| CITATION | (1968) 2 SCR 239 : AIR 1968 SC 741AIR 1970 Mad 194, (1970) ILLJ 296 Mad |
| DATE OF JUDGMENT | 10th November, 1967 |
| COURT | Supreme Court Of India |
| APPELLANT | P.S.N.S. Ambalavana Chettiar and Company Ltd. |
| RESPONDENT | Express Newspapers Ltd |
| BENCH | Ramakrishnan |
INTRODUCTION
The case of P.S.N.S. Ambalavana Chettiar v. Express Newspapers Ltd. (1968) 2 SCR 239 : AIR 1968 SC 741 is a landmark case in Indian contract law. It deals with the rights of an unpaid seller against the goods sold, and the effect of a variation of a contract of sale on the passing of property in the goods.
FACTS OF THE CASE
The appellants, P.S.N.S. Ambalavana Chettiar and Co. Ltd., entered into a contract with the respondents, Express Newspapers Ltd., to purchase 415 tons of newsprint lying in the respondents’ godown. The contract provided that the appellants would pay the price of the newsprint within 30 days of delivery.
However, after the contract was entered into, the appellants informed the respondents that they would only be able to purchase 300 tons of the newsprint. The respondents agreed to this, and the parties orally modified the contract accordingly.
The appellants failed to pay the price of the newsprint within 30 days of delivery. The respondents then resold the remaining 115 tons of newsprint to a third party.
The appellants brought a suit against the respondents, claiming damages for breach of contract. They argued that the respondents had no right to resell the newsprint, since the property in the goods had already passed to them (the appellants) under the contract of sale.
ISSUE RAISED
- The main issue in the case was whether the variation of the contract had the effect of annulling the passing of property in the goods.
- Whether the respondent had the right to resale the goods under section 54(2) of Indian Contract Act 1872
CONTENTIONS OF APPELANT
In the case of P.S.N.S. Ambalavana Chettiar v. Express Newspapers Ltd. (1968) 2 SCR 239 : AIR 1968 SC 741, the appellant contended that the property in the 415 tons of newsprint had passed to them and that the respondent could not resell any part of it without their consent. They relied on the following case laws to support their contention:
- Sale of Goods Act, 1930, Section 18: This section states that the property in the goods passes to the buyer when there is a contract for the sale of specific goods and the goods are in a deliverable state.
- Ward (RW) Ltd. v. Bignall [1967] 2 All ER 449 (CA): In this case, the Court of Appeal held that the property in the goods passes to the buyer when the buyer has done everything necessary to entitle him to the immediate delivery of the goods.
The appellant argued that the 415 tons of newsprint were in a deliverable state and that they had done everything necessary to entitle them to the immediate delivery of the goods. Therefore, the property in the goods had passed to them and the respondent could not resell any part of it without their consent.
However, the Supreme Court of India held that the property in the 415 tons of newsprint had not passed to the appellant. The Court reasoned that the original contract for the sale of the goods had been varied and that the new contract was for the sale of unascertained goods. The Court further held that the property in unascertained goods does not pass to the buyer until the goods are ascertained. Therefore, the property in the 415 tons of newsprint had not passed to the appellant at the time of the resale by the respondent.
The Supreme Court of India also distinguished the case of Ward (RW) Ltd. v. Bignall [1967] 2 All ER 449 (CA) on the ground that the goods in that case were specific goods, whereas the goods in the present case were unascertained goods.
CONTENTIONS OF RESPONDENT
The respondent, Express Newspapers Ltd., contended that it had the right to resell the goods under Section 54(2) of the Indian Sale of Goods Act, 1930, as the appellants, P.S.N.S. Ambalavana Chettiar & Co. Ltd., had repudiated the contract.
The respondent relied on the following case laws to support its contention:
- Mackintosh v. Great Western Railway Co. (1895) 2 Q.B. 134: In this case, the court held that an unpaid seller has the right to resell the goods under Section 54(2) of the Sale of Goods Act, 1893 (the predecessor to the Indian Sale of Goods Act, 1930) even if the property in the goods has not passed to the buyer.
- Segara v. Ramakrishnayya (1924) I.L.R. 47 Mad. 667: In this case, the court held that an unpaid seller can resell the goods under Section 54(2) of the Indian Sale of Goods Act, 1930, even if the buyer has not received any notice of the resale.
- Haridas Motilal v. Laxmi Cotton Mills Co. Ltd. (1952) A.I.R. Bom. 254: In this case, the court held that an unpaid seller can resell the goods under Section 54(2) of the Indian Sale of Goods Act, 1930, even if the buyer has not been given a reasonable opportunity to take delivery of the goods.
The respondent argued that these cases established that it had the right to resell the goods under Section 54(2) of the Indian Sale of Goods Act, 1930, even though the property in the goods had not passed to the appellants and even though the appellants had not been given a reasonable opportunity to take delivery of the goods.
The Supreme Court of India, however, rejected the respondent’s contention and held that the respondent did not have the right to resell the goods under Section 54(2) of the Indian Sale of Goods Act, 1930. The court held that the property in the goods had not passed to the appellants, as the goods were unascertained at the time of the contract. The court also held that the respondent had not given the appellants a reasonable opportunity to take delivery of the goods.
Significance of the case:
The case of P.S.N.S. Ambalavana Chettiar v. Express Newspapers Ltd. is an important case on the law of sale of goods in India. It clarifies the distinction between ascertained goods and unascertained goods, and the rights of an unpaid seller in respect of each. The case also lays down the principle that an unpaid seller cannot resell unascertained goods without first appropriating them to the contract with the buyer.
JUDGEMENT
The appellants had entered into a contract to purchase 415 tons of newsprint from the respondents. However, the parties later agreed to vary the contract, reducing the purchase quantity to 300 tons. The remaining 115 tons were left in the respondents’ godown.
The appellants failed to pay for the goods in full, and the respondents resold the 115 tons of newsprint to a third party. The appellants sued the respondents for damages, claiming that they had no right to resell the goods.
The Supreme Court held that the respondents had the right to resell the goods in the circumstances of the case. The Court reasoned that the variation of the contract had annulled the passing of property in the goods to the appellants. As a result, the respondents were still the owners of the goods and were entitled to resell them.
Referred Case Laws:
Ward (RV) Ltd. v. Bignall [1967] 2 All ER 449 (CA)
Priest v. Last (1903) 2 KB 148
Baldry v. Marshall [1925] 1 KB 260 (CA)
Conclusion:
The Supreme Court’s decision in this case is an important one for the law of sale of goods. It clarifies that an unpaid seller has the right to resell goods where the buyer has varied the contract and failed to pay for the goods in full.
REFERENCE
This Article is written by Lavkesh Gour student of University Institute of legal Studies, Chandigarh University; Intern at Legal Vidhiya.
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