹ 216/- per 100 bags respectively. At the commencement of the first period of delivery in April, 1952, it was found that the rate had fallen to ₹ 1551- per 100 bags. The margin in the three deliveries due in April under the 3 contracts resulted in a loss of about ₹ 50,175 to the respondent. That this contract was under Indian Jute Mills' Association was not disputed and accepting its full implications the respondent paid the amount under settlement contracts. Regarding the delivery due in the month of May under the 3 contracts there was a Sold and Bought note exchanged between the parties whereby the respondent agreed to sell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not any tender of delivery orders and whether the delivery orders were in accordance with the contract or not. Much less is there any reference to the delivery order requiring that it should be registered with the Mill or that an undertaking to abide by the conditions was insisted upon in the delivery order. In the amended plaint Paragraph 19A was introduced wherein the appellant reiterating that Mills' pucca delivery orders were made in terms of the contracts between the parties proceeded to state that in any event the delivery orders were proper tenders by virtue of trade customs and usage of the Jute Trade in Calcutta. In the additional written statement filed on 9th December, 1957, further particulars in reply to Paragraph 19A of the plaint are given in Paragraph 2- It is stated that the delivery orders are not in terms of the contracts and that the appellant had no title to them. It is further stated that the delivery orders on the face of them relate to goods deliverable under co acts between third parties, mentioned in the said delivery orders, that the goods are not of the description as mentioned in the contracts and that when the respondent called for the tender of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling with the manner in which allegations of fact in the plaint should be traversed and the legal consequences flowing from its non- compliance. The written-statement must deal specifically with each allegation of fact in the plaint and when a defendant denies any such fact, he must not do so evasively, but answer the point of substance. If his denial of a fact is not specific but evasive, the said fact shall be taken to be admitted. In such an event, the. admission itself being proof, no other proof is necessary. The respondent had ample opportunity to put forward his objections to the delivery order in the correspondence that was exchanged between the parties or in the written statement as originally filed. The additional written statement of course, gave another opportunity but even in this respondent has failed to put forward the grounds which he is in law required to do. On the pleadings itself it appears that the defence is without substance and belated and put forward for the purpose of escaping the liability. The three delivery orders regarding B Twill deliverable in June on the first three contracts, and of hessian deliverable in June and regarding the last contract by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt duly delivered the delivery orders and the respondent paid for and took delivery of the same but pleaded that he paid and took delivery before he discovered that the relevant contract was void. It is significant that the attack was on the contract on the ground that it became void because of the West Bengal Act V of 1950. There is no challenge against the delivery order. The contention of the appellant that the delivery orders relating to the present suit were the usual delivery orders which were prevalent in the Jute Trade in Calcutta appears probable. No specific plea that the delivery orders relating to the suit were different from the delivery orders which the respondent accepted regarding the April delivery was raised nor was it contended that the delivery orders which lie accepted did not contain the restrictions requiring registration and giving of an undertaking. In the additional written statement there is no specific reference to Paragraph 14 of the plaint. Another contract was entered into between the appellant and the respondent on 19th April, 1952, whereby the respondent agreed to buy from the appellant and the appellant agreed to sell to the respondent 90,000 ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders as delivery orders and that the defendant had accepted mill's pucca delivery orders and paid therefore with respect to certain deliveries under the contracts in question. It was also contended on behalf of the plaintiff that in some of the correspondence the defendant alleged that as the plaintiff failed to tender mill's pucca delivery orders, the contract was cancelled and, therefore, there was in the correspondence never any contention on behalf of the defendant that mill's pucca delivery orders were not proper tender. No case of estoppel was pleaded and I am, therefore of opinion that the plaintiff cannot raise any such plea of estoppel. The question is not one of estoppel but the inference to be, drawn from the conduct of the respondent. The pleadings as well as the conduct lead one to the conclusion that the delivery orders were in accordance with the contract which the respondent accepted, as Mills' pucca delivery orders. In the result apart from the questions of law which have been discussed in full by all the courts the appellant is entitled to succeed on the simple ground that he has established that in the cases in dispute the delivery orders w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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