TaxTMI 
TaxTMI 
2023 (5) TMI 89
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..../- @ 12% p.a. 2.The respondent/plaintiff is a company incorporated under the Companies Act and carrying on business in Coimbatore in machine tools required for industrial purposes. On 09.02.2007, the respondent/plaintiff placed an order with the defendant under Order No.345 for supply of 7 Nos. of basic equipment Fine Lift FH 160 with gripper for sheet metal components and 7 Nos. of aluminium rack total overhead trolley with air supply kit and rack. The total value of all the equipments as admitted by the plaintiff is Rs.61,74,000/-. 3.It is the specific case of the plaintiff that the plaintiff made it clear to the defendant even while placing the order that the equipment should lift a minimum of 160 kg of material at all angles. From the case of the plaintiff, it is understood that the plaintiff placed order to purchase equipment which was expected to lift up to 160 kg of material with a capability of tilting at all angles. It is also the case of the plaintiff that the defendant should install the lifts at the site of the plaintiff and the defendant also agreed to deliver and install the lifts in twelve weeks and to give one year warranty. 4.After placing the order, the plainti....
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....would only mean that the carrying capacity of the equipment without the gripper is 160 kg. Since the weight of the gripper is 60 kg, the equipment with the gripper attached should be capable of lifting 100 kg and the equipments erected were capable of lifting 100 kg as per purchase order. (b)The delay in supplying the equipments was due to the negligence of the plaintiff to send lathe machine covers to facilitate trials of the equipments and also on account of non-cooperation to send the specifications of the same. (c) The defendant did achieve and accomplish lifting of 130 kg of weight by the equipments by incurring extra cost which was agreed to be compensated by the plaintiff. (d)There was no specific demand made by the plaintiff for lifting 160 kg in the purchase order, as the order was placed by referring to FH 160 equipment and therefore, the goods supplied by the defendant are completely as per the purchase order. (e) The defendant never admitted that the equipments supplied by the defendant would lift weight of 160 kg exclusive of gripper. (f) The aluminium racks worth Rs.17,22,000/- have been accepted by the plaintiff and the plaintiff, under the guise of rejecti....
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....dant requested the plaintiff for the sample of the job material, namely lathe machine covers, for the purpose of such trials. It is further stated that the plaintiff failed and neglected to supply the lathe machine covers to facilitate the conduct of trials and that therefore, the defendant had to procure sample lathe machine covers by incurring extra expenses. 8.The defendant further stated that the defendant called the plaintiff to defendant's factory for a pre-dispatch inspection and trials before dispatching the equipments and that the plaintiff did not come for such trials. It is also pleaded by the defendant that the defendant, on being satisfied about the total weight lifting capacity, i.e., 100 kg job weight plus 60 kg of gripper and efficient working of the manipulators, intimated the same to the plaintiff and that the plaintiff, instead, called the defendant to forthwith deliver and install the machineries at their place. It is also stated by the defendant that the defendant is entitled to get 85% of the total amount of the purchase order after trials. Stating that the plaintiff insisted the defendant to first deliver and install the equipments before making payment ....
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....he side of the plaintiff. Mr.Nilesh Jayant Karandkar, the Proprietor of defendant, was examined as D.W.1 and Exs.B1 to B11 were marked on behalf of the defendant. 12.The trial Court, after extracting the pleadings, framed the following issues : i. "Whether the plaintiff is entitled for the amount of Rs.58,25,430/- and the interest at the rate of 12% for the amount Rs.49,79,000/- till realization ? ii. Whether the plaintiff is entitled for any other relief ?" The trial Court has also framed the following additional issue : "Whether this Court has got jurisdiction to entertain the suit ?" 13.From the issues framed by the trial Court, this Court is of the view that the trial Court ought to have framed appropriate issues having regard to the nature of factual disputes between the parties. However, the trial Court has considered every pleadings in relation to every issues raised by the parties. On the issue raised by defendant as to the jurisdiction of trial Court, it was held that the Court has got jurisdiction to entertain the suit. 14.After hearing the different versions of plaintiff and defendant, the trial Court has agreed with the plaintiff that the equipments supplied b....
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....one in accordance with the purchase order, cannot insist changes or modifications to be carried out and that the modifications suggested by the plaintiff at the time of installation cannot be the basis for the suit claim complaining that the equipments supplied by the defendant are liable to be rejected. In other words, the learned counsel tried to convince this Court by referring to the communications that the equipments which are supplied by defendant and installed at the premises of the plaintiff do satisfy the specifications that were accepted by the plaintiff at the time of placing purchase order. Learned counsel also relied upon the Minutes recorded during the process of installation of the equipments and pointed out that the promise that was made by the defendant at the time of installation was satisfied, as regards the carrying capacity of the machines at 100 kg. 18.On the other hand, Mr.P.R.Ramakrishnan, learned counsel appearing for the respondent/plaintiff, would refer to a series of communications between the parties to point out that the equipments supplied by the defendant were not as per the specifications mentioned in the purchase order. Referring to the Brochure i....
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....e order or in any other communication that was sent by defendant prior to the purchase order. 21.It is admitted before this Court that the then Managing Director of plaintiff company had an occasion to meet the defendant in the venue of an Exhibition meant for displaying, promoting and dealing with several equipments. While it is the case of the plaintiff that they placed order to purchase basic equipment to handle objects which are upto 160 kg, the defendant's specific case is that the equipment suggested to the plaintiff was to lift 100 kg, as the gripper was an additional component to enhance the efficiency of the equipment. Stating that the capacity (160 kg) was inclusive of the weight of the gripper, i.e., 100 kg job weight and 60 kg gripper weight, the defendant has denied its liability on the ground that the defendant had supplied the equipments as per the specifications and the understanding of the plaintiff while placing order. This Court is unable to accept the case of the defendant that the specification indicating the carrying capacity of the machine should be understood that it would carry actual weight less the weight of gripper. 22.Ex.B10 is a Brochure issued b....
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....umber 160 indicates the lifting capacity inclusive of gripper weight. 24.One more factor which we should take note of is that the defendant has never made an attempt to demonstrate before the trial Court that the weight of gripper is 60 kg. D.W.1, in the Proof Affidavit, has stated that the capacity was inclusive of weight of gripper, i.e., 100 kg job weight plus 60 kg gripper weight. During cross-examination, D.W.1 has admitted that FH 160 is to indicate that the lifting capacity is 160 kg. P.W.2, in his Proof Affidavit, has stated that he is a qualified Chartered Engineer and Valuer and he has an experience of 12 years in the field. He has given a report after examining the capacity of the equipment supplied by the defendant to the plaintiff. In his report, which is marked as Ex.A14, he has mentioned that the average weight of the gripper is only 31.5 kg and not 60 kg. Though his evidence and the report under Ex.A14 were not relied upon by the trial Court, it is to be noted that the defendant has not even given any suggestion to discard the evidence of P.W.2 as regards his evidence that the weight of gripper is just 31.5 kg and not 60 kg as it was projected by the defendant. The....
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....mmediately after receipt of goods and balance on installation. However, there is material to show that the plaintiff also agreed for payment of 60% of value even before trial. The reason to alter the terms of the purchase order is not known. We are unable to find any negotiation or an agreement regarding the unilateral deviation by defendant after confirmation of purchase order and payment of substantial amount towards supply of equipments. However, the new terms are admitted. With the substantial payment of Rs.5,00,000/-, Rs.30,00,000/- and a further sum of Rs.6,50,000/- on 01.11.2007, the plaintiff has by then paid more than 78% of the invoice amount, which cannot be disputed. However, even before successful installation, the defendant was insisting further amount. 26.The first communication was sent by defendant to plaintiff by mail on 05.08.2007. In this communication, the defendant has tendered its apology for the delay and informed the plaintiff that the equipment is developed using very costly imported materials. On the next day, the plaintiff expressed their disappointment for the delay in delivery of materials. Stating that the credibility of the defendant is very low, th....
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....he gripper weight is around 60 kg in our case and the job weight lifted is 100 kg. Hence it is a FH160 Fine Lift and job weight is 100 kg (Gripper approx 60 kg). Mr.Anotonio did visited our company (along with you) where it was discussed for a lighter manipulator since most components are within 50 kg range. Mr.Sonalkar also had checked the possibility to go for a lighter version of the manipulator since the job needs lighter construction. However since we had progressed quite far in the project we kept the heavier load capacity manipulator. The heavier version was also decided for keeping some future scope possible. The manipulators supplied can now lift upto 100 kg (we have done the necessary additions for that as you are aware) and can tilt upto around 50 kg job (heavier jobs and odd jobs propose Centre of Gravity shiftings and hence can be tilted only by around 45 degrees). However if higher air pressure is supplied to the system (~10~11 bar), more weight of job can also be tilted. We would have hence appreciated for a pre-dispatch trials on your components in presence of your member(s). Since the manipulators are mounted on overhead rails (which we have supplied of A....
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....ground that the equipments have been installed. This shows how the defendant was never willing to satisfy the plaintiff regarding the performance of equipments as per the specifications. 32.It is surprising to note that the requirement as per the specifications was never demonstrated by the defendant at the site of plaintiff. The defect that the machines were not capable of handling sufficient weight at all angles was never attended by the defendant. As per the terms of invoice, 10% was payable as advance, 60% upon delivery of equipments, and the balance was supposed to be paid only upon successful installation of all equipments. In the communication from the plaintiff to defendant dated 13.11.2007, the defendant was asked to work towards achieving the lifting capacity of 160 kg without fixtures at all angles. It was thereafter, both parties have stuck to their stand. It is to be noted that, at this point of time, the defendant demanded payment without undertaking or completing trials which was indicated during the correspondence. The specific grievance of the plaintiff is that the machines did not even lift a weight of 100 kg during test and it was impossible to get the performan....
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....n 02.10.2008 and thereafter, a reply notice through Advocate was sent by the defendant to the plaintiff's counsel. 34.From the communications exchanged between the parties, this Court is surprised to find that the defendant, who had promised to demonstrate the functioning of equipments with a carrying capacity of 130 kg, did not come forward to fulfill their promise. The defendant, at one stage, felt disappointed and insisted only payment. It is now established that the defendant, who has undertaken to successfully install the machines before the release of final payment, started demanding payment, which is not required as per the revised terms as mentioned in the invoice. The communications that were sent by defendant would only show that the defendant was more keen in collection of balance without showing any respect to the purchase order and the terms of purchase. Therefore, this Court has no hesitation to hold that the defendant has not fulfilled its obligation under the contract and that they purposely delayed installation to the satisfaction of the plaintiff, as undertaken by them during middle of the installation. Though the defendant made an attempt to convince the pla....
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....talled at the plaintiff's premises. It is also agreed by defendant to install. The goods were rejected by plaintiff after finding that the goods were not working as per specifications. The plaintiff has filed the suit for recovery of money paid towards purchase. The facts admitted and issues decided earlier have to be kept in mind. 38.Learned counsel appearing for the appellant submitted that the plaintiff has failed to visit the defendant's factory, despite several requests by defendant to check the actual performance of the equipments to be supplied to the plaintiff as per the contract. When the defendant specifically invited the plaintiff to verify the actual performance, it is too late for the plaintiff to raise an issue regarding the condition of the equipments supplied or its efficiency. When the plaintiff was in a position to assess the actual capacity of the machinery even before delivery and installation, they cannot complain about the quality of equipments supplied. Learned counsel for the appellant then submitted that, when the plaintiff had every opportunity to examine the performance of the goods before delivery and installation, there is a presumption that th....
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....n if during the currency of the reasonable time within which the examination of the goods is to be made the buyer does any one of the acts specified in Section 42, he must be deemed to have accepted the goods. The language of Section 42 is plain and simple. There is no ellipsis and no redundance nor is there anything vague or ambiguous about the language. That being so, I must read Section 42 in its natural and ordinary sense. Section 42 expresses a meaning which is single and sensible and I see no reason why the precise words used by the law-maker in that Section should not be given their full meaning and effect. Section 42 declares in clear and unambiguous language that when any one of the acts specified therein is done by the buyer, the buyer shall be deemed to have accepted the goods and does not introduce or admit any qualification or exception. Under these circumstances I do not see why the plain meaning and effect of Section 42 should be cut down by introducing a qualification by reference to Section 41. Section 41 confers on the buyer a right of examination of the goods for the purpose of ascertaining whether they are in conformity with the contract. On principle this right....
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....y of examining the goods had expired or was done by the defendant after the expiration of the reasonable time for examination of the goods. Even if the reasonably opportunity of examining the goods did not expire until 7th May 1953, when the defendant purported to reject the goods, the act of the defendant in selling and delivering a part of the goods to the sub-purchasers on 6th May 1952 resulted in the acceptance of the goods by the defendant and the defendant was, thereafter, not entitled to reject the goods. The rejection of the goods by the defendant on 7th May 1952 was, therefore, invalid and not binding on the plaintiffs and the goods being deemed to have been accepted by the defendant, the plaintiffs were entitled to claim the balance of the price from the defendant. No doubt the description of the goods was a condition of the contract and since the plaintiffs committed a breach of the condition by delivering goods which were not of the contract description, the defendant was entitled to treat the breach of the condition as a breach of warranty on the part of the plaintiffs and to claim damages from the plaintiffs for the loss suffered by the defendant as a result of the br....
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.... necessary. (S. 41). But if the buyer's examination of the goods is superficial, the implied condition as regards defects which such examination, if more careful and thorough, would have revealed, is destroyed: Thornett and Fehr. v. Beers and Sons, (1919) 1 KB 486. 31.There the defendants, who were desirous of purchasing a quality of vegetable ghee from plaintiffs who dealt in that commodity, went, by arrangement with plaintiffs, to the warehouse where the ghee, which was in barrels, was stored, for the purpose of inspecting it. Every facility was offered to defendants for inspection; but, being pressed for time, they did not have any of the barrels opened, and merely looked at the outside of the barrels. Defendants purchased the ghee, and after it was delivered they alleged that it was not of merchantable quality. It was held that the defendants had examined the goods and consequently there was no implied condition that the ghee was to be of merchantable quality. ... 33.The seller's duty is to afford the buyer a reasonable opportunity; it is up to the buyer to avail of that opportunity and if he fails to avail of it or if he avails of it in an incomplete or perfuncto....
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....the first plaintiff had to inspect or examine the goods before taking delivery, he did not do so and the circumstances of the case show that the plaintiffs accepted the goods and have started making these objections only when the prices had started to fall and wanted to go back on their contract. (His Lordship went through the evidence, and proceeded): 49.On this evidence it is quite clear that the first plaintiff who had an opportunity to inspect the goods did not avail himself of the same and was content to take delivery and having done so it does not lie in his mouth now to say that unmerchantable goods were fraudulently palmed off on him. On the other hand, the evidence, in this case clearly shows that probably the condition in which the surveyor noted the skins in the three bales was due to the bales not being opened and the damp not being removed by shade drying and the goods not being properly stored. Therefore, we are not in a position to say that even in the case of these bales when deterioration had set in. 50.Therefore, looked at from any point of view, the plaintiffs have failed under both the heads and their suit was rightly dismissed by the learned trial Judge. We....
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.... certain defects, it may be totally impossible to determine whether those defects existed at the time when the goods were taken over, or had subsequently developed owing to imperfect storage and allied causes. Reference might also be made to 1945-2 Mad LJ 418: (AIR 1946 Mad 69), for the broad proposition that goods must not be rejected if opportunities for inspection within a reasonable period had not been availed of. 40.Learned counsel appearing for the appellant also relied upon a judgment of a Division Bench of this Court in the case of A.R.Muthukrishna Reddiar & Sons v. Messrs. Madhavji Devichand & Co. Ltd. reported in 1965 LW Pg.854 [O.S.A.No.16 of 1949 dated 30.11.1951]. As a matter of fact, the judgment of the Division Bench appears to be against the case of the appellant before this Court. The Division Bench of this Court, in the said judgment, has only accepted the right of purchaser to reject the goods on the ground that the goods are not in accordance with the terms of the contract, if the purchaser had no opportunity to inspect the goods before. It was further observed by the Division Bench that Section 16(2) of Sale of Goods Act specifically has to be understood that ....
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....f Sale of Goods Act was relied upon to hold that the plaintiff, who has accepted the goods without reservation, cannot reject the goods after sometime and the defendant is also entitled to a decree for the price of goods delivered to the plaintiff. However, the facts narrated by the Division Bench cannot be fitted to this case to deny the relief to the plaintiff who has never accepted the goods at any point of time. 43.The learned counsel then relied upon a judgment of King's Bench Division in the case of Thornett & Fehr v. Beers & Son [1918 T. 820], wherein, it is held as follows: "Mr. Halfhide stated in evidence, and the judge accepted this; that he did not have any of the barrels opened, and only looked at the outside, but he admitted that he and Mr. Beers had been offered every facility and had received Mr. Arnholt's message that he would return, but he said that they had no time to wait as they had another appointment. On the following day the defendants, in conversation with the plaintiffs' representative, said that they had inspected the parcel, and they offered 90l. a ton for it. That offer was not accepted, and eventually the defendants agreed to buy at 95l.....
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....ght by description shall be of merchantable quality. 45.A few more judgments were also cited by the learned counsel appearing for the appellant. However, this Court finds that those judgments are out of context and cannot be considered in favour of the appellant to deny relief to the plaintiff who has proved his case. It is not the case of the defendant in the written statement that the equipments supplied by defendant were used by the plaintiff as owner of the goods and therefore, the defendant cannot rely upon Sections 14(2) and (6) of Sale of Goods Act. We are unable to accept the arguments of the learned counsel for the appellant relying upon several other judgments in view of our findings on facts to the effect that the goods were not supplied as per specifications. 46.Learned counsel appearing for the respondent/plaintiff, on the other hand, relied upon Sections 13, 15, 42, 53 and 59 of Sale of Goods Act and relied upon several precedents for the proposition that, when the goods are purchased by description, the condition implied as to the merchantable quality of the goods can be presumed and the seller is bound to supply goods in confirmity to the contract and of merchanta....