Civil Revn. Appln. No. 412 of 1965

6th February, 1970.

Petitioner Counsel: N.S. Munshi. for Opponents Nos. 1 and 2

Cases Cited:
Raghava Menon v. Kuttappan Nair, (1962) AIR 1962 Ker 318 (V 49),ILR (1962) 2 Ker 449 [Para 13]
(1960) AIR 1960 Mad 520 (V 47) Sorabji H. Joshi and Co. v. V. M. Ismail [Para 15]
(1946) 50 Cal WN 213 Mckenzie and Co. v. Nagendra Nath [Para 12]
R. T. Grant v. Australian Knitting Mills, (1936) AIR 1936 PC 34 (V 23),17 Mad LJ 513 [Para 14]
Thornett and Fehr v. Beers and Sons, (1919) 1919-1 KB 486,24 Com Cas 133 [Para 11]

JUDGMENT

ORDER :-This is an application by the original plaintiff Ranbirsingh Shankarsingh Thakur whose suit was dismissed by the learned Small Cause Court Judge, Nagpur. The suit was to recover a sum of Rs. 674/- from the two defendants as refund of the price of a radio-set which he purchased from the defendants and which was not in working order at all.

2. The defendant No. 1 is the manufacturing corporation of radio-sets and other electrical goods. Defendant No. 2 is the distributor of defendant No. 1's products. The plaintiff purchased radio-set of a particular model by name HGEC (Saba) from the defendant No. 2 on 20-2-1962 on a hire-purchase basis. He had paid in advance Rupees 270/- on that date (20-2-1962) and agreed to pay the rest of the sum in six instalments at the rate of Rs. 60 per mensem. Along with the radio which he got on 20-2-1962, under this hire-purchase agreement, he also got a guarantee under which the defendants undertook to repair or exchange free of cost any components except valves which may become defective due to faulty workmanship or material within one year from the date of purchase. It appears that the radio-set started giving him trouble in May or June 1962. It was giving jarring sound. Therefore the plaintiff handed over this radio-set to the defendant No. 2 in June 1962. The radio was thereafter lying with defendant No. 2 and it was given back to the plaintiff only on 16-7-1963. The case of the plaintiff now is that although he had paid all the arrears by 16-7-1963, the radio still is not in working order and is with the defendants. According to him, the defendants have committed a breach of warranty and therefore he is entitled to reject the radio and claim the refund of its price with interest.

3. The defendants contest the claim of the plaintiff and say that he cannot claim refund of the price because according to them the original set was immediately repaired after June 1962 and that it was lying with them till July 1963 because the plaintiff did not turn up to take the radio. They further plead that the set was again repaired on 21-10-1963

and returned to the plaintiff after recovering some repairing costs but the - plaintiff again brought it back in November 1963 and, therefore, they sent the radio-set to the manufacturing corporation for repairs. The manufacturing corporation repaired the set and sent it back to Nagpur in April 1964 but the plaintiff declined to pay the repairing costs and the insurance costs and declined to accept the radio. According to them, therefore, the plaintiff under these circumstances has no right to reject the set and claim refund of its price.

4. The learned Small Cause Court Judge, although there was a hire purchase agreement and although that agreement was admitted by the defendants, found that there was no hire- purchase agreement between the parties. According to him, the plaintiff is neither entitled to reject the radio nor claim refund of its price. Therefore he dismissed the plaintiff's suit. He also ordered that the plaintiff is free to take back his radio from the defendants on a payment of the repairing cost of Rs. 40-72. This decree of the trial Court is challenged here by the plaintiff. The point therefore that arises here for consideration is to see whether this order is according to law.

5. Admittedly, the impugned radio set was purchased under a hire-purchase agreement by the plaintiff on 20-2-1962 and had ultimately paid the balance of Rs. 180/- after certain defaults on 16-7-1963. The defendants had also waived their right to forfeit under the forfeiture clause under the agreement. Therefore, the radio was sold by the defendants to the plaintiff on 16-7-1963. The claim of the plaintiff, therefore, can be considered under the Indian Sale of Goods Act, 1930.

6. The history of the radio shows that after the radio was handed over to the plaintiff by the defendant No. 2 on 20-2-1962, it started giving him trouble and was not working satisfactorily and was giving a jarring sound in May or June 1962. The plaintiff therefore, had no other alternative but to return the radio to the defendants in June 1962. The radio was repaired and he took it back in July 1963. It appears that the radio started again giving him trouble and therefore, according to the plaintiff, he handed it back again in the same month of July 1963. According to the defendants however, he returned the radio set and it was again repaired on 21-10-1963. He did not take back the radio but it appears that there was also another bill of repairs dated 16-4-1963. This history therefore, clearly shows that after the purchase of the radio by the plaintiff on 20-2-1962 the radio was not working satisfactorily. The plaintiff had, therefore, to return the radio to the defendants within about four months. He says in his evidence that the radio gave good performance for two months and then became defective. He also has admitted in his evidence that on 16-7-1963 when he paid the last instalment and when the radio was sold, he found the radio giving good performance, but thereafter it again became bad.

7. The correspondence between the parties also shows that the radio was not working satisfactorily soon after the hire purchase agreement and after its sale. We have a letter at Exh. D-21 by the plaintiff to the defendant No. 1 dated 7th of November 1963 in which he has complained about the defects in the radio-set which he purchased from defendant No. 2. The defendant No. 1 has also written a letter to the plaintiff in November 1963 stating that they referred his complaint to their dealer defendant No. 2, with a request to attend to the plaintiff's radio. The defendant No. 1 has also mentioned that in case defendant No. 2 found any difficulty to repair the set, they were advised to send the same to their works for thorough repairs. We have then another letter from defendant No. 2 dated 9th of December 1963 at Exh. P-23 in which they have stated that they had repaired the set to their satisfaction and requested the plaintiff to take delivery. They have also mentioned that since the plaintiff was not satisfied with the repairs and had not taken the delivery, they are, in these circumstances, sending the radio-set to their Calcutta firm. All this correspondence, therefore, clearly shows that the radio-set was not working properly and therefore, not only defendant No. 2 had to repair the same but they had also to send the same for thorough repairs to their manufacturing company defendant No. 1. There is similar correspondence by defendant No. 1 at Exh. 32 and by the plaintiffs at Exhs. P-33 and 34 showing that the radio-set was bad and had to be repaired by not only defendant No. 1 but also by defendant No. 2. All these circumstances, therefore, clearly show that the radio-set which was purchased by the plaintiff was defective from the very beginning and it did not serve the purpose of the plaintiff for which he had purchased it from the defendants.

8. Section 16 of the Indian Sale of Goods Act is an exception to the rule of caveat emptor under the Act. Sub-sections (1) and (2) of S.16 are as follows :-

"16. Subject to the provisions of this Act and of any other law for the time being in force, there is no implied warranty

or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale except as follows :-

(1) Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller's skill or judgment, and the goods are of a description which it is in the course of the seller's business to supply (whether he is the manufacturer or producer or not) there is an implied condition that the goods shall be reasonably fit for such purpose;

Provided that in the case of a contract for the sale of a specified article under its patent or other trade name there is no implied condition as to its fitness for any particular purpose.

(2) Where the goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be of merchantable quality :

Provided that, if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed."

9. The above section deals with the implied conditions as to quality or fitness of goods for a particular purpose. No distinction appears to have been drawn in the section between contracts for the sale of specific, as distinguished from those for the sale of unascertained goods. Exception 1 applies where the buyer requires the goods for a particular purpose, where the buyer expressly or implication makes known to the seller that particular purpose, where it is shown that the buyer relies on the seller's skill or judgment and where the seller's usual course of business is to sell such goods, whether he is the actual producer or not. Where all these essential facts exist, there is an implied condition that the goods shall be reasonably fit for such purpose. The buyer in our case did rely on the skill or judgment of the seller. This is not a case where he had inspected the goods and bought them on his own judgment. In this case, the buyer purchased the radio-set with some specified purpose. It could easily be said that the vendor sold this radio-set for that specified purpose. It has, therefore, to be of a certain quality. If it is not of that quality and if it is not fit for such purpose, then the law implies a promise from the vendor that he will supply to the purchaser an article of that quality and reasonably fit for the purpose for which it is required. The seller's liability in such cases to supply goods that are reasonably fit is an absolute one.

10. It is not necessary that the buyer should expressly or by implication make known to the seller a particular purpose. The words "by implication" in Section 16(1) clearly indicate that the communication of the purpose to the seller need not be expressed in words. It may be inferred from the description of the goods given by the buyer to the seller or from the circumstances of the case. The buyer however must rely on the seller's skill or judgment. In this particular case, it does appear that the plaintiff naturally had relied on the radio-set which he had purchased from the defendants. In the instant case defendant No. 2 was a firm which was supplying radios in the ordinary course of their business. In fact they were supplying the goods manufactured by defendant No. 1. Therefore the buyer naturally should expect goods which were fit enough for the purpose for which he was buying. We have seen that the radio-set started giving the plaintiff trouble almost about two months after he purchased it. In this view of the matter, therefore, it appears to me that the case of the plaintiff could even come within the purview of sub-section (1) of S. 16.

11. It could also come within the purview of sub-section (2) of S. 16. This sub-section embodies also an exception recognized at common law to the maxim "caveat emptor". If a dealer deals in goods of a particular description and if the buyer purchases the same, then there is an implied condition that the goods shall be of the merchantable quality. If however the buyer had examined the goods, then there shall be no implied condition as regards defects which such examination ought to have revealed. In other words in the case of goods sold of a particular description by a seller who deals in such goods, he is always, in the absence of agreement to the contrary, responsible for the latent defects in the goods which render them unmerchantable, whether the buyer examined them or not, and for all such defects, whether latent or discoverable, on examination in cases where the buyer has not in fact examined the goods. Where the buyer however gets opportunity of inspection but examines the goods superficially he cannot complain of defects which a reasonable and more thorough examination ought to have revealed. This proposition is also laid down in Thornett and Fehr v. Beers and Sons, (1919) 1 KB 486. Ours is not a case in which the plaintiff had either inspected the goods or even superficially examined the goods. Therefore it appears to me that even if the

goods are sold under a patent or a trade name or otherwise, but if they are of a particular description and if they are sold by a seller who deals in goods of that description, then there is an implied condition as to merchantableness of the goods.

12. Mckenzie and Co. v. Nagendra Nath. (1946) 50 Cal WN 213 was a case of a motor car sale by description by a seller who deals in cars of that description. It was observed that when in such a case a latent defect which is not expected in a car of the description of average quality is discovered subsequently; there was not only a breach of the implied condition of merchantability under the Second Exception of Section 16, but also of an implied condition of conformity with description under Section 15, and in either case the buyer can under Section 13 of the Act treat such a breach of warranty and claim damages without repudiating the contract of sale. Section 13 of the Act was not limited to a breach of an express condition but extended also to a breach of an implied condition.

13. In Raghava Menon v. Kuttappan Nair, AIR 1962 Ker 318, the Kerala High Court was dealing with the purchase of a wrist watch. The plaintiff there had purchased a wrist watch from the defendant-company along with a guarantee certificate and within about three weeks the plaintiff found that the watch was not working properly. Therefore, he handed over the watch to the defendant-company. It was kept there for a few days and was returned to the plaintiff but the plaintiff was not satisfied and therefore he handed over back the watch at the Head-office of the defendant-company. It was again returned back to the plaintiff with the assurance that the defects were set right. But within a week the trouble again reappeared. The plaintiff therefore had to hand over the watch again to the defendant-company and in the background of these circumstances he had to file a suit against the defendant-company. That High Court observed that where a layman purchases a watch of a particular make from a reputed firm which exclusively deals in such watches, the sale is governed by exception (1) to Section 16 of the Sale of Goods Act because in such a case the purpose is only the common purpose and not any special purpose, the seller knows it and the purchaser being only a layman, he relies on the seller's skill or judgment. According to that High Court such transaction being a sale by description from a dealer who deals in goods of that description can also fall under exception (2) to Section 16. In my view, with respect, the observations of the Kerala High Court appropriately apply to the facts of our case here.

14. In R. T. Grant v. Australian Knitting Mills, AIR 1936 PC 34, the Judicial Committee of the Privy Council was considering Section 14 of the South Australia Sale of Goods Act which is equivalent to Section 16 of the Indian Sale of Goods Act. That was a case in which A brought an action against B and C claiming damages on the ground that he had contracted dermatitis by reason of the improper condition of underwear purchased by him from B company and manufactured by C company. A alleged that the disease was caused by the presence in the cuffs or ankle ends of the underpants which he purchased and were of an irritating chemical, viz., free sulphite the presence of which was due to negligence in manufacturing by C. and also involved on the part of B, a breach of implied conditions under the Sale of Goods Act. The disease was external and A's skin was normal. Free sulphite was present in the garment in quantities which could not be described as small. The disease contracted and the damage suffered by A were caused by the defective condition of the garments which B sold to him and which C manufactured and put forth for sale. It was held by the Judicial Committee that B company were liable in contract; their liability was made out under exceptions (1) and (2) to Section 14 which are equivalent to exceptions (1) and (2) to Section 16 of our Indian Sale of Goods Act. According to their Lordships, the underpants were not merchantable in the statutory sense because their defects rendered them unfit to be worn next to the skin. The Judicial Committee also defined the term "merchantable". According to their Lordships the term "merchantable" means that the article sold, if only meant for one particular use in ordinary course, is fit for that use. It does not mean that the thing is saleable in market simply because it looks alright; it is not merchantable in that event if it has defects unfitting it for its only proper use but not apparent on ordinary examination. In our case also the radio-set cannot be said to be fit for use as is amply shown by the record.

15. The learned advocates for the opponents relied on Sorabji H. Joshi and Co. v. V. M. Ismail, AIR 1960 Mad 520, but I do not think the observations there in any way help the opponents for the reasons stated by me above. It is also held there that if the goods are bought by description there is an implied condition that the goods shall be of merchantable quality. The Madras High Court also has described what is "merchantable" : Goods are of merchantable quality

if they are of such a quality and in such condition that a reasonable man acting reasonably would after a full examination accept them under the circumstances of the case in performance of the offer to buy them, whether he buys for his own use or to sell again. This definition is based on English cases referred by their Lordships during the course of their judgment.

16. It would, therefore, be difficult for me to accept the finding of the trial Court. It appears to me that the order of dismissal of the plaintiff's suit by the trial Court is not according to law. The learned advocate for the opponents requests that the order as regards costs in this application should at least be that each party to bear its costs. It is, however, difficult for me to agree with this plea. In the ordinary course of their business, the defendants ought to have served the plaintiff like good businessmen and not to have given any opportunity to complain. But the plaintiff had to take recourse to law. In these circumstances, therefore, this application should be allowed with costs.

17. I set aside the decree passed by the trial Court and hereby order that both the defendants jointly and severally shall pay to the plaintiff Rs. 630.43 with interest at 6% per annum from 21-10-1963 till the date of payment. This application is allowed with costs of this Court only.

Application Allowed