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Judgment
The above appeal suits are directed against the judgment and decree dated 25.4.1984 respectively made in O.S.Nos. 7929 of 1981, 8350 of
1981 and 8351 of 1981 by the Court of IV Additional Judge, City Civil Court, Madras, thereby decreeing all the three suits, as prayed for.
In fact, all the above three suits have been filed against one and the same defendant, praying thereby to direct the defendant to pay the plaintiff in
O.S.NO. 7929 of 1981(connected with A.S.No. 376 of 1985) a sum of Rs.91,476.76.; to pay the plaintiff in O.S.No. 8350 of 1981 (connected
with A.S.No.378 of 1985) a sum of Rs.41,866 and to pay the plaintiff in O.S.No.8351 of 1981 (connected with A.S.No.379 of 1985) a sum of
Rs.55,368 with interest at 18% p.a. on the principal sums and with costs, which amounts, the plaintiffs are said to have paid in excess to the
defendant, than what the plaintiffs should have paid, as per the accounts.
So far as the suit in O.S.No.7929 of 1981, which is concerned with A.S.No.376 of 1985, is concerned, the averments of the plaint are that the
plaintiff is a limited company; that the plaintiffs company is carrying on business, as dealers, in Aluminium and Steel Reinforce Conductors; that the
defendants a public sector and a Government of India undertaking used to supply the raw materials to enable the plaintiff to manufacture the
Aluminium and Steel Reinforce Conductors; that the plaintiffs were allotted 40 M.T of Aluminium E.C. Grade Ingots, as per the sale note, dated
26.5.1980, fixing the price at Rs.14,089 per M.T. exgodown, other charges being extra amounts payable and the said sale note was valid upto
24.6.1980, by which time, the plaintiffs had to arrange for remittance and deposit of sale value; that in accordance with the terms and conditions of
the sale note, the plaintiffs opened a letter of credit in confirmation with the arrangement and the amount was reserved with the bankers; that the
defendants accordingly received the amount payable in respect of the goods earmarked for delivery to the plaintiffs and issued a delivery order
No. 1568, dated 10.7.1980 against the above sale note and as per the value of the invoice issued by the defendants; that all the ingredients of sale
were completed with the payment by the plaintiffs to the defendants; that by issuing the delivery order for delivery of the goods to the plaintiffs, the
title in the goods passed to the plaintiffs effectively, in view of the fact that the goods were in ""deliverable state"" in the godown of the defendants
and only formal physical delivery had to be effected and that the transaction of sale became completed as the between parties, by payment and
issue of delivery order.
The further case of the plaintiffs is that when the plaintiffs went to the godown and about to take physical delivery of the goods, they received a
telegram dated 19.7.1980, sent by the defendants, directing the plaintiffs to make a further payment of Rs.75,600.56 ps. on ground that the
amount payable by the plaintiffs has increased, due to increase in price of Aluminium EC Grade Ingots; that the plaintiffs are not liable to pay the
said excess demand, but since the defendants refused to effect physical delivery of the goods, without such payment, the plaintiffs paid the said
amount under coercion, by pay order dated 29.7.1980 for the said sum of Rs. 75,600.56 ps., issued by the Indian Overseas Bank,
Kodambakkam Branch, Madras-26. The further case of the plaintiffs is that the price of the goods having been fixed and the plaintiffs having paid
the amounts, the tile of the goods was passed to the plaintiffs with the payment and issue of delivery order and the defendants cannot demand any
excess payment on account of any increase in the price of the material between the date of delivery order handed over to the plaintiffs and the date
when actual physical delivery took place. The plaintiffs would further submit that in as much as the goods were available in the godown and having
ascertained the goods, as shown in the invoice and the sale price having been fixed, the demand for excess payment on account of the alleged
increase in price, after the date of issue of delivery order to the plaintiffs is illegal and not valid and opposed to Law and equity; that the plaintiffs
were made to pay the amount under coercion and the amount so collected by the defendants from the plaintiffs on account of the alleged increase
in price, after issue of the delivery order, being illegal, the plaintiffs are entitled to the refund of the said amount from the defendants; that therefore,
the plaintiffs issued a notice dated 3.5.1981 to the defendants calling upon them to pay the amounts, for which the defendants sent a reply dated
26.5.1981 with frivolous allegations that they are entitled to claim excess amount towards increase in price, as per sale note; that the said plea of
the defendants is not valid and hence the plaintiffs would file the above suit for recovery of a sum of Rs.75,600.56 ps., being the excess amount
collected by the defendants, with interest at 18%p.a.
So far as the suit in O.S.No. 8350 of 1981, which is concerned with A.S.No.378 of 1985, the averments of the plaint are that the plaintiffs
were allotted 40 M.T. of Aluminium E.C. Grade rods, as per the sale note dated 24.5.1980 and the price was fixed at Rs.3,13,000 as per invoice
No. AL/ECR, dated 5.7.1980 and in the same manner as in the earlier case, the defendants demanded the plaintiffs to pay an excess amount of
Rs. 34,600, through their telegram dated 17.7.1980 and the plaintiffs paid the said amount under protest, as per pay order No. 2787, dated
25.7.1980 and took physical delivery of the consignments and since the said amount of Rs.34,600 was collected by the defendants from the
plaintiffs under coercion and threat, without allowing the plaintiffs to take physical delivery of the goods, even though the defendants cannot
demand any excess payment on account of any increase in the price of the materials between the date of delivery order handed over to the
plaintiffs and the date, when actual physical delivery took place, the plaintiffs would file the above suit for recovery of the said sum of Rs. 34,600,
being the principal amount and Rs.7,266 being the interest at 18% p.a., totalling to Rs.41,866.
So far as the third suit in O.S.No. 8351 of 1981, which is concerned with A.S.No. 379 of 1985, is concerned, the averments of the plaint are
that the plaintiffs are the dealers in Aluminium and Steel reinforced conductors; that the defendants used to supply the raw materials to enable the
plaintiffs to manufacture conductors in Aluminium and Steel; that the plaintiffs were allotted 40 M.T. of Aluminium E.C. Grade Aluminium rods as
per sale note dated 22.5.1980, fixing the price at Rs.6,23,725-88 ps. as per invoice No-A1/ECR dated 5.7.1980; that in accordance with the
terms and conditions of the sale note, the plaintiffs opened a letter of credit in confirmation with the arrangement and the defendants received the
amount and issued a delivery Order No.3645, dated 3.7.1980 against the sale note and as per the value of the invoice issued by the defendants;
that prior to taking physical delivery of the goods, the defendants, as per the telegram dated 17.7.1980, directed the plaintiffs to make further
payment of Rs.45,800 on the ground that the amount payable by the plaintiffs has increased due to increase in price of E.C. Aluminium rods; that
the plaintiffs, even though not liable to pay the said excess amount, under coercion and threat and to take physical delivery of the goods, paid the
said amount, by pay Order No.2738, dated 25.7.1980 and took physical delivery of the consignment and that the defendants collected the excess
amount under coercion and being illegal, the plaintiffs filed the above suit for recovery of the said sum of Rs.45,800, being the principal amount and
Rs.9,568 being the interest at 18% p.a., totalling to Rs.55,368.
In the written statements filed in all the three suits in a similar manner, the defendant would allege that the defendants are a Corporation owned
by the Central Government and carry out the direction as and when issued by the Central Government, with regard to the release of imported
stocks of Aluminium; that the defendants issued sale notes to the plaintiffs on certain conditions mentioned therein and the price is subject to
revision vide Note (i) thereof, which says that the seller reserves the right to revise the price mentioned in clause (4) of the material with
consequential revision in quantity etc; that it is also provided therein that in the event of price being revised by the Government, the ruling (price) on
the date of delivery/ despatch shall be charged; that the collection of the additional sums are unassailable and valid in Law; that it is open to the
defendants to demand difference in price in view of the increase in the price, after 15.7.1980, though the delivery order was dated 10.7.1980 in
the case of O.S.No.7929 of 1981 and dated 3.7.1980 in the case of O.S.Nos.8350 of 1981 and 8351 of 1981; that the plaintiffs are not entitled
to claim the refund, since the defendant collected the said amounts lawfully and since the plaintiffs are questioning the price as fixed by the
Aluminium Controller, the plaintiffs ought to have made the Aluminium Controller as party to the suit and thus the suits are bad for non-joinder of
necessary party and would ultimately pray for dismissing all the suits with costs.
Based on the above pleadings of parties, the Court below would frame certain issues and would hold common trial in all the three suits, by
recording the evidence in O.S.No.7921 of 1981 (connected with A.S.No. 376 of 1985) in which, on the part of the plaintiffs, two witnesses
would be examined as P.Ws. 1 and 2 and they would mark six documents as Exs.A. 1 to A.6. On the part of the defendants two witnesses would
be examined as D.WS.1 and 2 and they would also mark 13 documents as exs.B.1 to B.13.
In consideration of the above evidence brought on record by parties and in the context of the pleadings and the position of Law and
appreciating the same in its own way, the lower Court would ultimately arrive at the conclusion to decree all the suits, as prayed for, challenging
which, the defendant in all the above three suits (as details above) has come forward to prefer the above three appeal suits, on certain grounds, as
offered in the Memorandum of Grounds of Appeal.
During arguments, the learned counsel for the appellant/defendant would contend that the defendants are the Public Sector Undertakings and
are canalising agents and used to supply Aluminium rods to actual users on the price quoted by the Aluminium Controller; that Aluminium being a
controlled commodity, if any party wants to import it to a foreign country, he has to apply and get allotment from the Aluminium Controller; that in
all these matters, in accordance with the terms and conditions of the sale note issued by the defendant, the plaintiffs opened a letter of credit and
the amount was reserved with the bankers and the plaintiffs after obtaining the delivery order, have to produce the same to the Godown Manager
to take delivery of the goods.
The learned counsel appearing for the appellants would further argue that the plaintiffs after receipt of the delivery order, delayed in taking
delivery of the goods from the defendants godown and in the mean while, the price of the Aluminium was increased by the Aluminium Controller
and the defendants have to pay the difference in price and they paid the difference in price and had taken delivery of the goods and hence the
defendant/appellant is not liable to refund the difference amount, paid by the plaintiffs/respondents. He would further contend that the defendant
issued sale notes to the plaintiffs and as per Note (i) of the sale notes, the defendant can revise the price and in the event of price being revised by
the Government, the price on the date of delivery/despatch shall be charged; that the price of the commodity is fixed by the Aluminium Controller
and the defendants have no control over the price of the commodity; that title to the goods will be passed on only by physical delivery of the goods
and not by mere issuance of delivery order and that the goods are unascertained because they have to be separated from the bulk, weighed and
delivered.
The learned counsel for the appellant would further continue to argue that in Para No.11 of its judgment, the lower Court, by relying upon
Section 2(4) the Sale of Good''s Act, 1930, would observe that by issue of delivery order, the title of the goods had been passed on to the
plaintiffs; that but u/s 18 of the Sale of Goods Act, unless the goods are ascertained, the title to the goods will not pass on to the buyer and would
rely on Sections 22 and 23 of the Sale of Goods Act and would cite a judgment in Jute and Gunny Brokers Ltd. and another v The Union of India
and others, 1961 S.C.R., 820 wherein it has been observed that
The contention on behalf of the Union of India is that property in the goods cannot pass in law to the holder of the pucca delivery orders till the
goods are actually appropriated to the particular order; therefore, as in this case it is not in dispute that no goods were actually appropriated
towards the pucca delivery orders concerned, the property in the goods did not pass to the holders thereof but was still in the milt. Reliance in this
connection is placed on S. 18 of the Indian Sale of Goods Act, No.III of 1930. That Section lays down that ""Where there is a contract for the sale
of unascertained goods, no property in the goods is transferred to the buyer unless and until the goods are ascertained."" In the present case, as we
have already said it is not in dispute that the goods covered by the pucca delivery orders are not ascertained at the time such orders are issued and
ascertainment takes place in the shape of appropriation when the goods are actually delivered in compliance therewith. Therefore, till appropriation
takes place and goods are actually delivered, they are not ascertained. The contract therefore represented by the pucca delivery orders is a
contract for the sake of unascertained goods and no property in the goods is transferred to the buyer in view of S. 18 of the Indian Sale of Goods
Act till the goods are ascertained by appropriation, which in this case takes place at the time only of actual delivery. The appeal court in our
opinion was therefore Tight in holding that the property in the goods included in the pucca delivery orders did not pass to the holders thereof in
view of S. 18 of the Sale of Goods Act inspite of the decision in the case of the Anglo-Indian Jute Mills Co. 1910 ILR 38 Cal. 127 What that case
decided was that in a suit between a holder of a pucca delivery order be he the first holder or a subsequent holder who has purchased the pucca
delivery order in the market- and the mills, there will be an estoppel and the mill will be estopped from denying that cash had been paid for the
goods to which the delivery order related and that they held the goods for the holder of the pucca delivery order. That case therefore merely lays
down the rule of estoppel as between the mill and the holder of the pucca delivery order and in a suit between them the mill will be estopped form
denying the title of the holder of pucca delivery orders; but that does not mean that in law the title passed to the holder 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 like of actual delivery. The appeal court was in our opinion right in
holding that the effect of the decision in the case of Anglo-India Jute Mills Co, ILR 1910 Cal, 127 was not that the property in the goods passed
by estoppel and that the case only decided that as between the seller and the holder of the pucca delivery order, the seller will not be heard to say
that there was no title in the holder of the delivery order. That case was hot dealing with the question of title at all as was made clear by Jenkins
C.J. but was merely concerned with estoppel. In the present case the question whether the Government of India Will be estopped is a matter
which we shall consider later; but so far as the question of title is concerned there can be no doubt in view of S. 18 of the Sale of Goods Act that
title in these cases had not passed to the holders of the pucca delivery orders on September 30, 1946, for the goods were not ascertained till then,
whatever may be the position of the holders of the pucca delivery orders in a suit between them and the mills to enforce them.
The next judgment cited by the learned counsel for the appellant in Juggilal Kamlapat Vs. Pratapmal Rameshwar, , where it has been held that
There is yet another reason why the pucca delivery orders cannot be taken as documents of title. These delivery orders did not relate to any
specific lot of goods. It is well established that title cannot pass until the goods are ascertained in view of Section 18 of the Sale of Goods Act,
1930. See Jute and Gunny Brokers Ltd. and Another Vs. The Union of India (UOI) and Others, . It was argued that requisite quantities of goods
were lying in the mills'' godown when the pucca delivery orders were issued which was sufficient ascertainment within the meaning of Section 18. It
appears from the Judgment of the learned single Judge as also of the Division Bench of the High Court that no responsible officer of the mills came
forward to prove this. But even assuming that the mills; godowns had sufficient quantities of B twill and hessian when the pucca delivery orders
were issued, the requirement is not satisfied. Here the contracts were for the sale of unascertained goods by description. Section 23 of the Sale of
Goods Act provides that in such cases, if goods of that description and in a deliverable state are unconditionally appropriated to the contract by
the seller with the express or implied assent of the buyer, the property in the goods passes to the buyer. The assent may be given either before or
after the appropriation is made. But here the 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.
The learned counsel for the appellant would then draw the attention of the Court towards the middle part of para No.11 of the judgment of the
lower Court and would cite yet another judgment in M/s Kamala Sugar Mills Ltd., Delhi v M/s.Ganga Bishen Bhajan Singh 1990 L.W. S.N. 42,
wherein it has been held that
S. 23 of the Contract Act which provides the basis for Courts to find whether a contract is opposed to public policy says that a contract with
consideration or object which is forbidden by law, or is of such a nature that, if permitted, it would defeat the provisions of any law, or is
fraudulent, or involves or implies injury to the person or property of another is a contract which is opposed to public policy. The foundation on
which that principles of public policy is based is that no Court will lend its aid to a man who founds his cause of action upon an immoral or illegal
act. If the cause of action springs from Ex Turpi Cause, then the Courts are prevented from assisting a litigant who bases his cause of action on
such immoral and illegal causes. But it is always necessary that the Court''s conscience should be satisfied that the illegality, immorality or
irrationality complied of in a contract goes to the very root of the matter and shakes its foundation. If such is the situation, then the Courts will not
assist the litigant who seeks its assistance under such circumstances.
It is further held that : The Courts, therefore, ought not to be astute to defeat the efficacy of such document or destroy such bargains. While
interpreting a commercial contract, a broader outlook has to be adopted and care should be taken to avoid an artificial and unrealistic approach in
the matter of the understanding the meaning and purpose of such documents. In such cases, the Courts should occupy the chair of the contracting
parties and reasonably understand their minds and intents. If after such an approach the instrument still presents, circumstances which the
conscience of a reasonable and prudent person cannot accept and if Ex Facie the terms are so unconscionable, illegal and designed to avoid or
evade law, then only the doctrine of public policy will intervenes, and will not implement such bargains.
In the instant case, we are satisfied that Cls.3 and 9 have the tenor of Exs.A.1 to A.5 do not pose any irrational principle in commercial practice;
nor could it be said to be so unconscionable so as to be ignored by courts as being opposed to public policy.
The learned counsel for the appellant would cite yet another judgment reported in P.S.N.S. Ambalavana Chettiar and Col Ltd and another v.
Express Newspapers Ltd., Bombay, 1968 (2) S.C.R. 239 wherein it has been observed that
Section 18 of the Sale of Goods Act provides that where there is a contract for the sale of unascertained goods no property in the goods is
transferred to the buyer unless and until the goods are ascertained. It is a condition precedent to the passing of property under a contract of sale
that the goods are ascertained. The condition is not fulfilled where there is a contract for sale of a portion of a specified larger stock. Till the portion
is identified appropriated to the contract, no property passes to the buyer. In Gillett v Hill, 1834 (2) C&M.535; 149 E.R 871, Bayley, B. said:
Where there is a bargain for a certain quantity, and there is a power of selection in the vendor to deliver which he thinks fit, then the right to them
does not pass to the vendee until the vendor has made his selection, and trover is not maintainable before that is done. If I agree to deliver a certain
quantity of oil as ten out of eighteen tons, no one can say which part of the whole quantity I have agreed to deliver until a selection is made. There
is no individuality until it has been divided.
The learned counsel for the appellant would end up his argument saying that since there was a delay on the part of the plaintiffs in taking
delivery of the consignments and since in the meantime the prices of the commodities have gone up, the plaintiffs are bound to pay the enhanced
rates and would pray to set aside the judgment and decree of the lower Court.
In reply, the learned counsel appearing for the respondents/plaintiffs would contend that the point that is to be decided in these matters is
whether the plaintiffs were entitled to delivery or not; that the plaintiffs paid the excess amount under protest and therefore they are entitled to get
back the same; that it is not a case where the goods were sent after importing; that the goods were available in the godown, on the date, when the
plaintiffs paid the excess amount and would cite Ex.B.7, dated 15.7.1980, which is the notification issued by the Joint Secretary to the Government
of India, Ministry of Steel and Mines, which runs as follows:
In pursuance of sub-clause (2) of clause 4 of the Aluminium Control Order, 1970, and in supersession of the notification of the Government of
India in the late Ministry of Steel, Mines & Coal Department of Mines No.S.O.567(E) dated 4th October, 1979, the Central Government hereby
fixes the sale price of imported aluminium as specified in the schedule appended to this notification.
THE SCHEDULE
ISI Specification Price in Rupees per lonne
(1) (2)
Ingots conforming to specification : 15867
IS 4026 - 1969
Ingots conforming to specification : 15,723
IS 2590 - 1964
3.Wire rods conforming to specification: 16,349
IS 5484 -1969
Citing the above, the learned counsel for the respondents/plaintiffs would argue that according to particular specification, unless the otherside is
able to connect the specification and in the absence of anything to show that the standard of the specification is the same as mentioned in Ex.B.7,
the defendants cannot claim the excess amount and increase the price. The learned counsel for the respondents/plaintiffs would further argue that
the notification under Ex.B.7 dated 15.7.1980 is after the issue of the delivery order and therefore the same cannot be relied upon; that when once
the delivery order is issued, the plaintiffs are entitled to take delivery of the goods; that the question of ascertainment of goods does not arise
because the goods are available for delivery and in that context, the learned counsel for the respondents/plaintiffs would rely upon the evidence of
D.W.1, who deposed that he was one who specify and deliver the goods; that the allotment of the Aluminium has to be done by the Aluminium
Controller and the consignment will be allotted either in the godown or in the transit in the ship and they are only concerned with the sale; that the
amount has to be paid within a specified time, after opening the sale note; that in all these cases, the plaintiffs deposited the amount in time and only
after ascertaining the payment of the amount, they issued the delivery orders. The learned counsel for the respondents/plaintiffs would then rely
upon the evidence of D.W.2, who is the Assistant Divisional Manager in the defendant- Corporation and who deposed in his cross examination
that immediately after the issue of delivery order to the plaintiffs, they would get carbon copy of the same and that after the issue of the delivery
order, they have no right to detain the consignment and that the purchaser can take delivery of the goods at any time.
The learned counsel for the respondents plaintiffs would further contend that there is an admission on the part of D.W.2 that they received the
copy of the delivery order prior to the date of Ex.B.7 and therefore when once the delivery order copy is received by the godown authorities,
where does the question of withholding the delivery arise that since the defendants did not effect the delivery of the goods, the plaintiffs paid the
excess amount under protest and took delivery of the goods and therefore the plaintiffs are claiming only the amounts, which they have paid in
excess to the defendants and stating what a seller or buyer should do, he would rely on Section 2(4) of the Sale of Goods Act and would State
that the goods are in a ""deliverable state"". He would further rely on Section 22 of the Sale of Goods Act, which deals with ""specific goods in a
deliverable state, when the seller has to do anything thereto in order to ascertain price"" and would state that since the price had already been paid,
the question of ascertaining the goods does not arise; that there is nothing to connect increase in price with Ex.B.7 and in the absence of any
connecting link, it is not open to the defendants to say that the plaintiffs must pay the increased price and except Ex.B.7, there is no other
impediment on the /plaintiffs to receive the goods.
The learned counsel for the respondents would further argue that even assuming that there was delay on the part of the plaintiffs/respondents in
taking delivery of the goods, it would only attract the godown rent and interest; that the plaintiffs have not applied for delivery and it has not
affected the defendants in any manner; that so long as the separation is not done with regard to the quantity to be supplied to the plaintiffs, it would
not be ascertained goods, that when once the delivery order goes to the godown, it is the duty of the seller i.e. the defendants herein to inform
about the quantity to be delivered, which he can keep separately, so that the plaintiffs can take delivery of the goods at any time; that D.W.2
admitted that the goods must be delivered after receipt of the delivery order and therefore having issued the delivery order, the defendants cannot
plead that the plaintiffs are not entitled to take delivery of the goods.
The learned counsel for the respondents/plaintiffs would further argue that payments have been made in time, as admitted; that so far as
A.S.No.378 of 1985 and 379 of 1985 are concerned, the payments are made on 15.6.1980 and the payment in A.S.No.376 of 1985 was
received by the defendant on 16.6.1980; that this realisation would not in any manner affect the right of the purchaser; and after complying with all
the formalities only, delivery orders were issued on 10.7.1980; that the plaintiffs paid the excess amount under protest; that the defendants
demanded the excess amount under Ex.A.6-telegram, dated 19.7.1980 and the plaintiffs sent the reply under Ex.A.2 on 29.7.1980, thereby
stating that the delivery Order No.1568 dated 10.7.1980 for 40 M.Ts. of EC Grade Aluminium Ingots has already been issued in favour of the
plaintiffs against the sale note and ultimately saying that they are paying the amount ''under protest'' and would request to deliver the material; that if
the Court is pleased to hold that on issue of the delivery order, the plaintiffs are entitled to delivery of the goods, the excess amount must be
ordered to be refunded to the plaintiffs; that the defendants claim is based only on Ex.B.7 and excepting that document, there is no other defence
at all and there is absolutely no other go for the defendants except to refund the excess amount and since the excess amount paid by the plaintiffs
was retained by the defendants illegally, the plaintiffs are entitled to the interest at 18% p.a. and would end up his argument saying that the trial
Judge has rightly dealt with all these aspects and would pray to dismiss the appeals filed by the appellant/defendants.
The learned counsel appearing for the appellants/defendants, in his attempt to clarify certain anomalies in the argument of the learned counsel
for the respondents/plaintiffs would show as to how the question of payment would not arise in the cases connected the appeals and would read
out passages from Exs.B.1, B.2, B.4, B.5, B.7, B.12 and B.13 and also from the evidence of P.W.1. Regarding the interest claimed by the
plaintiffs at 18% p.a, the learned counsel for the appellants/defendants would cite clause 6(V) of Exs.B.1 and B.2, which reads as follows:
In case of delay to effect delivery of the material for whatsoever reasons, the sale value and other charges deposited with the seller will not carry
any interest. In case delivery becomes impossible due to Government order or any other reason, the deposited money will be refunded to the
buyer without any liability to interest.
At this juncture, the learned counsel for the appellants/defendants would cite a judgment of this Court in Messrs. General Papers Limited v Messrs
A.P.A. Pakkir Mohideen and Brothers, 1958 M.L.J. 294, wherein it has been observed that.
The next was that as the goods covered by the contracts, Exhibits B1 and B2, were in a deliverable state, and as the plaintiff''s agent Annamalai
had inspected and approved of them, they must be deemed to have been unconditionally appropriated to the and to have become their property
the moment the contracts were entered into at Madras, or atleast when they were separated from the general stock and put in the cart to be taken
to the Beach Station at Madras for consignment, and so the plaintiffs ought to have been directed by the lower Court to bear the loss by the fire
later on. Mr. Gopalaswami Iyengar relied on the ruling in Langton v Higgins 4H.&N.391 Revised Reports 519 and on the ruling in Aldridge v.
Johnson 110 Revised Reports 875, referred to therein, in support of the above contention. We agree with Mr. Bashyam that those rulings will have
no application to the facts of this case. In Aldridge v Johnson, it was held that the property passed to the buyer when the barley was put into the
sacks supplied by the buyer. In Langton v Higgins, the property was held to have passed to the buyer by the sellers putting peppermint oil into the
bottles supplied by the buyer. With great respect, we agree that in those cases the property passed to the buyer by such act. But the sellers in this
case did not take out the bales contracted for from the general stock with them, and put them into any cart or box sent by the buyers, when alone
the appropriation with the implied assent of the buyer would be made out and property pass. Indeed even in firm Firm Paharia Mal Ram Sahai Vs.
Birdhi Chand Jain and Sons, , a ruling of the East Punjab High Court relied on by Mr. Gopalaswami Iyengar, it was remarked that where there is a
contract for sale of an ascertained goods, it is necessary that they should be identified and ascertained before the contract can be performed, and
that if the parties agree that the contract goods shall be taken from some specified larger stock, then there is no identification of the goods as
contract good till they are ascertained on severance, and that in this connection a mere national severance is not sufficient, and that it is well settled
that before property in the goods passes to the buyer, the individuality and identity of the goods to be delivered under the contract should be
established. So the mere fact that Annamalai had inspected the general stock and approved of the quality of the paper, and that the price was fixed
ex- godown at Madras, and the buyer had to pay the freight, sales tax, packing charges etc. will not do to pass the property to the buyers, as the
contracted bales were not separated from the general stock and given to Annamalai, and therefore the property in the suit bales had not passed at
Madras itself to the plaintiffs, the buyers here.
At this juncture, the learned counsel for the respondents/plaintiffs would comment that the question of ascertainment as well as the above judgment
are only with regard to the ascertainment but not regarding cutting of the goods and hence they are not applicable to this case.
With the above arguments of the learned counsel for both and in consideration of the evidence and the facts and circumstances of the case, for
determining the above appeals, the following points are framed:
Whether the transaction of sale was complete on the issue of the delivery orders and whether the title to the goods had been passed on to the
plaintiffs with the issue of the delivery orders even in the event of certain conditions as found in Ex.B-1 agreement.
Whether the lower Court is right in deciding to decree the suit as prayed for, for refunding the difference of amount with interest at 18% p.a?
Looking into the evidence, P.W.1 the Director in the respondents/plaintiffs company would depose that the appellants/defendants Corporation
used to supply them the Aluminium ingots and rods and would narrate the procedure in the process of sale, saying that they would first give the sale
note along with the letter of credit, declaration form and the power of attorney; that Exs.A.1 and A.2 are the sale notes, wherein the quantity of the
commodity, the price and to what date it would be delivered etc. would be found; that the sale note cannot be altered or changed and they will get
ready with money to take delivery of the article, before the closing date and after handing over the letter of credit by them, the
appellants/defendants would issue delivery order and on receipt of the delivery order, the respondents/plaintiffs would make arrangements to take
delivery of the consignments and after issuance of the delivery order, the appellants/defendants have no reason or right to stop the physical delivery
of the goods; that they would get the delivery order from the Bank, immediately after it has been sent by the appellants to the Bank; that within 15
days after the issuance of the delivery order, they should take delivery of the consignments and at times, the appellants/defendants would take even
a month for effecting the physical delivery of the goods; that in all the above three matters, on receipt of the delivery order, they approached the
appellants on the same day and requested to deliver the consignments, but the consignments were not delivered within 15 days after the issue of
the delivery order and the delay had been occasioned on account of the slackness committed on the part of the appellants/defendants, for which
the respondents/plaintiffs cannot be blamed.
This witness would further depose that as per Ex.A.1, 40 M.Ts of Aluminium should be delivered and they were not supplied in one day, but on
three different dates respectively on 11.7.1980, 29.7.1980 and on 30.7.1980; that it is not correct to say that the delay had been occasioned on
account of the delay made on the part of the respondents/plaintiffs in taking delivery of the goods; that in all the above three matters, prior to the
dates noted in the sale note, they deposited the amount in the Bank, by opening a letter of credit; that after issuing the delivery order, the sale price
cannot be altered; that they paid the amount only under protest and hence they filed the suits for recovery of the difference of amount paid by them
to the appellants/defendants.
In the cross examination, this witness would say that he did not accompany the defendants to take delivery of the consignments; that he does not
know, who is fixing the sale price of the consignments; that they have given power of attorney in favour of M.K.S & Brothers Transport Company
to take delivery of the goods; that he does not know on what date, the transport corporation people went to the defendants and took delivery of
the consignments; that they have stated about the delay caused in their pleadings itself, but have not given as to on whose fault, the delay had been
caused. This witness would firmly deny the suggestion put by the otherside that only on 8.7.80, 9.7.80 and on 16.7.1980, the amount was
received by the defendants and that only on account of the delayed payment, the delivery of the consignments were delayed. This witness would
also depose that he did not go through the conditions imposed in Exs.B.1 and B.2 and that at Ex.A.2 is the reply given by them stating that they
paid the amount under protest.
P.W.2 is the Manager of M.K.S.& Brothers Transport Company and he would depose that they would entrust the consignments with the
party on the same day; that the plaintiffs gave the delivery orders in the second and third cases on 8.7.1980 and on 14.7.1980 in the case of first
case; that in the first instance of two cases, only on 11.7.1980, delivery of the consignments was given, since there was no crane facility on 9.7.80
and 10.7.80 and in the first case on 12.8.1980, part of the consignments, weighing 10 tonnes, was given. In the cross examination, this witness
would depose that there is no record for him to prove his submissions; that he approached the defendant company for taking delivery of the goods
on 8.7.1980, 9.7.1980 and on 10.7.1980 and it is false to say that the consignments were supplied in one day in the first case and he would firmly
deny the suggestion that on account of their slackness only, the delay had been caused.
On the side of the defence, D.W.1 the Joint Divisional Manager of the defendants Corporation-would depose that the Government, through
the Aluminium Controller, would determine the requirements of every factory and start supplying partly from the imported Aluminium and partly
from the indigenous; that it is the Aluminium Controller, who has to assess the quantity of the Aluminium required per factory and to recommend to
their head office; that likewise they sold the imported Aluminium through their Madras Office and prior to the sale, they would prepare the sale
note and they are Exs.B.1 and B.2 and among other particulars given in Exs.B.1 and B.2 like price etc. condition No.6(b) is also to be taken note
of since the price quoted is likely to be modified and in such event, prior to taking physical delivery of the consignments, if there is any change in
the price, only that price would hold good and that should be paid by the buyer; that the said sale note has been signed by the plaintiffs; that in all
the above three cases, the sale amount had been deposited by letter of credit dated 19.6.1980 and the pay orders were received on 16.7.1980 in
the first case and regarding the other two cases, the pay orders were received on 9.7.1980 under Exs.B.5 and B.6 and while sending the delivery
order to their Bank, they would also send a copy of the same to the godown and it is upto the plaintiffs to weigh the consignments and take
delivery of the goods and in case there is any change in the price, the same would be made known to the buyer besides giving intimation to the
godown to stop delivery of the consignment. He would further depose that Ex.B.7 is the Gazette publication dated 15.7.1980 regarding the
enhancement of the price of the Aluminium and this fact had been made known to the plaintiff by Ex.B.8 letter and without any objection, the
plaintiffs came forward to pay the additional amount and having taken delivery of the goods under Ex.B.9-challan, the plaintiffs set up a plea that
they took delivery of the consignment and paid amount only under protest.
In the cross examination, this witness would make it clear that it is the Aluminium Controller, who will allot the Aluminium to various factories; that
only after ascertaining that their money would be obtained, they will issue the delivery orders; that for implementation of the contract, there is a time
limit; that they do not issue the sale receipt only based on the stock available in the godown, but will issue the sale note even in anticipation of the
consignments to be received and that in all the above three cases, they issued the sale receipts only when the consignments were in the godown.
This witness would firmly deny a suggestion that they have no authority to revise the price after issuance of delivery order and would state that as
per clause 6(b) of Exs.B.1 and B.2, they can revise the price of the consignment prior to handing over of the physical delivery and that under
Ex.A.6, dated 19.7.1980, the plaintiffs issued them a telegram to refund the excess amount.
D.W.2 is the Assistant Divisional Manager of the defendants Corporation and during the year 1980, he was at Royapuram godown; that the
copy of the delivery order would come to the godown; that the purchasers would show the delivery order sent to them and on comparison of the
same with the copy sent to the godown, they will entrust the consignment with the purchaser after weighing the same; that on 11.7.1980, there was
a stock of 500 M.Ts of Aluminium; that on that day, they have effected the delivery of 52 M.Ts of Aluminium only; that even though the delivery
orders of the plaintiffs in O.S.Nos.8350 of 1981 and 8351 of 1981 connected with A.S.Nos.378 of 1985 and 379 of 1985 respectively were to
the effect of 40 M.Ts, they have taken delivery of 14 M.Ts only on that day; that on 29.7.1980 they have taken delivery of 22 M.Ts of Aluminum
and the rest of the Aluminium had been taken delivery on 30.7.1980 and they would deny a suggestion that because of them only the delay was
caused.
In the cross examination, this witness would depose that the moment the delivery order was issued to the plaintiffs, he would receive the copy; that
even prior to 14.7.1980, he was in receipt of the delivery order; that they have no authority to detain any consignment after the receipt of the
delivery order and the purchaser can come and take delivery of the goods at any time; that the Aluminium ingots were delivered from 7.7.80 to
10.7.80, on 14.7.80 pud on 31.7.1980; that if they receive any order from the Regional Office to the effect not to deliver and goods, they cannot
give delivery of the consignments and that if the delivery has not been taken within 15 days after the issue of the delivery order, the buyer should
pay the godown charges.
POINT NO. 1:-
In support of their contentions, the plaintiffs would mark six documents as Exs.A.1 to A.6. Ex.A.1 is the delivery order given to the plaintiffs in
O.S.Nos.8350 of 1981 and 8351 of 1981 (connected with A.S.Nos.378 of 1985 and 379 of 1985) by the defendants; Ex.A.2 is the office copy
of the letter dated 29.7.1980 addressed by the plaintiff in O.S.NO.7929 of 1981 connected with A.S.No.376 of 1985 to the defendants; Exs.A.3
to A.5 are the legal notices issued by the plaintiffs in all the above suits respectively to the defendants and Ex.A.6 is the telegram dated 19.7.1980
issued by the defendants to the plaintiffs in O.S.Nos.8350 of 1981 and 8351 of 1981 (connected with A.S.Nos. 378 of 1985 and 379 of 1985).
From among all these documents, marked on behalf of the plaintiffs, the respondents/plaintiffs would claim to have become the owner of the goods
under Ex.A.1 delivery order, dated 3.7.1980, since according to them, the moment the delivery order was issued in their favour by the defendants,
the title of the goods had been passed on to them and it is only the formality that is to be observed for taking physical delivery of possession of the
property and further since Ex.A.1-delivery order had been issued on payment of the amount quoted by the defendants, there cannot be a revised
sale price for the same consignment, which had been sold in their favour. The other two vital documents are Exs.A.2 and A.6. Among these two
documents, Ex.A.6-telegram is the earlier one, dated 19.7.1980, wherein the respondents plaintiffs were requested by the appellants/defendants to
make good the difference of amount, since the price of the aluminium ingots had increased. This is the telegram that has been given at the earliest
possible opportunity, after the notification under Ex.B.7 had been received by the appellants/defendants. Ex.A.2 is the reply given by the
respondents/plaintiff to the appellants/defendants on 29.7.1980, i.e. ten days after the telegram and while enclosing therewith the pay Order for the
difference of amount, in the last paragraph of Ex.A.6, the plaintiffs would write that they are paying the amount ''under protest''. This would mean
that immediately after coming to know of the increase of the price, the plaintiffs as per the usual conditions and formalities and practice, accepted
the proposal of the defendants regarding payment of difference of amount and while enclosing the pay order for the difference of amount and
intimating their intention to take delivery of the goods on payment of the revised an they would state that they were making the payment ''under
protest'', which is nothing short of an element of after thought.
On the contrary, among the defence documents, marked as Exs.B.1 to B.13, Exs.B.1 and B.2 are the agreements entered into respectively by
the respondents/plaintiffs with the appellants/defendants, wherein not only the particulars such as description of the metals, weighment, quantity,
mode of delivery, price, handling charges, taxes applicable were mentioned, but also under Heading ''NOTE(i)'' it has been clearly mentioned that:
The seller reserves the right to revise this price mentioned in Clause (4) of the material with consequential revision in quantity etc.
Under heading ''Note (ii)'', the right of revision of taxes is also discussed. Again under clause 6(b) it has been mentioned that
**In the event of the price being revised by the Government, the ruling on the date of delivery despatch shall be charged.
This has been tellingly and mandatorily revealed as one of the conditions of the agreement entered into between the parties.
Further, it should be noted that under clause 6(v) of Exs. B.1 and B.2 it has been clearly mentioned that
In case of delay to effect delivery of the material for whatsoever reasons, the sale value and other charges deposited with the seller will not carry
any interest. In case delivery becomes impossible due to Government order or any other reason the deposited money will be refunded to the buyer
without any liability to interest.
Further, under clause 6(vi) it has been mentioned that
In default of payment/additional payment and or non- compliances of any of the formalities within the time allowed, the sale note will automatically
stand cancelled.
Clause 6(vii) reads that:
The seller shall have the right to amend or revise or modify the terms and conditions of sale note at their sole discretion.
Likewise, under clause 6(viii), a deeming provision has been introduced regarding the acceptance of the sale note and regarding the cancellation or
modification of the sale before delivery of the goods.
The next important documents, marked on behalf of the appellants/defendants are Exs.10 and B.11-delivery orders in favour of the respective
plaintiffs, wherein it has been clearly mentioned under heading ''Note 4'' that,
Material should be lifted within 15 days from the date of this D.O., failing which godown rent and interest are recoverable.
Ex.B.7 is the notification issued by the Government of India, Ministry of Steel and Mines, dated 15.7.1980 and it is the case of the
appellants/defendants that the moment the Government alters or modifies or revises the prices of the goods, the defendant-Corporation being a
Government of India undertaking, the Aluminium Controller will announce the revised rates and from the time that it has been given effect to, the
buyers have to pay me revised rates and take delivery of the consignments irrespective of the fact that sale note, delivery order etc. had already
been issued.
Only agreeing to the above conditions, the plaintiffs placed the orders with the defendants for the purchase of the commodities and not
otherwise, so as to ignore the conditions in Exs.B1 and B.2 and claim the refund of the difference of price that they have paid after enhancement.
Hence, it is clear from the terms of the agreement that it is not the sale note or delivery order that would pass on the title, but it is within the
meaning of the relevant conditions imposed in the contract itself. Hence, it is evident that the price noted in clause 4 of the contract under Exs.B.1
and B.2, should be read alongwith sub clauses and it cannot independently be looked into, so as to come forward to say that once the price under
clause 4 is fixed and the delivery order is issued, there is no question of revising the price of the consignment since the moment, the delivery order
is passed, the title is passed on to the plaintiffs. In these cases, in view of the conditions of contract, as aforementioned, the title of the goods
cannot pass on to the plaintiffs, based on the issuance of the delivery order. Hence, it has to be answered to the point No.1, as framed above, that
the transaction was not complete on the issue of the delivery order and that the title had not passed on to the plaintiffs. However, the delivery order
issued by the defendants was only subject to the other conditions imposed, as per the terms of contract and in such event, it has to be decided that
the delivery order is not a document of title.
Point No.2
Coming to the second point, it could be seen that there is no pleading at all to the effect that the goods are in a ""deliverable state"" nor any oral
evidence has been adduced to that said effect, it may further be noted that the latches committed on the part of the plaintiffs in taking delivery of the
consignments have given way for all the problems and it is the case of the plaintiffs that the delay had been caused by the defendants. On the
contrary, it would be stoutly defended by the defendants that there was absolutely no delay caused on their part and the moment either the buyer
or his power of attorney produces the delivery order, the physical delivery of the consignments would have been effected.
From the evidence of defence witnesses it comes to be known that on three instalments the plaintiffs had taken delivery of 40 M.T. of
Aluminium through their Transport contractors, and on the first day, when a part of the consignment had been taken delivery of by the plaintiffs,
there had been a stock of 500 M.Ts, out of which, by all parties including the plaintiffs, only 52 M.T.S of Aluminium had been received and
therefore it cannot under any circumstances be held that either for lack of stock or for any of the reasons, the godown authorities could be held
responsible for the delay, which is only either on the part of the plaintiffs in being lethagic or could be attributed for the delay committed by the
Transport Contractors of the plaintiffs.
Moreover, so far as the delay is concerned, in part No.5 of the plaint in O.S.Nos.8350 of 1981 and 8351 of 1981 (connected with
A.S.Nos.378 of 1985 and 379 of 1985), the plaintiffs state that ""when the plaintiffs went to the godown for taking delivery, there has been some
delay."" But, at the same time, there is no pleading to the effect that as to who caused the delay, either by the plaintiffs themselves or by the
defendants and in what matter etc., Therefore, the Court below should not have allowed evidence to be let in on this point without proper pleading.
It could be further seen from the evidence of D.W.1 that there are three modes of payment, out of which, if immediate delivery was the motive on
the plaintiffs, nothing prevented them from paying the amount by Demand Draft and take immediate delivery of the consignments. The positive
evidence adduced on the part of D.W.1 is that the price got increased only on 15.7.1980 by the notification in ExB.7. Thus, it is the fault
committed on the part of the plaintiffs, to have not come forward to take delivery of the consignments from the godown till such time, even though
the delivery order was issued long before. Hence, the delay caused in not taking delivery of the consignments before 15.7.1980, could only be
attributed for the plaintiffs and not to the defendants in any manner. Moreover, this is a charge levelled against the defendants by the plaintiffs and
therefore the burden lies on the plaintiffs to prove this fact, but the evidence adduced on the part of the plaintiff is/a begging and explanation is
lacking. Hence, it is to be decided that the plaintiffs are responsible for causing the delay in taking delivery of the consignments and for such delay
committed on the part of the plaintiffs, the defendants, cannot, under any circumstance, be held responsible. The lower Court in its judgment has
not properly considered the condition clauses in the contract covered under Exs.B.1 and B.2, agreeing which only the plaintiffs came forward to
purchase the commodity from the defendants. In fact, inspite of rise in price, in the middle, the plaintiffs willingly came forward to purchase the
goods, even paying the difference of amount. But, ten days later, changing their minds, the plaintiffs wrote a letter to the defendants under Exs.A.6,
stating thereby that they are paying the difference of amount ''under protest.'' Moreover, it comes to be known that this form of agreement, as seen
in Exs.B.1 and B.2, being the printed forms, the same were followed for earlier transactions and comes to be followed for the current and future
transactions also, since it is the evidence available from the plaintiffs side that even after the purchases, which are the subject matters of the above
three matters, the plaintiffs have been in the habit of effecting the purchase of the Aluminium ingots and rods from the defendants and no evidence
come forth to the effect of any alteration in the usual conditions, imposed in the agreement forms, covered under Exs.B.1 and B.2.Hence, it has to
be decided that the plaintiffs came forward to claim the difference of amount ignoring the conditions imposed in the contracts, which are glaring and
as against their own willingness showed to abide by the conditions mentioned under Exs.B.1 and B.2, Under such circumstances, the lower Court,
without proper consideration of the facts and circumstances and without proper appreciation of the terms and conditions of the contract and the
evidence let in by the parties, has arrived at a wrong conclusion to decree the suits as prayed for by the plaintiffs and the same being against the
spirit of Law, agreed conditions and the evidence available, the same is hereby declared wrong and set aside.
There are patent errors of Law and perversity in approach, so far as the findings arrived at by the trial Court are concerned, thus, warranting
interference by this Court into such wrong findings, as arrived at by the trial Court, as per its judgment and decree passed in all the above three
suits. So far as the facts and circumstances and the question of law that are concerned with the above cases they are one and the same and no
necessity arose to differentiate one case from the other.
In result, all the above three appeal suits are allowed. The common judgment and decree dated 25.4.1984 made in O.S.Nos.7929 of 1981, 8350
of 1981 and 8351 to 1981 by the of IV Additional Judge, City Civil Court, Madras, are set aside and the said suits are dismissed.
However, in the circumstances of the case, the parties are to bear their own costs.