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Judgment
K.K. Lahoti, J.
The Plaintiff has filed this appeal u/s 96 of the Code of Civil Procedure, challenging the judgment and decree passed by Ist Addition District Judge, Betul in civil suit No. 6-B/90 dated 31.08.1994 by which the suit of Appellant was dismissed.
The case of Plaintiff:
The Appellant filed suit for recovery of Rs. 4,20,244.60p. against the Respondent on following grounds:
(A) The Plaintiff issued tender for purchase of 7 Nos. of Horizontal foot Mounted spiral Bevel-cum-helical reduction Gear unit. The Defendant submitted his offer for the supply of above gear units on 31.07.1979 which was accepted by the Plaintiff and order for supply of aforesaid 7 Nos. of gear units as per schedule No. 2, 3, 4, 5 & 6 was placed to Defendant on 10.03.1980. The total costs of gear unit was Rs. 5,11,000/-.
(B) The delivery period of supply of goods as per clause No. 7 of the supply order was within 12 months from the date of order.
(C) As per the terms the Defendant gave gurantee for the satisfactory performance of the machinery and undertook repairs/replacement of parts in the event of any manufacturing defect or working defect without charging any costs. This guarantee was for a period of 12 months from the date of installation as per letter of the Defendant.
(D) The Defendant has also furnished a bank guarantee for Rs. 51,100/-for the satisfactory performance of machinery parts. The bank guarantee was issued by the State Bank of India, Industrial Branch of BSR Road Gaziabad. All the terms and conditions of supply order dated 20.03.1980 were accepted by the Defendant by his letter. In the aforesaid terms it was agreed by the Defendant that Plaintiff shall be entitled to recover 2% of the total costs of the goods in the event of delay in the supply of the goods for a period exceeding one month subject to a maximum of 10%.
(E) The Defendant failed to deliver the machinery as per the terms of the supply order. Initially 7 Nos. of Bevel-cum-Helical reduction Gear were supplied without output geared couplings. The Defendant was intimated for supply of geared couplings and after repeated reminders the Defendant supplied it on 22.12.1984 through M/s Nagpur Golden Transport Co., Itarsi. (F) The material was received at the store of Plaintiff on 26.03.1985 which was almost after a period of 5 years from the dated of supply order.
(G)That item No. 1 & 2 of the order (schedule No. 2) were dispatched on 05.06.1982 after a delay of 1 year 2 months and 17 days. Similarly item No. 2,3 4 & 5 were supplied after 1 year 7 months and 14 days.
(H) That the Bevel gear supplied by the Defendant were not satisfactory and were not working at all on putting load. This fact was brought into the notice of Defendant on various occasions and a continuous correspondence was made with Defendant in this regard. Ultimately Defendant deputed his Technicians/Experts/Engineers/Workman from time to time to see that the machinery supplied by the Defendant were not working as complained by the Plaintiff.
(I) That the personnel sent by the Defendant from time to time made attempts to correct/repair the manufacturing and working defects but the defects could not be cured. As per the allegations made by the Plaintiff the machinery supplied by the Defendant was not in conformity with the specifications and the performance was unsatisfactory, which was accepted by the Defendant by various letters sent by the Defendant and also by its Experts/Engineers who visited at the site to repair the same.
(J) That because of failure on the part of Experts and Engineers to rectify the defects on the spot the Defendant agreed and took back the gear boxes one by one to the factory of Defendant for repair/ replacement. It was agreed that Defendant will deposit the amount of Rs. 70,000/- in the form of FDR for the value of each unit. It was also agreed that after rectification/replacement the Defendant shall give trial on load of the machinery to the satisfaction of Plaintiff and all the expenses in this regard shall be borne by the Defendant as per the terms of contract.
(K) That initially though the Defendant made an effort that in place of furnishing FDR he may be permitted to furnish bank guarantee, but ultimately by letter dated 01.08.1985 the Defendant informed that its Board of Director has agreed to send FDR. Thereafter again the Defendant changed the stand and informed his inability to submit FDR for Rs. 70,000/- and made a request that in place of FDR he may be permitted to furnished bank guarantee and a considerable time was wasted in the aforesaid correspondence. But ultimately Defendant sent one FDR of Rs. 70,000/- and taken back its machinery for curing defect for replacement of necessary parts to make its unit workable in trial.
(L) On 22.05.1987 one gear unit was sent back by the Defendant after near about 13 months from the date when it was taken back, but the defects could not be removed and during the trial when the gear boxes put to load, it was creating abnormal sound in the pinion. The technicians/engineers of Defendant have admitted this fact, which reflects from letter dated 22.01.1988.
(M) Inspite of sufficient opportunities and lapse of time the Defendant had not replaced/repaired the goods as per the specification of supply order dated 10.03.1980 and the entire machines supplied by the Defendant were lying unutilised. The Defendant had not fulfilled his obligations and because of this the Plaintiff had suffered huge damages because of non-working of the machines and the conveyor belt. It is also alleged in the plaint that because of aforesaid lapse on the part of Defendant the Plaintiff had also suffered generation losses at Sarni. Thereafter the Plaintiff purchased another gear unit from third party for the need as per the specifications.
(N) The goods supplied by the Defendant are lying idol and are not required by the Plaintiff. It does not confirm to the specifications of the supply order, and failed to run on load as the same was inferior and defective. On this ground the suit was filed for recovery of price of goods and return of unutilised goods. Notices were issued on 03.04.1986 and 04.04.1988 and the Defendant was asked to remove/collect goods supplied by him and to remit the amount of goods. The Defendant had received Rs. 4,90,244.60p, being 90% price of the goods supplied by him.
(O) The Plaintiff had encashed FDR deposited by the Defendant and gave due credit of the amount to the Defendant. After giving due credit of FDR amount a suit for recovery of Rs. 4,20,244.60p. was filed with following reliefs:
(a) That the Honourable Court be pleased to grant a decree of Rs. 4,20,244.60p. against the Defendant.-
(b) The Honourable Court be pleased to direct the Defendant to remove the material supplied by him from the stores of the Plaintiff.
(c) Any other relief which the Honourable Court feels just and proper in the circumstances of the case be granted.
(d) That a decree for interest on the amount of Rs. 4,20,244.60p. be granted from the date of the suit till the date of recovery.
(e) The costs of the suit be decreed.
The case of Defendant
The Defendant filed written statement and contested the suit inter alia on following grounds:
(A) That the Divisional Engineer who has filed a suit is not authorised to file the suit on behalf of Plaintiff and the corporate body can only authorise any person by Power of Attorney to sign and verify the plaint.
(B). The Defendant admitted that the performance bank guarantee was furnished for 12 months from the date of dispatch of goods or 6 months from the date of commissioning of gear units which ever is earlier.
(C) It was pleaded by the Defendant that the gear boxes were fabricated as per design and specifications of the Plaintiff. The Plaintiffs representative P.C. Verma and M.A. Khan had inspected the gear boxes at Defendants workshop, gave clearance, issued inspection notes and thereafter the gear boxes were dispatched. The prices were F.O.R. Ex-works and the same was accepted by the Plaintiff. The Defendant as per the terms delivered the boxes in packed condition at his works at Gaziabad. At the time of inspection of gear boxes it was admitted that if any minor modification is required during commissioning the same would be done free of costs or the Plaintiff may do himself at the costs of Defendant after getting his approval. It was also denied that the material was rejected at Sarni on 26.03.1985.
(D) As the Defendant received letter from the Plaintiff so the Defendant''s General Manager went to Sarni and remained there for two weeks. During this time two gear boxes were re-aligned with available parts. These were checked and tried on no load for number of days and were found satisfactory. But on load trial was not made in the presence of General Manager of Defendant. It was done after the return of General Manager of the Defendant and it was informed by the Plaintiff that three teeths were broken during running on load of gear units. The Defendant''s representative visited the site and found that the load of two gear boxes were put on single unit which indicates that the intention of Plaintiff was malafide.
(E) That the Defendant''s representative and expert repaired the defects, changed the parts complained of which was not due to the manufacturing defect but due to excessive over loading, mishandling etc. Defendant had fabricated the gear boxes in accordance with the Plaintiffs designs and specifications only. The repairs were done and the parts were changed as a gesture of goodwill, whereas the Defendant was not liable for any loss or damages due to over loading mishandling, mala fide intentions wrong designing etc.
(F) That the Defendant''s team visited Plaintiffs place and repaired the gear boxes when received the complaint of Plaintiff about improperly working of gear units. The Defendant''s employees were not allowed by the Plaintiff to test the gear units in loaded condition. The Defendant brought one after another two gear boxes to his works at Gaziabad for realigning. Since the Defendant was denied facilities at Sarni and for this purpose the Defendant had deposited Rs. 70,000/- by way of F.D.R., in good faith just to meet the requirement of Plaintiff. The gear boxes were returned to the Plaintiff and nothing is left with the Defendant, but the Plaintiff is not returning the FDR which was submitted in lieu of gear boxes.
(G)The gear boxes could be repaired at Sarni but the Plaintiff had not allowed Defendant''s team to work in the workshop and therefore the Defendant took back gear boxes to his workshop for which he had to pay the expenses of transport etc. The gear boxes were returned after repair, but the Plaintiff had not returned the FDR to the Defendant.
(H) That there were total 7 gear boxes, and out of 7 gear boxes 2 were of plain gear type and 5 were of Bevel-cum-Helical gear type. All the gear boxes were supplied with latest design fluid couplings and gear couplings. The cost of these couplings were more than 50% value of the order. The Plaintiff had consumed all the couplings. This was seen by the Defendant''s General Manager, who visited Sarni works of MPEB and he was shocked to note that from all the gear boxes the Plaintiff had removed and consumed all the major parts. It was utmost surprise and shock to the General Manager when he noted that the gear boxes were declared as rejected even without using them, which certainly doubt the intention of Plaintiff. The Defendant has alleged that infact there was no requirement of complete gear box units, but the Plaintiff wanted fluid couplings and gear coupling and some other parts which Plaintiff has already consumed out of consignment. The Plaintiffs intention was malafide and Defendant was harassed from time to time, but remained calm due to the business interest and cooperated to the extent for which he was not bound. It is also alleged by the Defendant that the Plaintiffs officer had admitted the wrong drawings, design and specifications of the gear boxes before the General Manager of the Defendant, for which the Plaintiff himself is liable. It was caused due to Plaintiffs improper design and specification for which the Defendant cannot be blamed.
(I) The Defendant admitted that the Plaintiffs notice were received and were replied. After receipt of first notice the Defendant''s employee came and the matter was solved. The Defendant is not liable for the loss or the suit amount. Infact the Plaintiff has committed breach of trust by encashing the FDR of Rs. 70,000/-and not returned the FDR to the Defendant. The Plaintiff had no right to encash the FDR.
(J) The Plaintiff has not paid 10% remaining amount of Defendant''s bill and the costs of repair and replacement and the Defendant has filed suit at Gaziabad for the same.
(K) The Court at Jabalpur has no jurisdiction to try the suit in view of Section 20 of the C.P.C., as the cause of action arises at Gaziabad and the consignment was F.O.R. Ex-Works.
(L) The suit is barred by time as the consignment was inspected by the Plaintiff employee on 03.06.1982 and 13.10.1982 and prior to that on 17.03.1981. Hence the Plaintiffs contract was completed as alleged in the plaint and in the letter of Plaintiff dated 17.03.1980. Hence the suit for recovery of the amount is barred by limitation.
The suit has been filed by the Plaintiff to pressurise the Defendant to go for underhand dealings which the Defendant had not accepted. The Defendant has suffered loss and has been vexed in litigation. The Defendant claimed compensatory cost of Rs. 2,000/- from the Plaintiff.
The trial Court framed the issue and recorded the evidence. The Plaintiff examined P.W.1 A.K. Singh, Executive Engineer, RW.2 N.C. Jain, Assistant Engineer, P.W.3 Prakash Chand, Executive Engineer, P.W.4 Mohd. Ayub, Senior Operating Officer and P.W.5 Brijraj Singh Baghel, Executive Engineer. The Defendant examined D.W.1 A.K. Dixit, Commercial Worker, D.W.2 Arun Kumar Jain, General Manager. Both the parties filed various documents in support of their contention.
The findings of the Trial Court:
The trial Court found that:
(i) Brijraj Singh Baghel, Executive Engineer was competent to file suit on behalf of the Plaintiff.
(ii) The Defendant gave l2 months performance guarantee from the date of installation. In this regard the trial Court has relied on document Ex.P-5 dated 17.06.1983 by which the guarantee was extended for 12 months, effective from the date of installation.
(iii) The letters Ex. D-3 and D-4 were not accepted by the Trial Court and it was held that the guarantee was for 12 months from the date of installation of gear boxes.
(iv) That the gear boxes were inspected by Mohd. Ayub Khan and D.P. Verma, who inspected gear boxes as per inspection report Ex.P-16, Ex.P-17 and Ex.P-18. Mohd. Ayub Khan found 3 gear boxes as per specification and drawing and this fact was accepted by P.W. 3 Prakash Chand, Executive Engineer. On the basis of this the trial Court found that the gear boxes were inspected by the Plaintiff at workshop of the Defendant.
(v) While deciding issue No. 5 the trial Court found that D.W.2 Arun Kumar Jain, General Manager has specifically stated that for 3 days the gear boxes were running without load. After repair inspite of his insistence for trial on load it was not agreed by the Respondents so he left his employee Dixit at the Plaintiffs place and returned back. The Plaintiff has not adduced any evidence that the gear boxes where tested on load in the presence of employee of Defendant. Thus the issue No. 5 was decided against the Plaintiff.
(vi) That the Court at Jabalpur has jurisdiction and suit is within limitation.
(vii) That the Plaintiff had not removed the gear box-fluid couplings and gear couplings from the gear boxes. In this regard the case of Defendant has not been found proved by the trial Court.
(viii) That the Defendant got gear boxes repaired after depositing FDR of Rs. 70,000/- to the Plaintiff and the gear boxes after repair ware returned to the Plaintiff, so the Defendant is entitled to refund of the FDR of Rs. 70,000/-. The Plaintiff has not paid remaining 10% of the price and had only paid 90% of the price of goods supplied to the Plaintiff.
(ix) The trial Court found that there is no contract between the Plaintiff and Defendant for the refund of amount as the Defendant has guaranteed for repair or replacement of gear boxes and in absence of any contract of refund of price the Plaintiffs suit for recovery of the amount is not maintainable. On this ground the suit has been dismissed by the trial Court.
This judgment and decree passed by the trial Court has been assailed by the Plaintiff on following grounds:
(i) That in the case it is proved by the Plaintiff that all the gear boxes were having manufacturing defect and were not working on load. The Defendant failed to repair/replace the gear boxes so the Plaintiff is entitled for recovery of price paid in respect of aforesaid gear boxes.
(ii) That the finding of the trial court that there was no contract between the Plaintiff and Defendant for the refund of amount and only Defendant furnished guarantee for repair or substitution of gear boxes and in absence of any contract for refund of price the Plaintiff cannot claim the amount is erroneous. Reliance is placed to Section 16 of the Sales of Goods Act, 1930 and submitted that there is an implied condition that the goods should be reasonably fit for the particular purpose for which it was required and the material supplied by the Defendant was not found fit for the use by the Plaintiff. On this ground the suit ought to have been decreed.
(iii) That the trial Court erred in ignoring the documentary evidence in the case, on which the suit of Appellant deserves to be decreed. Reliance is placed to two judgments of Nagpur High Court in Dr. Baretto v. T.R. Pruce (AIR 1939 Nagpur 19) and Bajrangi Prashad Gaurishankar v. Provincial Government of C.P. and Berar ( AIR (38) 1951 Nag 301) and submitted that this appeal be allowed and the suit of Appellant be decreed with costs.
In Dr. Baretto (supra) the Nagpur High Court considering the question held thus:
According to Section 16(1), Sale of Goods Act, there is an implied condition that the goods should be reasonably fit for the particular purpose for which they are required. It was found that they were not so reasonably fit. The Plaintiff had an opportunity on the 25th to make them fit but had not succeeded.
In Bajrangi Prashad Gaurishankar (supra) the Nagpur High Court held thus:
Thus, these cases lay a heavy responsibility upon manufactures of articles. The only way in which a manufacture, undertaking to make a particular article according to specifications and designs, can protect himself is by expressly providing in the agreement that he will not be answerable for a defect which in inevitable because of the strict adherence to the specifications and designs mentioned in the agreement or contract. In the absence of such express term, the law will imply a warranty that the article supplied is one which would serve the purpose for which it was ordered to be made. From this it dearly follows that a manufacturer cannot escape liability in respect of a defect which arose not because he carried out the work according to the specifications in the contract not because he was compelled to be something by the buyer or his agent in the course of his manufacture but because of something else such as, negligence or want to skill.
The learned Counsel for Respondent supported the judgment and decree and submitted that inspite of all the efforts made by the Defendant, the Plaintiffs officer had not cooperated with the Defendant. The goods were manufactured as per the specifications furnished by the Plaintiff which was duly checked at the works of Defendant and thereafter it was dispatched for the site. The Defendant on being intimated that the gear boxes are not working proper the Defendant tried to resolve the defect, though he was not liable for this. Because of non-cooperation on the part of Plaintiffs officer the Defendant cannot be held liable. The Plaintiffs officers had created all the hurdles in rectifying the defect for which the Defendant was always willing and ready and even submitted FDR to the Plaintiff for getting the gear boxes repaired. All these facts shows that infact the Plaintiffs officers were responsible for non-cooperation and creating hurdle in rectifying the defects of gear boxes. In these ''circumstance the trial Court has rightly dismissed the suit of Appellant.
In this case various documents are on record which deserves to be seen before proceeding further. As the documents are material it will be appropriate if the aforesaid documents are referred in the matter. The correspondence which took place after the visit of Arun Kumar Jain, General Manager of Respondent at Sarni in February 1988 also reflects the factual position which was prevailing at the relevant time. In this regard the documents which are admitted in evidence the relevant portion of which are quoted as under:
PERFORMANCE GUARANTEE
It is certified that five Nos. gear boxes as Schedule No. 3,4, 5 & 6 Right hand drive against Satpura Thermal Project Sarni order No. DE; STP: CHP: ORD: 350: 843 dtd. 10.03.1980 have been manufactured strictly as per their drawing & specification. We fully warranty for the satisfactory performance at customer''s site, any flaw or defect found during working regarding design and material we undertake to repair/replace the part at free cost. This guarantee will be inforce for twelve months from the date of installations.
The letter dated 23.11.1983 Ex.P/7 sent by Defendant reads as under:
With reference to your telegram, the undersigned visited your office with technician. The failed pinion has been replaced by New pinion but on trial at no load it is given sound and three teeth of pinion is rubbing with bevel gear. Now we decided to replace complete set bevel gear & pinion that sound can be stopped. But in meantime you can run this gear box at our risk.
In letter dated 25.01.1984 Ex.P-8, Ramesh Chandra Sharma an employee of Respondent has stated as under:
He visited Sarni and found damaged spiral gear in broken and with old welding. Similarly he found the teeth of pinion loose. He had seen the fitting of pinion gear major shaft was loose and he assessed that it could not run. He brought one bearing alongwith him, but he could not find any place for its fitting. The pinion gear, housing and shafts cannot be repaired there, so he made request for carrying it alongwith him to workshop. He also promised that after getting it repaired he will bring it back and make it in working condition. He made this request to Divisional Manager to carry the aforesaid goods with him.
In letter dated 12.06.1985 Ex.P-9 the Respondent has stated as under:
With reference to the above the undersigned visited your site where these Gear Boxes are to work on examination of One No. Gear Box. Found some defect. This defect cannot be removed at site because, proper machining facilities are not available. So under discussion hold alongwith your S.E.(Services) & Chief Engr. Sarni, mutually agreed to deliver one No. Gear Box, against the security, for the same. In form of FDR for amount of Rs. 70,000/- in favour of Sr. Accounts Officer, MPEB, Sarni is to be given. After rectification we shall give you trial on load at site. We want to maintain the co-ordial relation. Regarding the expenses incurred in carrying the G. Box to our works shall be born by us. Now, you are requested to advise the Banker not to encash the B.G. for Rs. 51,100/-.
After satisfactory trial of one No. of Gear Box other Gear Boxes may be rectified accordingly one by one to give the proper performance with the same F.D.R.
We hope that your good self co-operate us to avoid inconvenience in future.
In letter dated 12.04.1985 Ex.P-10 the Respondent stated as under:
Enclosed please find herewith FDR No. R346708 dated 08.04.1986 for Rs. 70,000/- issued in favour of Sr. Accounts Officer, MPEB, Sarni. Kindly acknowledge the same and hand over the Gear Box to our representative for necessary rectification.
Further you are requested to please issue a latter to your banker i.e., State Bank of India, Indl. Estate Bulandshahar Road, Ghaziabad that dispute has been settled mutually and earlier letter issued for encashment of BG may be treated as withdrawn.
By Ex.P-11 dated 17.08.1983 the Plaintiff wrote as under:
We are in receipt of your above cited letter. It is ridiculous to note contents from reputed manufacturer of mechanical Engineering items. We have already checked up the supply at our Area Store in presence of your representative, the idea of geared coupling was not even clear to him. On checking one fluid coupling along with the two flange couplings each for either side of fluid coupling were found. Please go through the schedule of our order No. 350/843 dtd. 10.03.1980 wherein Out put geared coupling is specifically mentioned. In this connection you may depute your representative for getting yourself convinced.
How the inside and of pinion of assembled gear can get hand diving transportation. Probably there is some misunderstanding at your end about this point. Removal of 50 thousand from small dis-shaft is not easy, where bevel is to get fixed on pinion shaft. This is also to inform that one number gear box (left hand drive under schedule No. 4) has been taken on load on dated 13.08.1983 and running with the abnormalities already mentioned in our previous letter.
By letter dated 04.01.1984 the Plaintiff intimated Defendant as under:
Your technician & Sales Engineer have been to our site around 20th of Nov. 83. They have seen the condition of damaged bevel gear. They have also tried their level best to run the spiral bevel cum helical reduction gear (new mounted on our conveyor No. 9B) with the help of bevel gears brought by your technicians (that too of old one), but failed to put conveyor on load as the gear box was not at all giving satisfactory performance. At last your Sales Engineer has given in writing to send one complete set of level gear and pinion. Since then more than month has passed by nothing has been heard from your end.
Now there is no hesitation to mention that by supplying partial and substandard material you are trying to befooling not only to this office but to whole organization. You will agree to the fact that gear boxes supplied by you are creating more problems rather to help us as being the new one.
You will also have to agree to the fact that considerable amount has been invested by our organization in procuring the new gear boxes from you to meet out our requirements and future Plant emergencies. But the running performance of the gear boxes supplied by you is so poor that for future one can hardly believe on you. Please note that load trial was not witnessed by our representative.
The Defendant by letter dated 25.03.1984 Ex.P-13 wrote as under:
With reference to your above communications, our Foreman has rectified one gear box with a new pinion in single piece. Kindly let us know about the performance of this gear box, so that we can depute our Foreman again for replacement/rectification of other remaining gear boxes also. Meanwhile, kindly extend the delivery period of the order so that we can claim 10% pending payment from your Accounts Section.
Thereafter by letter dated 21.01.1988 Ex.P/12 the Defendant wrote letter to the Divisional Engineer, Sarni as under:
The trial was taken on rectified Gear Box on 14.01.1988 & 21.01.1988 but the sound was observed at pinion side. Hence we want to take the pinion for further modification. It is therefore requested to please order SBI, Ghaziabad not to encash B.G. till further letter.
Thereafter on 02.02.1988, Ex.P/16 the Defendant wrote as under:
Kindly refer to above. It appears that this case has not been understood in the right perspective. Out of the 7 pcs of gear boxes supplied by us two were found perfect in all respects. The balances 5 pcs needed rectification. We have submitted Bank Gurantee of Rs. 51,000/- and also deposited an FDR of Rs. 70,000/- with you for collection of gear boxes one by one and repair them. We collected two from you and returned both of them after repairs and sent our man to give a trial. Unfortunately they did not pass in the trial due to some defect in the pinion. We have got a new pinion prepared out of EN-24 material and our man is leaving tomorrow with that pinion to Sarni to give a trial of one gear box. Another pinion has also been forged and is under machining. It will be ready in 2 to 3 days when another man will proceed to Sarni to give a trial of the other gear box. As soon as both these gear boxes are cleared in the trial, we will collect the balance 3 gear boxes one by one and repair them to your full satisfaction in the trial.
In this case the witnesses were examined by both the parties and as per the evidence recorded by the trial Court, the trial court has recorded aforesaid findings. From the perusal of findings recorded by the Court below and also from the evidence it is apparent that the gear boxes supplied by the Defendant were not working on putting load and as soon as the load was put on the gear boxes there was noise and some of the matters the teeth of gear boxes damaged. The Defendant was extended an opportunity to get repaired the gear boxes. Though in this regard certain conditions were imposed by the Plaintiff, but it appears that the Plaintiff to safeguard its interest imposed condition on the Defendant to furnish FDR in lieu of the gear boxes so that the Defendant after repairing gear boxes may return it to the Plaintiff at the earliest. But the gear boxes even after the repair could not perform to the satisfaction of Plaintiff and except these two gear boxes which were permitted by the Plaintiff to take back for repairing other gear boxes were not repaired. All these facts are clear from the correspondence between the parties. The Defendant in all the letters had not protested in any manner that he was not at fault, but always accepted that he was willing to repair the gear boxes or make the defect good. The replacement/rectification was not possible at Sarni so the Plaintiff had permitted Defendant to take back the gear boxes to its workshop at Gaziabad and even after repairing the gear boxes could not perform and ultimately the Plaintiff had to arrange other gear boxes from other sources. Though the Defendant has taken a plea that infact the Plaintiff was not in need of the gear boxes and infact the entire purpose of Plaintiff was to use some parts of the gear boxes namely fluid couplings, gear couplings. But this plea has been negatived by the trial Court after appreciating the evidence in para 18 of the judgment. This finding has not been assailed by the Defendant before this Court. In view of aforesaid, it is crystal clear that the gear boxes supplied by the Defendant could not perform up to the mark when they were put on load and the Plaintiff could not use those gear boxes inspite of extending opportunity to the Defendant to repair it.
Section 16 of the Sales of Goods Act, 1930 (hereinafter referred to as ''Act'' for short) provides implied condition as to quality or fitness. For ready reference Section 16 of the Act is quoted as under:
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 purposes.
(2) Where 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.
(3) An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade.
(4) An express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent therewith.
The aforesaid provision specifically provides that where the buyer explaining or intimating to the seller particular purpose for which the goods are required and the buyer relies on the seller and the goods are of the description of which it is in the course of seller''s business to supply then there is an implied condition that the goods shall be reasonably fit for such purpose.
In this case from the perusal of tender notice it was very specifically intimated that the tender Ex.P-1 was for the supply of horizontal foot mounted spiral Bevel-cum-Helical Reduction Gear units. The details of specifications were available in the office of Divisional Engineer Sarni and the aforesaid tender shows that the goods as per the specifications was required to be manufactured and supplied by the tenderer. The Appellant who submitted his tender as per Annexure P-2 had specifically stated that the items will be manufactured out of specified material as per instructions given in Plaintiffs relative drawings. As per para 9 & 10 of the offer the Defendant stated that it will issue a guarantee letter for its workmanship for the material supplied by it with a further promise that if there is any defect it will be replaced or repaired free of costs. In para 10 of the tender it has been stated that the Defendant had already supplied this type of material to M/s Harduaganj Thermal Power Station, Aligarh, M/s Obra Thermal Power Station, Obra (Mirzapur) and M/s U.P. State Cement Corporation Ltd., Churk (Mirzapur). The work order of Plaintiff Ex.P-3 dated 10.03.1980 specifically states that the tender is for the supply of horizontal foot mounted spiral bevel cum Helical reduction gear boxes. Hence as per quotation dated 31.07.1979 by the Defendant and para 10 of the order Ex.P-3 states that the gear boxes should be guaranteed for 12 months from the date of installation and if there is any defect it will be replaced or repaired by the Defendant free of the costs. The specification of items are on record in schedule annexed to the work order Ex.P3. Though the Defendant had took the plea that there was some defect in the designing of gear boxes, but nowhere in the letters of the Defendant this fact finds place. Though this fact has been tried to be stated, but until and unless a specific intimation could have been given by the Defendant in the correspondence, this subsequent change of stand cannot be accepted. The Defendant was well aware with the fact that the gear boxes supplied by the Defendant are not taking load or fail to perform when it was put on lead. This fact was verified by the Defendant through its employee on the spot, seen the working of gear boxes and thereafter as per the request of Defendant the Plaintiff had permitted Defendant to take back the gear boxes and after repairing to return it. In the letter dated 02.02.1988 Ex.P-16 the Defendant has specifically stated that out of 7 pieces only 2 gear boxes were found in perfect condition. The Defendant had submitted bank guarantee for 7 Nos. The Defendant collected 2 gear boxes and returned both of them after repair and sent a representative to give trial, but when these were put to trial the gear boxes could not pass in the trial due to some defect in the pinion. The Defendant got a new pinion prepared out of EN 24. Another pinion was also forged and was under machining and was to be ready within 2-3 days and another person was to proceed to Sarni to give a trial of other gear boxes. The last 3 lines of first para of the letter Ex.P-16 are very important which states that "as soon as both these gear boxes are cleared in trial, we will collect the balance 3 gear boxes one by one and repair them to your full satisfaction in the trial." When the Defendant had admitted that 5 gear boxes were not functioning and 2 inspite of repair could not perform and Defendant was directed to rectify the defect by changing new pinion, then now it cannot say that there was some defect of designing of gear boxes. The Defendant was manufacturing all the aforesaid materials and was having a technical know how for this purpose. If the Defendant was of the opinion that the aforesaid gear boxes will not be in a position to run on load then it ought to have intimated to the Plaintiff forthwith that the aforesaid design will not be suitable to the Plaintiff or even after the trial in the presence of Defendant the aforesaid fact ought to have been brought to the notice of Plaintiff in writing, failing which at this stage it Cannot be held that there was any defect of designing of the aforesaid gear boxes. The aforesaid 2 gear boxes inspite of repair could not perform well and thereafter the Defendant had not taken any pain for the repair or replaced all other gear boxes. As per the case of Plaintiff all the gear boxes are lying with the Plaintiff and could not be used by the Plaintiff because of defect. When the Plaintiff placed the order for supply and aforesaid specified gear boxes and these gear boxes could not perform to their quality of fitness then the Plaintiff was entitled for replacement of aforesaid gear boxes. Merely there was a condition that the aforesaid gear boxes may either be repaired or replaced will not deprive the Plaintiff to recover the price from the Defendant if the aforesaid gear boxes failed to perform inspite of repairing by Defendant. The ensure purpose of placing the order the Defendant was to get appropriate gear boxes for the machines which Plaintiff could not get and now on the aforesaid ground suit of Plaintiff cannot be dismissed. Though the Defendant has taken a plea that out of supplied 7 gear boxes 5 were defected and 2 were performing well, but there is no such evidence on record except the aforesaid letter while the case of Plaintiff is that all 7 gear boxes were not up to the mark.
In these circumstances the trial Court erred in dismissing the suit of Plaintiff/Appellant which deserves to be decreed for the price which was paid by the Plaintiff to the Defendant. However the Defendant who had supplied the gear boxes is entitled to take back or to get due adjustment if the aforesaid gear boxes are not refunded to the Defendant.
In view of aforesaid the judgment and decree passed by the trial court in not sustainable under law and accordingly it is set aside. The suit of Plaintiff is decreed in following terms:
The Plaintiff shall be entitled for the refund of price of gear boxes after due adjustment of FDR which has been apportioned by the Plaintiff, as stated in the plaint which comes to Rs. 4,20,244.60p.
That the Defendant shall be entitled to get back all the gear boxes supplied by it, immediately after payment of aforesaid amount. In case of any dispute in this regard, the trial Court shall be free to appoint a Commissioner in this regard.
In case the Plaintiff failed to return the aforesaid gear boxes or any of them to the Defendant on payment of aforesaid amount or the aforesaid gear boxes are found not available with the Plaintiff then the Defendant shall be entitled to get back 50% of the aforesaid amount adjusted from the aforesaid amount and in that circumstances the Plaintiff would be entitled for 50% of the amount or in proportion thereof.
In case the unused gear boxes are returned by the Plaintiff to the Defendant then the Plaintiff will be entitled for Rs. 4,20,244.60p. alongwith 6% interest from the date of filing of suit till its realization. But in case Plaintiff failed to return all the unused gear boxes or any of them to the Defendant then the Plaintiff would be entitled to only Rs. 2,10,122.30p., or in proportion thereof as the case may be and interest (a 6% thereon from the date of filing of suit till its realisation.
The Plaintiff shall be entitled for costs of this appeal and suit from the Defendants.