Case Note & Summary
The dispute arose between a firm engaged in the manufacture and sale of tents and the Union of India regarding the short delivery of goods under a contract. The appellant, Marwar Tent Factory, submitted a tender for the supply of tents, which was accepted, leading to a contract for the delivery of 15,000 tents. A consignment of 1,500 tents was dispatched, but the consignee reported a short delivery of 224 tents, leading to a deduction from the payments due to the appellant. The appellant filed a suit in the Delhi High Court for recovery of the principal amount and interest, claiming a total of Rs.74,972. The trial court dismissed the claim except for a small amount related to 11 tents, which was decreed with interest. The appellant appealed to the Supreme Court after the High Court dismissed their appeal. The Supreme Court examined the terms of the contract, particularly the delivery terms specified as 'F.O.R. Jodhpur', concluding that the property and risk in the goods passed to the consignee upon loading at Jodhpur. The court held that the consignee was liable for the price of the short-delivered tents and awarded interest on the unpaid price at a rate of 6% per annum. The appeal was allowed, and the previous judgments were set aside, granting the appellant the full amount claimed along with interest.
Headnote
A) Sale of Goods - Passing of Property - Property in goods passed upon loading in railway wagons - Indian Sale of Goods Act, 1930, Sections 23, 39 - The court held that under the terms of the contract, the property in the goods passed to the buyer as soon as they were loaded in the railway wagons at Jodhpur, thus establishing the consignee's liability for the short delivery. (Paras 136-137) B) Interest on Unpaid Price - Entitlement to interest on delayed payment - Indian Sale of Goods Act, 1930, Section 61 - The appellant was entitled to interest on the unpaid price of the goods for the period from 1.1.1969 to 1.12.1971 at a reasonable rate of 6% per annum. (Paras 139-140)
Issue of Consideration
Whether the property in goods passed to the buyer upon loading at the railway station, and the liability for short delivery rests with the consignee.
Final Decision
The Supreme Court allowed the appeal, decreeing the appellant's claim for the price of the 224 tents and awarding interest at 6% per annum for the period from 1.1.1969 to 1.12.1971. The court set aside the previous judgments that denied the claim.
Law Points
- Sale of Goods
- Contract Law
- Delivery Terms
- Liability for Short Delivery
- Interest on Unpaid Price
