Kalka Prasad Ram Charan v. Harish Chandra

Kalka Prasad Ram Charan v. Harish Chandra

AIR 1957 All 25

(Section 54(2) of Sale of Goods Act, Right of an unpaid seller, Right to lien)

FACTS:

Harish (H) entered into a contract for sale of 67 thans of silk with Kalka Prasad (K) (a partnership firm). 10 thans were delivered immediately. Delivery of the remaining, were not accepted by K. H sold off the remaining thans and then notified the K about the sale. But due to a government control order the sale fetched a price considerably less than what had been agreed between the two. H brought a claim to recover the damages after deducting the price from the sale.

HELD

Trial Court: There was a contract. Case awarded to H without considering the question whether notice of the intended sale was given to K.

HIGH COURT:

Contentions

H

1. Breach of contract, as delivery of the 57 thans not accepted and no payment made.
2. Two notices had been sent to K, one stating that if they did not accept the 57 thans they would have to pay damages and second stating that the 57 thans had already been sold.
3. S.54 (2) of SOGA not applicable as a seller’s exercise of the right of lien begins when a demand for delivery is made from him by the buyer and is followed by a refusal by him. But since this did not happen so it was not an exercise of lien, as per  section 47[1] of SOGA.
4. Buyer (K) falsely denied the formation of contract, so cannot claim relief under section 54(2).

K

1. Completely denied the existence of any such contract.
2. Claimed they were agents for H for the sale of the silk.
3. Since, no notice of the sale had been given to K therefore he was not liable to pay any damages. (section 54 (2)[2] of SOGA)

Decision:

1. No notice was sent to K. H’s own munim contradicted him in his deposition, claiming that only an oral statement was made, further H was unable to produce any secondary statement proving his statement.
2. If lien would arise only when demand for the said goods is made then the interpretation of section 47 would be very narrow. H had sold the thans in exercise of lien as per S.47 and that S.54 (2) would be applicable. The mere fact that K made a false claim about not entering into a contract is not sufficient to take the case out of the purview of section 54(2). Therefore seller cannot claim any damages from buyer.
3. As 67 thans were determined by both parties, the goods were ascertained and were in a deliverable state. Under Section 20[3], Sale of Goods Act the property in the goods passed to the buyer as soon as the contract was made, so the seller was merely a bailee.
4. H should have sued under S.55[4], claiming the full amount, but now the court cannot award him damages as that would give Harish a decree for an amount larger than what he had claimed. No damages can be claimed for the 57 thans. For the remaining 10 thans, K is liable to pay with interest.