Juggilal Kamlapat Vs. Pratapmal Rameshwar [1977] INSC 220 (24 November 1977)
BEG, M. HAMEEDULLAH (CJ) BEG, M. HAMEEDULLAH (CJ) GUPTA, A.C.
KAILASAM, P.S.
CITATION: 1978 AIR 389 1978 SCR (2) 219 1978 SCC (1) 69
ACT:
Sale of Goods Act 1930--Sec. 2(4). 18 and 23.
Meaning of document of title to goods--If pucca delivery order passes the title--If custom can prevail over law or express contract.
Evidence Act 1872 Sec. 92 whether custom can be pleaded to vary a written contract.
Civil Procedure Code 1908 Order VIII rule 2 and 3--Whether all grounds of defence must be raised--Effect of not raising all defence.
HEADNOTE:
The appellant-plaintiff entered into a contract with respondents to sell diverse quantities of B. Twill. By another contract the appellant agreed to sell to the respondents certain quantity of Hessian goods. All contracts were in the standard forms of the Indian Jute Mills Association. All contracts contained the following clause for payment "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 Receipts (Which Dock's or Mate's Receipts are to be handed by a Dock or Ship'$ Officer to the Seller's representatives." The appellant tendered to the respondents "Pucca Delivery Orders" on different mills. These pucca delivery orders contained a stipulation that the mills were not bound to recognise any transferee except the original buyer and further requires the transferee to give an undertaking to the mills that he will take delivery of the goods in terms of the contract between the mills and the original buyer.
The appellant was not the original buyer of these pacca delivery orders. The respondents refused to accept the pucca delivery orders tendered by the appellant or pay for the same. The appellant, therefore, instituted the present suit. In para 19A of the plaint it was contended that the delivery orders were valid by virtue of trade, custom and usage of the jute trade in Calcutta. The respondents in their written statement contended that the documents described as pucca delivery orders are not delivery orders at all, and, therefore, the tenders were invalid. The respondents also denied the existence of trade custom or usage as alleged.
The learned Trial Judge of the High Court held that the pucca delivery orders tendered by the appellant to the respondents were not in conformity with the contacts between the parties. He also held that the custom was not proved;
that the custom alleged was contrary to sections 18 and 23 of the Sale of Goods Act, 1930 and also to the terms of the written contracts.
In an appeal filed by the appellant the Division Bench of the High Court confirmed the decision of the Single Judge.
In an appeal by certificate Beg, CJ. (concurring with Gupta J.)
HELD : 1. The crux of the whole matter was whether the plaintiff had carried out what it had undertaken and tendered the delivery notes in respect of the contracts.
The respondent 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 defendants complied with such other and additional terms or conditions as the suppliers imposed. It is difficult to see how any alleged custom, could modify the requirement of law as 220 to what a document of title. is or what a particular contract is or what a particular delivery order means. The plea of custom set up by the plaintiff was not available in the face of express statutory provisions as well as specific terms of the contract between the parties. Alleged custom, amounting to ignoring or contravening the express terms of agreements or the operation of statutory provisions would obviously be invalid. A custom could not be pleaded as an answer to the provisions of section 92 of the Evidence Act which bar oral evidence to contradict, vary add to, or subtract from the terms of an agreement. Moreover, it has been found by both the learned Trial Judge as well as the Division Bench of the High Court that there is no such uniformity of practice or usage about the forms of either contracts or delivery orders or their implications as to annex obligations contained. in a particular type of delivery order to transactions in general. The defendants 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. [223C, D226D. E-G. 227A, B, D] Anglo-India Jute Mills Co. v. Omademull, 38 Cal. I.L.R.
127, Dutni Chand Rataria v. Bhuwalka Brothers Ltd., [1955] SCR 1071, Jute & Gunny Brokers Ltd. and Anr. v. The Union of India & Anr., [1961] (3) SCR 820 and The Morvi Mercantile Bank Ltd., & Anr. v. Union of India, [1965] (3) SCR 254 referred to.
2. The defendants cannot be compelled to pay damages for alleged breach of contract when the delivery order was not what they contracted for.
In view of the above conclusion it is not necessary to deal with the further question whether, the delivery orders, if they authorised the defendants to demand delivery unconditionally, would still not constitute a due performance of the contract between the parties until the goods had been ascertained. [227H, 228A.] GUPTA J. A delivery order is a document of title to the goods according to section 2(4) of the Sale of Goods Act. A delivery order is an order by the owner of goods directing the person who holds them on his behalf to deliver them to the person named in the order. If the pucca delivery orders were documents of title the defendant should have been able to get delivery only by lodging them with the mills concerned but the delivery orders issued by the mills contain a term that the mills would not be bound to recognise a transferee. The transferees have to register their names with the mills as buyers and the mills insist on an application being made for that purpose. Thus, the mills insist on a new and separate contract that the holder of a pucca delivery order accept the obligations of the original buyer, which are not necessarily identical with the obligations of the buyers under the contracts concerned in this case. The new contract insists on and includes terms regarding insurance and godown charges which are not mentioned in the contracts between the parties. Thus the pucca delivery orders were not documents of the title under the Sale of Goods Act and were not in conformity with what the parties had contracted for. [230 F. G. 231A. F]
2. The 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. [231F] Jute and Gunny Brokers Ltd. and Anr. v. Union of India and Ors, [1961] 3 SCR 820; followed.
3. The forms of the Indian Jute Manufacturers Association are not uniform. They differ in several particulars. The High Court has found that no such custom or usage has been proved on evidence. [232C] Les Affreteure Raunis Societe Anonyme v. Leopold Walford (London) Ltd., 1919 AC 801 (807) referred to.
Anglo-India Jute Mills Co. v. Omademnull, ILR 38 Calcutta 127, distinguished.
Gunny Brokers Ltd. v. Union of India, [1961] 3 SCR 820, referred to.
221 Duni Chand Rataria v. Bhuwalka Brothers Ltd., [1955] 1 S.C.R. 1071, distinguished.
Bayyana Bhimayya v. The Government of Andhra Pradesh, [1961] 3 SCR 267 and State of Andhra Pradesh v. Kolla Sreemaa Murthy, [1961] 1 SCR 184; distinguished.
4. The contention of the plaintiff that the defendant riot having raised the plea in their correspondence with the plaintiff that the delivery orders tendered were defective, were estopped from justifying their repudiation of the contracts on that ground is negatived. The plaintiff did not plead the case of estoppel and was, therefore, debarred from raising the contention. Even otherwise the law permits a defendant to justify the repudiation on any ground which exists at the time of repudiation whether or not the ground was stated in the correspondence. [233A. 234A-B] Nune Sivayya v. Maddu Ranganayakulu, 62 I.A. 89 (98) approved.
KAILASAM J. (Dissenting).
1. In the original written statement the defendant contended that the bought and sold chits and contracts are invalid and void as hit by the provision of West Bengal Jute Goods Act, 1950. Therefore, on the original pleadings the question as to whether the delivery order was according to the contract was not in dispute. Four years after the original plaint was filed the appellant sought amendment of the plaint. By this amendment, the appellant reiterated that the tenders made by the appellant of the mills pucca delivery orders were duly made in terms of the contract between the parties An Additional Written Statement was filed by the defendant contending that the mills pucca delivery orders were not delivery orders at all and, in any event, the appellant had no title to any of them. The definition of document of title to goods under section 2(4) is an inclusive definition. A document which is used in the ordinary course of business as proof of possession would satisfy the definition as also a document which would enable the possessor to receive the goods thereby represented. The transfer of title is therefore, not relevant. The document of title to goods need not be confined to specific goods for it may relate to goods which are not specified. The property in the goods is not transferred to the buyer unless and until the goods are ascertained but the contention that unless by the document the property in the goods passes there could be no document of title cannot be accepted.
[237B-C, D, 239A, B. E, 243A] Anglo India Jute Mills Co. v. Omademull, I.L.R. 38 Cal. 127, referred to.
Duni Chand Rataria v. Bhuwalka Brothers Ltd., [1955] 1 SCR 1071 applied.
Bayyana Bhimayya v. The Government of Andhra Pradesh, [1961] (3) SCR 267 referred to.
Jute and Gunnv Brokers Ltd., and Anr. v. The Union of India and Ors., [1961] (3) SCR 820, applied, State of Andhra Pradesh v. Kolla Sreerama Murthy, [1963] (1) SCR 184 and Butterworth v. Kingsway Motors Ltd., [1954] 2 All E.R. 694 referred to.
2. The plea of the appellant that the delivery orders tendered in respect of the contracts are proper tenders would have to be accepted since the possession of the documents entitles to receive the goods thereby represented.
[243-B] Bhiniayya v. The Government of Andhra Pradesh, [1961] (3) SCR 267 at 270 applied.
222
3. The plea of the appellant is that the delivery order is in accordance with the contract and that the respondent knew that the delivery order was in accordance with the contract and that he wanted to avoid the contract without justification as the prices had fallen. [244A-B]
4. In the original written statement there was no challenge to the validity of the delivery orders. The parties to the suit are bound by the procedure prescribed in the Code of Civil Procedure . Order VIII of the C.P.C.
provides what a written statement should contain. Order VIII rule 2 requires that a defendant must raise by his pleading all matters which show +he suit not to be maintainable or that the transaction is either void or voidable in point of law and all such grounds of defence as, if not raised, would be likely to take the opposite party by surprise. Rule 3 requires that it shall not be sufficient for a defendant in his written statement to deny generally the grounds alleged by the plaintiff but the defendant must deal specifically with each allegation of fact of which he does not admit the truth except damages. The failure to question the validity of the delivery order on the ground that it required registration with the mill or that the possessor was bound to give an undertaking, would be failure to comply with the requirements of Order VIII. The pleadings of the original side of the High Court must be strictly construed. [245B, G-246A-B] Badat & Co. v. West India Trading Co., A.I.R. 1964 S.C. 538 followed.
5. 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. On the pleadings itself it appears that the defence is without substance and belated and put forward for the purpose of escaping the liability.
[246-D-E]
6. The defendant not receiving the delivery orders and not raising the plea. specifically is more in accordance with his having been satisfied with the delivery orders being according to contract and his refusal to accept the delivery orders was to avoid the loss due to fall in price. The fact that 3 contracts, relating to 2 deliveries have been accepted shows that the respondent was following the practice prevalent in Calcutta by the Jute Mills Association. [246F, G.]
7. Taking into account the fact that the appellant as well as the respondent were engaging themselves in the jute trade in Calcutta and were following generally the practice of the jute mills Association and had entered into various contracts and having business relationship, the conclusion is irresistible that the respondent was familiar with the delivery order with the conditions and accepted" it as being in use in the ordinary course of business. It is difficult to accept the plea that the delivery order was not negotiable or that it was not in terms of the contract and that it would not have enabled him to take possession of the goods. The delivery orders were according to the terms of the contract and the respondent was aware of them.. 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.
[247H-248A-B, G] In view of the majority judgment the appeal is dismissed with costs.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2166 of 1968.
From the Judgment and Decree dated 26-4-1966 of the Calcutta High Court in Appeal No. 263 of 1959.
Y. S. Chitale, Leila Sethi (Mrs.), Praveen Kumar, Mukul Mudgal,.
B. P. Maheswari and Suresh Sethi for the Appellant.
S. K. Gupta, S. M. Jain and B. K. Jain for the Respondent.
The following opinions of the Court were delivered 223 BEG, C.J.-I have gone through the differing judgments of MY learned brethren Gupta and Kailasam. The difference arises, I find, primarily from divergent interpretations of what was, pleaded by the parties. What Kailasam J. considers as having been admitted in the pleadings, by implication, was assumed by Gupta J. to be the matter put in issue by pleadings of the two sides which had to be decided.
After having considered the pleadings of the parties, I am, unable to agree, with great respect, with my learned brother Kailasam that this case can be decided in favour of the plaintiff on the pleadings of the parties. It is true that the defendant admits the contract under which goods were to be delivered to the defendant 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, therefore, amended the plaint by adding as follows :
"19A. The tenders made by the plaintiff of the Mills Pucca Delivery Orders as mentioned in paragraphs 9, 14 and 18 of the Plaint were duly made in terms of the Contracts between the parties. In any event the Delivery Orders tendered in respect of the Contracts mentioned in the Plaint were and are proper tenders by virtue of trade customs and usage of the Jute Trade in Calcutta.
Particulars of such customs and/or usages are set out hereunder.
(i) In the Calcutta Jute market there is an usage that upon the issue by the Mills to the buyers of Deliery orders in respect of jute goods purchased, the purchasers are regarded as the owners of the goods with the right to transfer these goods by endorsing the delivery Orders and that the Delivery Orders are regarded as documents of title to the goods covered by them.
(ii)At no time till actual delivery is given, is there any appropriation of the goods either to the Contracts or Delivery Orders, but notwithstanding the absence of 224 the appropriation, the holders of the Mills Delivery Orders (known in the market as Pucca Delivery Orders) are regarded by the trade as the owners of the relevant goods.
(iii)That the Pucca Delivery Orders as representing the goods, pass from hand to hand by endorsement being received by the successive buyers against cash payment 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.
19B. The defendant, was at all material times fully aware of the aforesaid trade customs and" usages and dealt with the plaintiff on the basis thereof." The, defendant in his additional written statement set out in extensor as follows :
"2. With regard to paragraph 19A of the amended Plaint, the defendant denies that the alleged tenders or any of them or the alleged delivery orders or any of them were :in terms of the contracts between the parties.
Further, the documents described therein as Mills' Pucca Delivery 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 ofthem relate to goods deliverable under contracts betweenthird parties mentioned in the said alleged DeliveryOrders. In any event, the goods mentioned in the allegedDelivery Orders are not goods of the description mentioned in the contracts between the parties herein.
Further, thedefendant called for the tender of inspection orders in termsof 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 225 or usage as alleged. The correctness of the alleged particulars of the alleged custom or usage is disputed and denied.
4.The allegations contained in subparagraph (i) of paragraph 19A are denied.
The documents described as alleged delivery orders in the said paragraph 19A are not transferable by endorsement.
5.Save that there is no appropriation of the goods either to any particular contract or to any delivery order, the allegations contained in sub-paragraph (ii) of the said paragraph 19A are denied.
6.The allegations contained in sub-paragraph (iii) of the said paragraph 19A are denied.
7. The defendant denies each and every allegation contained in sub-paragraph (iv) of the said paragraph 19A.
8. With regard to paragraph 19B of the said amended plaint, it is denied that there was or is any trade custom or usage as alleged or that the defendant was at any time aware of any such alleged custom or usage or that the defendant dealt with the plaintiff on the basis of any such alleged custom or usage.
The alleged usage or custom (the existence of which is denied) is in any event inconsistent with the terms of the said written contracts between the parties and as such evidence of such alleged usage or custom is inadmissible." As a result of the explicit assertions by the plaintiff and the denials by the defendant, the real dispute between the parties clearly emerged. It was : Did the particular delivery orders, indorsed on behalf of the plaintiff in favour of the defendant, amount to valid tenders as contemplated by the contract between the parties ? Hence, Mr. Justice Bachawat of the Calcutta High Court, who dealt with the case in its earlier stages, framed the following among other issues "3. (a) Did the plaintiff tender the delivery orders in respect of June portion of the goods in terms of the contracts mentioned in paragraphs 3 of the plaint as alleged in paragraph 9 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 portion of the goods ?
4. (a)Did the defendant fail and neglect to pay for and take delivery of the Pucca Delivery Orders for May & June 1952 portions of the goods in respect of the 226 contracts mentioned in paragraph 13 of the plaint as alleged in paragraph 14 thereof ? . . . . . . . . . . . . . . . . . . . . . . .
5. (a)Did the plaintiff duly tender the 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 terms and liabilities. This was the short and simple question decided upon documentary evidence before the Court.
It is difficult to see how any alleged custom could modify the requirements of law as to what a "document of title" is or what a particular contract is or what a particular delivery order means. It could not help a legally defective document to overcome the basic legal defect due to its terms. It could not override the specific terms of the actual contract between the parties. It could not validate delivery, orders containing reservations derogating from the legal requirements of a document of title. The plea of custom set up by the plaintiff, in desperation, was obviously not available in the face of the express statutory provisions as well as the specific terms of the contract between the parties. An alleged custom, amounting to ignoring or contravening the express terms of agreements or the operation of statutory provisions would, obviously, be invalid. Surely, a custom could not be pleaded as an answer to the provisions of section 92 of the Evidence Act which bar oral evidence to contradict, vary, add to or subtract from the terms of an agreement, although proviso (5) of section 92 allows "any usage or custom by which incidents not expressly mentioned in any contract are usually annexed to contracts of that description" to be proved. Annexing usage or custom to the express terms of the contract is very different from demolishing the original contract by substituting new terms which enable a party to a contract to get over its obligations under the contract itself, Moreover, it has 227 been found, by the learned trial Judge as well as the Division Bench of the Calcutta High Court, that there is no such uniformity of practice or usage about the forms of either contracts or delivery orders or their implications as to annex obligations contained in a particular type of delivery order to transactions in general according to various forms of contracts for purchase of jute.
It has been clearly found by Ray J., and the Division Bench, consisting of Sinha CJ. and Sen J., that the contracts now before us (we are not concerned with other contracts for which decrees may or may not have been granted) are for "delivery orders" which are documents of title and not for orders with conditions annexed to them which prevent them from so operating. On the express terms 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 themills before he, could demand deliveries. Such conditional deliveryorders 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, (1) Duni Chand Kataria v. Bhuwalka Brothers Ltd.,(2) lute & Gunny Brokers Ltd. & Anr. v. The Union of India & Anr.,(3) and The Morvi Mercantile Bank Ltd. & Anr. v. Union of India.(4) We were not referred to any case which has laid down that a document purporting to be a delivery order hedged round with conditions showing that the supplier of goods had reserved the option to deliver or not to deliver unless further conditions are complied with could possibly be a "document of tide" as contemplated by section 2(4) of the Silo of Goods Act get out above. it could not authorise or purport to authorise the holder of the document to transfer the good& mentioned in it until another agreement. took place.
The holder might put up an equitable claim if he had actually paid some money. But, he could not be compelled to pay damages for an alleged breach of contract when the delivery order was not what (1) 38 Cal. I.L.R. 127.
(2) [1955] SCR 1071.
(3) [1961] 3 S.C.R. 820.
(4) [1965] 3 SCR 254.
228 he had contracted for. It is a simple case in which what the defendant contracts for has not been received by him on patent facts pleaded and established. Therefore with due respect I disagree with Kailasam J. and concur with the view of my learned brother Gupta.
1 do not think it is necessary, on the conclusion reached above by me, to deal with the further question whether the delivery orders, if they had authorised the defendant to demand delivery unconditionally, would still not constitute a due performance of the contract between the parties until goods had been ascertained and title actually passed. If, according to the contract, payment was only to be made when property in goods had passed, Section 18 of the Sale of Goods Act would have also constituted a good defence. But, as I have said, I need not go into this further question as it is enough, for the purposes of the case before us, to conclude, as I do, in agreement with the learned Judges of the Calcutta High Court and my learned brother Gupta, that the so-called delivery orders did not fulfill the terms of the contractbetween the parties.
The result is that this appeal must be dismissed with costs.
GUPTA, J.-This appeal on certificate of fitness granted by the Calcutta High Court is at the instance of the plaintiff in a suit for recovery of damages for breach of contract.
The appeal turns on the question whether certain documents described as 'pucca delivery 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 Receipts (which Dock's or Mates Receipts are to be handed by a Dock or Ship's officer to the Seller's representatives)." In respect of the June, quota of B twill and the May and June installments of hessian, the plaintiff tendered to the defendant 'pucca delivery orders' on mills like Fort Gloster, Fort William or Auckland generally described as 'European Mills'. These pucca delivery orders which were issued by European Mills passed through several hands 229 before they came into appellants possession. They contain a stipulation that the Mills were not bound to recognise any transferee,except the original buyer and require the transferees to give an undertaking to the Mills that they would take delivery of the goods in terms of the contract between the Mills and the original buyer. The appellant, as already stated, was not the original buyer of these pucca delivery orders. The respondent having refused to accept the pucca delivery orders tendered by the appellant or pay for the same, the appellant instituted the suit out of which the appeal arises.
It is alleged in the plaint that the tenders made were in terms of the contracts between the parties and that the defendant committed a breach of the contract by refusing to accept them. In paragraph 19A of the plaint it is claimedthat the tender of such delivery orders was valid by virtue of trade custom and usage of the Jute trade in Calcutta.
Particulars of such custom or usage as set out in the plaint are as follows :"(i) In the Calcutta Jute market there is a usage that upon the issue by the Mills to the buyers of Delivery orders in respect of jute goods purchased, the purchasers are regarded as the owners of the goods with the right to transfer these goods by endorsing the Delivery Orders and that the Delivery Orders are regarded as documents of title to the goods covered by them.
(ii)At no time till actual delivery is given, is there 'any appropriation of the goods either to the Contracts or Delivery Orders, but notwithstanding the absence of this appropriation, the holders of the Mills Delivery Orders (known in the market as Pucca Delivery Orders) are regarded by the trade as the owners of the relevant goods.
(iii)That the Pucca Delivery Orders as representing the goods, pass from hand to hand by endorsement being received by the successive buyers against cash payment 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.
230 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 contrary to sections 18 and 23 of the Sale of Goods Act, 1930, and also to the terms of the written contracts. The learned Judges composing the Division Bench that heard the appeal from his Judgment, by two separate but concurring Judgments affirmed the decision of the single Judge. It has been mentioned already that the scope of the appeal before us is not co-extensive,with the reliefs claimed in the suit but narrower. We have not therefore referred to the other issues in the suit or the other things recorded by the High Court which are not relevant for the present purpose.
Were the pucca delivery orders tendered by the plaintiff in conformity with what the parties contracted for ? If not, the defendant committed no breach by refusing to accept them. These pucca delivery orders, as already mentioned, had been issued by the mills. The payment clause in the contracts provides for payment in exchange for delivery orders on sellers. Here, the sellers were the plaintiff and not the mills. A contention rejected by the High Courtand repeated in this Court is that where the contracts speak of "delivery orders on sellers", 'the reference is to the original sellers, namely, the mills. In a contract for sale of goods, the word seller must obviously refer to the party selling under the contract unless there is anything 'in the context suggesting otherwise. There is nothing in the clause requiring one to read the word sellers to mean the original sellers and not the sellers under the contracts, and this is one of the reasons why the High Court held, in our opinion 'rightly, that the pucca delivery orders which were offered were not in compliance with the contracts between the parties. More important is the question, did these pucca delivery orders enable the defendant to obtain delivery of the goods from the mills in terms of the contracts ? A delivery order is a document of title according to the definition of "document of title to goods" in section 2(4) of the Sale of Goods Act, 1930. A delivery order is an his behalf to deliver them to the person named in the order. If the pucca delivery orders were documents of title, the defendant should have been able to get delivery only by lodging them with themills concerned.
But these delivery orders issued by the mills contain a term that the mills would not be bound to recognise a transferee.
It appears from the 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." 231 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, 1952, after which date a charge of eight annas per bale per month will be levied by the company for this purpose until removal.
(iii) That on and after the 1st October, 1952, the company will charge a godown rent of eight annas per bale per month for the purpose until removal.
(iv) That the company has a lien on the goods for the above charges." It thus appears that the pucca delivery orders did not, as theHigh Court has found, entitle the defendant to obtain delivery fromthe mills in terms of the contracts between the parties to the suit'. The term 'delivery order' in its natural sense would not include delivery orders of the kind tendered by the plaintiff, and there is nothing to suggest that the parties while agreeing on payment in exchange for 'delivery orders' used the term in any other sense, It must therefore be held that the pucca delivery orders were not documents of title under the Sale of Goods Act and were not in conformity with what the parties had contracted for.
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 v. Union of India and others.(1) 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 (1)[1961] 3 S.C.R. 820.
232 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.
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 DivisionBench that heard the appeal have found that no such custom or usagehas 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(1) that a custom proved in one case should not be utilised to found facts in another.
I do not think that any of the decisions relied on by the appellant in support of this contention finds that it is the custom of jute trade in Calcutta to accept pucca delivery orders of the kind we are concerned with in this case as document of title. In the Calcutta case, Anglo-India Jute Mills Co. v. Omademull(2), three pucca delivery orders were issued by the defendant company in favour of Janki Dass & Company's principals or order. Janki Dass & Company endorsed the delivery orders to the plaintiffs. The plaintiffs on making enquiries at the mills were informed that the delivery orders were ,,all right". The delivery orders were in these terms :
"Please deliver to Messrs. Janki Dass & Co.'s Principals or order 50 Bls. 1,00,000 yds.
Hess Cloth 40 in 7 1/2 oz., 9 by 9 each 2,000 yds. (One Hundred thousand yards only) Ready Shipment Rs. 113." The cheque handed to the defendant company by Janki Das & Company in payment of the goods comprised in the delivery orders was dishonored. The defendant company thereupon refused to give delivery of the goods to the plaintiffs under the delivery orders. The plaintiffs brought an action against the defendant company for delivery of the goods or their value or damages for conversion. The defendant company urged that the delivery orders were not documents of title and property in the goods did not pass. They also denied that these delivery orders were taken as equivalent to documents of title by any trade usage in Calcutta. The Calcutta High Court held that (1) [1919] A.C. 801 (807) (2) I.L.R. 38 Calcutta 127.
233 the defendant company having represented that the delivery orders would confer a good title and having put it in the power of M/s. Janki Dass & Company to endorse the delivery orders and having represented to the plaintiffs that it was "till right", were estopped from denying that they had been paid for the goods to which the delivery orders related or that they had appropriated the goods of the required quantity and description to the delivery orders and that they held these goods for the plaintiffs. It is difficult to see how this case helps the appellant. The form of the delivery orders was quite different from the ones concerned in the case before us and the case was decided on the principle of estoppel arising in the circumstances of the case. The Calcutta case was explained by this Court in Jute and Gunny Brokers Limited v. Union of India.(1) 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' case (supra) is really an authority against the appellant's contention.
Another case cited in this connection is Duni Chand Kataria v. BhuKalka Brothers Limited.(2). The main question that arose for determination in that case related to the meaning of the expression "actual delivery of possession" in section 2(1) (b) (i) of the West Bengal Jute Goods Future Ordinance, 1949 and it was held that the expression included within its scope symbolical as well as constructive delivery of possession. Another question which was raised, whether the delivery orders concerned in that case could be called documents of title within the meaning of section 2(4) of the Sale of Goods Act, was left open. Thus, this case also does not help the appellant. Bayyana Bhiniayya v. The Government of Andhra Pradesh(3) and State of Andhra Pradesh v. Kolla Sreerama Murthy,(4) are the other two decisions on which the appellant relied. Neither of these cases is on the point under consideration. Both these cases deal with the liability for payment of sales tax and are on the question whether the transaction is completed by giving and taking delivery of pucca delivery orders. If pucca delivery orders are accepted and paid for, and the (1) [1961] 3 S.C.R. 820.
(2) [1955] 1 S.C.R. 1071.
(3) [1961] 3 S.C.R. 267.
(4) [1963] 1 S.C.R. 184.
234 contract is fulfilled by delivery of goods, no such question as involved in the case before us can arise. Further, in neither of these two decisions any such trade custom as alleged here has been pleaded. Neither decision is therefore relevant for the present purpose.
Itwas also contended that the defendant not having raised the plea in their correspondence with the plaintiff that the delivery orders tendered were defective, was estopped from justifying their repudiation of the contracts on that ground. As the High Court has pointed out. no case of estoppel was pleaded by the plaintiff and therefore,, it was the plaintiff who should be precluded from raising the question of estoppel. Apart from that, the law permits defendant to justify the repudiation on any ground which existed at the time of the repudiation whether or not the ground was stated in the correspondence. (see Nune Sivayya v. Maddu Ranganayakulu(1).
In the result the appeal fails and is dismissed with costs.
KAIIASAM, J. This appeal is preferred by the plaintiff on certificate, of fitness granted by the Calcutta High 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 Rs. 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 Rs. 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 purchase of jute goods.
The respondent agreed to buy from the appellant and the appellant purported to sell to the respondent various quantities of B Twill. There were three contracts entered into on 22.11.1951, 1.12.1951 and 10.12. 1951 for delivery of certain quantities of bags at specified, rates during April, May and June, 1952. Under the three contracts 3 items of goods were deliverable by the appellant to the respondent in April. 1952. Regarding these three items deliverable in April, 1952, the respondent agreed to sell to the appellant and the appellant agreed to buy from the respondent diverse quantities of B Twill in 235 settlement of the goods deliverable in April, 1952 in respect of the three contracts. As there was a fall. in the price of the bags of Twills on the basis of settlement contracts the appellant became entitled to Rs 50,175 and the respondent duly paid to the appellant the said sum. So far as the delivery under the three contracts due in April was concerned it was thus settled by payment by the respondent.
Regarding the goods deliverable under the three contracts in May, 1952 the respondent agreed to sell to the appellant and the appellant agreed to buy from the respondent the goods deliverable under the three contracts. As there was a further fall in the price of Twills the appellant submitted 3 bills regarding the three transactions due in May for a sum of Rs. 67,275 but the respondent neglected to pay the sum of Rs. 67,275.
Regarding the goods deliverable in June, 1952 the appellant tendered delivery orders in respect of the June delivery but the respondent failed and neglected to accept the delivery orders and to pay for the same. The appellant after due notice sold the goods at the respondent's risk and thereby suffered a loss of Rs. 91,109/7/-.
Under the fourth contract exchanged between the appellant and the respondent dated 10th January, 1952 the respondent agreed to buy from the appellant and the appellant agreed to sell to the respondent three lakhs yards of hessian delivery in equal installments in April), May and June, 1952. In respect of the goods deliverable under the contract in April, 1952 the appellant delivered the delivery orders and the respondent paid for and took delivery of the goods but regarding heiessian deliverable in May and June the respondent failed to pay and take delivery of pucca delivery orders. The goods were resold after due notice to the respondent and the appellant suffered a loss of Rs.
57,381/4/-. By another contract dated 19th April, 1952, exchanged 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 Rs. 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 and purchase of jute goods on a forward basis by or with any person not being a person who habitually dealt in the sale or purchase of jute goods involving the actual delivery of possession thereof was prohibited. As the respondent had since discovered that 236 the contracts came within the mischief of the said Act and the notification the contracts were and are void. The respondent admitted that he paid a sum of Rs. 50,175/regarding the three contracts in respect of goods deliverable in April, 1952 but stated that the same was paid before the contracts were discovered to be void. The other allegations made in the plaint were generally denied. The facts and/ or validity of the alleged tender and/or the alleged resale and/or the alleged notice were denied. With reference to allegation in paragraph 14 of the plaint that the appellant delivered the delivery orders and the respondent paid for and took delivery of the delivery orders it was averred in the written statement that the delivery orders delivered by the appellant were paid for and taken delivery of by the respondent before the relevant contract was discovered to be void. The claim in the plaint and the respondent's liability was generally denied.
According to the pleadings of the parties it is seen that the plaint allegations are that the contracts were entered into in the standard I.J.M.A. forms which were annexed to the plaint. It was further alleged 'that regarding the delivery of goods in April, 1952, in respect of the three contracts the respondent entered into a settlement contract and paid the appellant a sum of Rs. 57,175 as per the contract. Regarding goods deliverable in May, 1952 under the three contracts though the bills were submitted the respondent failed and neglected to pay the same. Regarding the goods deliverable under the three contracts in June, 1952, it is alleged that the appellant duly and in terms of the contract tendered the delivery orders in respect of the said goods for June delivery but the respondent wrongfully failed and neglected to accept and to pay for the same.
Regarding the hessian contracts for the goods deliverable in April, 1952, it is alleged that the appellant duly delivered delivery orders and the respondent paid for and took delivery of the same but failed and neglected to pay for and take delivery of the goods deliverable in May and June 1952.
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 interms of the contract. So also in the case of hessian contracts it isalleged 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 goods deliverable in June 1952 also in Paragraph 18 of the plaint it is alleged that the appellant tendered pucca delivery orders in respect of goods deliverable in June, 1952 but the respondent failed and neglected to pay and accept for the 237 said goods. The reply to the specific allegations referred to in the various paragraphs of the plaint is that the delivery orders in the case of goods deliverable in April were paid for and taken delivery of before, the relevant contract was discovered to be void. The allegation by the defence according to the written statement is that the respondent discovered the Bought and Sold notes and contracts, to be invalid and void under the West Bengal Act V of 1950 in that it related to a forward contract prohibited under law. The' allegations in the plaint that the delivery orders were issued according to the contract were nowhere denied. The only defence was that the delivery orders were received and paid for in the case of April contracts before realising that the contracts were void. On the' pleadings therefore, the question as to whether the delivery order was according to the contract was not in dispute. Neither were the allegations that the contracts were in the standard I.J.M.A. Contract Forms were denied.
Four years after the original plaint was filed the appellant sought an amendment of the plaint for introduction of paragraphs 19-A and this amendment the appellant while reiterating that the tendersmade by the appellant of the Mills Pucca Delivery Orders as mentioned in paragraphs 9, 14 and 18 of the plaint were duly made in terms of the contracts between the parties, further pleaded that the delivery orders tendered in respect of the contract mentioned in the plaint were and are proper tenders by virtue of trade customs and usage of the Jute Trade in Calcutta. The particulars of the customs and usage were set out in four sub-paragraphs of Paragraph 19A of the plaint.
In Paragraph 19B the appellant alleged that the respondent was at all material times fully aware of the aforesaid Trade customs and usages and dealt with the appellant on the basis thereof. An additional written statement was filed by the respondent on 9th December, 1957, in which he denied that the alleged tenders or any of them or the alleged delivery orders or any of them were in terms of the contracts between the parties. It was contended 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 took a new turn and the outcome of the suit was considered important 238 for the jute trade in Calcutta. On the amended pleadings various issues were framed and the litigation has dragged on for nearly, 25 years. The matter was fought out and elaborate arguments were addressed before the trial court and a Bench of the Calcutta High Court and before us regarding various questions of facts and law.
So far as the original defence to the suit that the contacts were hit at by the West Bengal Act V of, 1950 is concerned it was found against the respondent by both the courts below and was not raised before us, The suit as well as the appeal proceeded on the basis of the amended pleadings. The trial court framed 7 issues as set out at page 262 of the printed Paper Book and answered them at page 304. It found that the contracts were not illegal in contravention of the West Bengal Jute Goods Act. It also found that the tenders made by the appellant were not valid and as such the respondent was not liable. Regarding the custom or usage in Calcutta the trial court found that there was no such custom proved.
It also recorded that the appellant had no title to documents described as Mills Pucca Delivery Orders. These findings were confirmed by the appellate court.
The Courts below negatived the custom or usage set up by the appellant. The question mainly is whether the tender of the delivery orders by the appellant is valid.
The trail court as well as the appellate court had gone into the question as to whether delivery orders were documents of title and goods.The trial Judge hold that a delivery order is not a document of titlenor that the delivery order represented the goods. It was further held that the property in unascertained goods cannot pass and that in any event as according to the delivery order the Mill is not bound to recognise the transfer and as the Mill insisted on written undertaking from the delivery order holder, the delivery order is not a document of title,The appellate court agreed with the conclusions of the trial Judge The correctness of the conclusions arrived at by the Courts below has to be considered.
The question whether the delivery orders are documents of title and whether there can be documents of title in relation to unascertained goods loomed large before the courts below. The view taken was that the delivery orders are not documents of 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;" 239 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 ordinar
