Holding

Under an F.O.R. Jodhpur clause, property and risk pass to the buyer at the point of loading in Jodhpur, rendering the buyer liable for the price of the 224 missing tents and entitling the seller to interest at a reasonable rate.

Summary

The Marwar Tent Factory supplied 1,500 tents to the Defence Services under a contract that stipulated delivery F.O.R. Jodhpur. After dispatching the consignment by rail, the Commandant of the C.O.D. at Kanpur claimed that 224 tents were missing and deducted their price from the amount due. The factory sued for the price of the missing tents and interest; the trial court recognized only an 11‑tent shortage, and the High Court upheld that decision. On appeal, the Supreme Court held that under an F.O.R. clause the property and risk pass to the buyer when the goods are loaded at the place of delivery, i.e., Jodhpur, making the Commandant liable for the full price of the 224 tents. The Court also awarded interest at a reasonable rate of 6% per annum under Section 61(2) of the Sale of Goods Act. Consequently, the appeal was allowed, the decree for the price of the 224 tents and interest was restored, and costs were awarded.

Issues considered

When does property and risk pass under an F.O.R. contract under the Sale of Goods Act, 1930?
Is the buyer liable for the price of goods short‑delivered when the contract specifies F.O.R. delivery?
Can interest be awarded on the unpaid price in the absence of an express contractual stipulation?
Whether the suit against the railways is maintainable given procedural requirements?

Legislation cited

Railways Acts. 78-B
Sale of Goods Act, 1930s. 23, s. 39, s. 61

Subjects

Sale of Goods ActF.O.R. deliverypassing of propertyrisk of lossshort deliveryinterest under Section 61defence procurement contractrailway carriage liability

Judgment

MARWAR TENT FACTORY
A
v.
UNION OF INDIA AND ORS.

NOVEMBER 9, 1989

[SABYASACHI MUKHARJI AND B.C. RAY, JJ.] B

Indian Sale of Goods Act 1930-Sections 23, 39 and 61-Short
delivery in transit of goods-Liability for-F. O.R. Contract-Meaning
of.

The appellant is a firm dealing in the manufacture and sale of
Tents and Tarpaulins at Jodhpur in Rajasthan. It carried on a regular c
business of supplying these goods• to defence services. The Director-
General of Supplies and Disposal invited tenders for the supply of tents
and the appellant-firm submitted its tender, which was accepted. The
said c9ntract was of two kinds of tents viz, "Flies Inner" and "Flies
Outer",. the agreed rate of the latter was Rs.225 per tent and the D
qnantity was 15,000. As per the terms of the contract, the goods were to
be inspected at the premises of the appellant firm and after inspection
the same were to be despatched to Commandant, C.O.D., Kanpnr. As
regards the mode of payment of the price of the goods, 95% of the price
was to be paid on proof of despatch of goods and production of inspec-
. tion note, and 5% latter. E

On Octol>er 14, 1968 one consignment of 1500 tents was despat-
ched to C.O.D. Kanpur from Jodhpur by the appellant under Railway
Receipt No. 502671 and 95% of the price was paid to the appellant. The
commandant, C.0.D. Kanpur, the consignee reported that 224 tents
out of the said sale consignment had not been received at Kanpur and F
for that reason a sum of Rs.51,912 being the price of 224 tents was
deducted from the amounts due to the appellant, under another con-
tract. The Traffic Officer, Commandant C.O.D. had filed a claim with
the railways for short delivery of 224 tents.

Despite repeated requests by the appellant for the payment of the ·G
said amount, the same was not paid to it. As such the appellant filed a
suit in Delhi High Court for the recovery of the principal amount as also
for the interest thereon. In the suit, the appellant also claimed interest
on two other consignments, as its balance price i.e. 5% amounting to
Rs.24,357 was paid after a delay of 3 years and thus a sum of Rs.8,525
was claimed as interest @12% per annum from 1.1.69 to l.12.71. Thus H
the total claim was of Rs. 74.972.
127
128 SUPREME COURT REPORTS (1989] Supp. 2 S.C.R.

A The defence of Respondents 1, 2 & 5 was that 224 tents were
received short and as such a sum of Rs.51,912 its price was rightly
·-
'I
L __

deducted from the appellant's bill.

Respondents 3 & 4 (Railways' Officials) filed a Statement that
only 11 tents were delivered short for which the admitted liability was
13 Rs.2,475, the same having been paid to C.O.D. Kanpur by debit
adjustment.

The Trial Judge by his Order dated February 12, 1982 dismissed
the claim of the appellant substantially but so for as the amount of
Rs.2,475 regarding the shortage of 11 tents was concerned, the same
was decreed with interest.
c
Against the Judgment and Order of the Trial Judge, the appellant
preferred an appeal before the Division Bench of the High Court and
the same having been dismissed, the appellant has come up in appeal to
this Court after obtaining Special Leave.
D
Allowing the appeal, this Court,

HELD: In view of the terms and conditions of the contract
embodied in clause 11 of the schedule of acceptance of tender regarding
the place of delivery "F.O.R. Jodhpur", the property in' the goods
E passed immediately on to the seller after delivering the goods and load-
ing the same in the railway wagons at Jodhpnr for transmission to the
buyer, the consignee, .without reserving any right of disposal. H36D]

On consideration of the place of delivery as well as the terms of
delivery embodied in clause 11 of the schedule of Acceptance of Tender,
F the property in the goods alongwith the risk in the goods passed from
the appellant to the Respondent No. 5 when the goods were delivered
and dispatched by railway wagons at Jodhpur i.e. F.O.R. Jodhpur. The
consignee, Commandant, C.O.D. Kanpur is, therefore, liable for the
price of 224 tents which was deducted by him from the other bills of the
appellant. ,[137 A-BJ
G
The plaintiff is entitled to get a decree of interest on the price from
1.1.69 to 1.12.1971@ 6% per aunum which is considered to b~ a reason-
able rate of interest as claimed by the plaintiff-appellant. [139C]

Girija Prashad Pal v. The National Coal Co. Ltd., AIR,1949 Cal.
H 472; The Commissioner of Sales-Tax, Eastern Division, Nagpur v.

.>··
MARWAR TENT FACTORY'· U.0.1. [RAY, J.[ 129

Husenali Adamji & Co., [1959] 2 Supp. SCR 702; B.B. Bose v. National
Coal Trading Company, AIR 1966 (Patna) 346 and M/s. M.K.M: A
Moosa Bhai Amin, Kola v. Rajasthan Textile Mills, Bhawanimandi,
AIR 1974 Raj. 194-1974 Raj. L.W. 77, referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4586
of1989. B
From the Judgment and Order dated 14.3.1983 of the Delhi High
Court in R.F.A. (O.S.) No. 3 of 1983.

Pallav Shishodiya and D. Bhandari for the Appellant.

V.C. Mahajan, ArunMadan and C.V.S. Rao for the Respondents. c

The Judgment of the Court was delivered by

RAY, J. Special leave granted. Arguments heard.
D
This is an appeal against the judgment and order passed in
R.F.A. (OS) 3 of 1983 on March 14, 1983 by the High Court of Delhi
dismissing the Civil Writ Petition in limini against the judgment and
decree rendered by Chawla, J. in Suit No. 50 of 1972 on February 12,
1982.
E
The matrix of this case is stated hereunder.

The appellant M/s Marwar Tent Factory is a firm having its
registered office at Jodhpur (Rajasthan) and dealing in the manufac-
ture and sale of tents and tarpaulins. The firm is a regular supplier of
these goods to the defence services of India. F

On March 13, 1986 tenders were invited for the supply of tents by
the Directorate General of Supplies and Disposals, the respondent
No. 2. Accordingly, the appellant submitted a tender which was
accepted by the officer of the Directorate General of Supplies and
Disposals on behalf of the President of India. The said contract was of G
two kinds of tents 'Flies Inner' and 'Flies Outer'. The agreed rate for
the 'Flies Outer' was Rs.225 per tent and the quantity was 19,100. In
accordance with the said terms of the contract the goods were to be
inspected at the premises of the firm at Jodhpur and after the same
being passed by the Inspector, the goods had to be despatched to the
Commandant, C.0.D. Kanpur. It was further agreed between the H
130 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

A . parties that 95% of the price was payable on proof of despatch and
production of the inspection note. The balance 5% was to be paid after
receipt of the goods in good condition by the C.O.D., Kanpur.

On October 14, 1968, one consignment of 1500 tents was
despatched to the C.0.D., Kanpur by the appellant under Railway
B receipt No. 502671 dated 14.10.1968 and 95% of the price was paid by
demand drafts dated 17.10.1968 and 19.5.1969. The Commandant,
••\.
C.0.D., Kanpur reported that 224 tents out of a sale consignment had ....
not been received at Kanpur and consequently a sum of Rs.51,912
(being the full price of those 224 tents inclusive of sales tax) was
deducted from the amounts due to the appellant under another
contract.
c
The appellant made repeated requests and sent repeated
reminders for payment of the said sum of Rs.51,912 from the respon-
dent but without any effect. As such, the appellant filed a suit being
Suit No. 50 of 1972 in the High Court at Delhi for recovery of the said
D principal sum as well as interest on the principal. The appellant further
claimed interest on two other consignments as the price of the said
consignments was paid after a great delay. The two consignments were
of 700 and 1400 tents despatched on August 10, 1968 and August 27,
1968 respectively. Though 95% of the price was paid, the balance 5%
amounting to Rs.24,357 was not paid till December 1, 1971 despite
E repeated requests and reminders. The said payment of Rs.24,357 was
wrongfully delayed by about three years and a sum of Rs.8,525 was,
therefore, claimed as interest @ 12% per annum from 1.1.1969 to
1.12,1971 on the said amount. The total claim of the appellant was of
Rs.7.4,972 i.e. Rs.51,912 principal sum and Rs.14.535 as interest on :
this and Rs.8,525 as interest on the sum of Rs.24,357 wrongfully with-
F held for three years. ·

· A joint statement was filed by the respondent Nos. 1, 2 & 5 as
their interest were idential. The defence was that 224 ten'ts were
received short under railway receipt No. 502671 and the sum of
Rs.51,912 was rightly deducted from the payment due to the appellant
G under other contracts.

The respondent Nos. 3 and 4 also filed a joint written statement
stating inter alia that only 11 tents were delivered short under 'railway
receipt No. 502671 for which the admitted liability was to the tune of
Rs.2,475. This sum had been paid to the C.O.D., Kanpur by debit
H adjustment.
MARWAR TENT FACTORY v. U.0.1. IRAY, J.] 131

T.P.S. Chawla, J by his judgment and order dated February 12,
1982 though dismissed the claim of the appellant substantially but in so A
far as the amount of Rs.2,475 regarding the shortage of 11 terms
admitted by respondent Nos. 3 and 4 was concerned, decreed the said
sum in favour of the appellant with interest @ 12% per annum from
1.4.1972 till the date of judgment and further interest@ 6% from the
date of judgment till the realisation of the amount. Against the said B
judgment and decree the appellant preferred an appeal being R.F.A.
(OS) No. 3 of 1983 before the Division.Bench of the said High Court.
The said appeal was, however, dismissed by the High Cour< of Delhi
by order dated March 14, 1983. The instant appeal on special leave has
been preferred by the appellant against the aforesaid judgment and
decree.
c
The crucial question that requires consideration in this appeal is
whether 1500 tents which were loaded in the railway wagons on.
October 14, 1968 at Jodhpur for delivery to the respondent No. 5, the
Commandant, C.O.D., Kanpur under railway receipt No. 502671
were actually delivered to the respondent No. 5. It has been held by D
the Trial Court i.e. learned single Judge, High Court, Delhi that the
tents were carried in 3 wagons upio Agra. The railway line from Jodh-
pur to Agra was a meter gauge. Thereafter, from Agra to Kanpur
which is a broad gauge line the tents were put into four broad gauge
wagons at Agra for onward transmission to Kanpur, as evident from
the transmission, register. It has been found that the railways could E
not establish the delivery of 224 te~ts under railway receipt No. 502671
to the Commandant, C.O.D., Kanpur from the unloading register.
The shortage certificate issued by the railways corroborates the entries
in the unloading register. The particulars of the consignment are set
out in the heading of this document. The railway receipt is No. 502671
and the names of the sendor and consignee are also mentioned. The F
Traffic Officer, Commandant, C.O.D., Kanpur filed a claim with the
railways on February 10, 1969 for 224 packages received short and this
claim was made under railway receipt No. 502671. The plea of the
railways was that the shortage was of 11 tents and not of 224 tents. It
has been found by the Trial Court that this plea is falsified by the
unloading register, the shortage certificate and the reconciliation G
statement as also the report made by their Traffic Inspector on
December 9, 1970. Accordingly, it was held that under railway receipt
No. 502671 the appellant delivered the full quantity of 1500 tents to
the railways but the latter failed to deliver 224 tents out of this consign-
ment to the Commandant, C.0.D., Kanpur and as such the railways
are estopped from contending that it was under some other· railway H
132 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

receipt. The Trial Court, however, held that no decree could be passed
A against the railways because the plaint did not contain any claim for
loss or non-delivery against the railways. Secondly, the suit against the
railways was barred by time and thirdly since no notice under Section
78-B of the Indian Railways Act was served on the railways by or on ;
behalf of the appellant. The appellant, however, submitt.ed that the
B title of the goods passed on to the r~spondent No. 5, Commandant,
C. 0. D., Kanpur, the moment the tents were lodged on rail head,
Jodhpur as the term of delivery under the contract wa§ F.O.R., Jodh-
pur. For any short delivery of the goods made by the railways at
Kanpur, the appellant was not responsible and the respondent No. 5,
under the terms of the contract is not entitled to deduct the price of the
short delivery of tents i.e. 224 tents. It was for the Commandant,
C C. 0 .D., Kanpur to claim damages from the railways and the Com-
mandant had actually made a claim as stated hereinbefore t9 the rail-
ways in respect of the short delivery. The learned single Judge, how-
ever, found that the abbreviation F.O.R. meant Free on Rail meaning
simply that the cost of the carriage of the goods upto the railway wagon
D is included in the price and must be borne by the seller and the cost of
carriage thereafter is to be borne by the buyer. It has also been held
that the risk in the goods would not pass at Jodhpur as expressly
stipulated in the general conditions of contract contained in Form
DGS & D-68. These were made applicable by clause 7 in the Schedule
of acceptance of tender. Special emphasis was laid to the condition
E No. 4 entitled "responsibility of contractor for executing the con-
tract". The learned Judge has with reference to sub-clause ( 10) of this
condition held that the goods shall remain in every respect at the risk
of. the contractor until their actual delivery to the consigI]ee at the
stipulated place and as such the risk of the appellant remains until the
goods were actually delivered to the Commandant, C.O.D. Kanpur.
F The argument as regards condition No. 14 of the general conditions of
contract as well as its sub-clause (2) entitled "passing of property" was
negatived on the ground that the risk was governed by condition 4( 1)
of the general conditions of contact. The claim before the railways
being time barred and also no notice under Section 78-B of the Indian
Railways Act having been served on the Railways within the stipulated
o period, the appellant could not claim for d~mages for breach of con-
tract and for the price of the tents not delivered. However, in resl'ect ,of
the price of 11 tents the shortage of which was admitted by the railways
and for which a sum of Rs.2,475 was paid to the respondenr No. 5 by
the appellant, it was decreed with interest @ 12% per anhum from
1.4.1972 till the date of passing of the decree and also further allowed
ft1 interest on the said sum @ 6% per annum thereafter till the date of
MARWAR TENT FACTORY v. U.0.1. [RAY, J.] 133

payment. The respondents, however, did not question the finding of
A
the Trial Court regarding the short delivery of 224 tents at the railway
station at Kanpur. Admittedly, there has been a short delivery of 224
tents out of the consignment of 1,500 tents loaded at Jodhpur railway
station in. the railway wagon under the said receipt No. 502671.

In order to decide and fix the responsibility for passing of the B
decree in respect of the sum of Rs.51,912 being the full price of 224
tents inclusive of sales tax deducted from the amount due to the appel-
lant under another contract by the repsondentNo. 5, it is pertinent to
consider the question when the property in goods passed from the
seller to the buyer at Jodhpur when the goods were loaded. in railway
wagons for delivery to the consignee at Kanpur. The learned counsel
for the appellant drew our attention to the condition No. 11 of the c
Schedule of acceptance of tender dated February 29, 1968. It has been
mentioned therein that the terms of delivery was F.O.R., Jodhpur i.e.
free on rail at Jodhpur railway station. It has also been mentionecHhat
before the goods are loaded on railway wagons for delivery to the
respondent No. 5 at Kanpur, the Inspector, I.G.S. North India will D
inspect the same at firm's premises at Jodhpur and after approval the
said goods will be despatched to its destination by placing them in the
railway wagons at Jodhpur railway station and the railway receipt has
to be sent to the consignee under registered cover immediately after
despatch of the stores with full details. It is also stipulated that 95% of
the price of the goods will be paid by the respondent No. 5 on receipt E
of the railway receipt and the inspection note and the balance 5% will
be paid after the same reached at the destination in goods condition.
Referring to this term for delivery under clause 11 of the Schedule of
acceptance of tender, it has been urged by the learned counsel for the
appellant that the delivery was complete at Jodhpur when the goods
were loaded in the goods train for delivery to the respondent No. 5 at F
Kanpur and property in the goods passed to the buyer as soon as the
goods were despatched by railway at Jodhpur. Thereafter, the risk in
respect of the goods despatched remained with the consignee. The
appellant, the consignor is entitled to get the entire price of the 224
tents which were short delivered by the respondent Nos. 3 and 4 to
respondent No. 5 at Kanpur in view of the clear finding by the Trial G
Court that though the entire consignment of 1500 tents was actually
loaded in the railway wagons for despatch to the consignee, the
respondent No. 5. The respondent No. 5 duly filed 'rt claim to the
railways, the respondent Nos. 3 and 4 for the short delivery to the tune
of 224 tents immediately after taking delivery of the goods. In order to
decide the question as to whether the rights in the goods passed from H
134 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

A the seller to the buyer i.e. from the appellant to the respondent No. 5
as soon as the goods were loaded in railway wagons at Jodhpur and the
railway receipt was sent to the consignee, it is pertinent to refer to the
meaning of the words F.O.R. Jodhpur. In Haulsbury's Law. of
England, 4th Edition (Volume 41) at page 800, para 940 it has been
a mentioned that:

"Under a free on rail contract (F.O.R.) the seller under-
takes to deliver the goods into railway wagons or at the
station (depending on the practice of the railway) at his
own expense, and (commonly) to make such contract with
the railway on behalf of the buyer as is reasonable in the
c circumstances. Prima facie the time of delivery F.O.R.
fixes the point at which property and risk pass to the buyer
and the price becomes payable."

In Benjamin's .Sale of Goods (2nd Edition), at page 1799 it is
D stated as under:

"Stipulations as to time of 'delivery'-provisions as to the
time of delivery in an f.o.b .. contract are taken to refer to
the time of shipment and not to the time of arrival of the
goods; and this may be so even though the provision in
question contemplates the arrival of the goods by a certain
B
time. Thus in Frebold and Sturznickel (Trading as Panda
O.H.D. V. v. Circle Products Ltd. German sellers sold toys to
English buyers f.o.b. Continental Port on the terms that
the goods were to be delivered in time to catch the Christ-
mas trade. The goods were shipped from Rotterdam and
reached London on November 13; but because of an over-
F
sight for which the sellers were not responsible the buyers
were not notified of the arrival of the goods until the
following January 17. It was held that the sellers were not
in breach as they had delivered the goods in accordance
with the requirements of the contract by shipping them in
such a way as would normally have resulted in their arrival
G
in time for the Christmas trade."

The question as to the meaning of F.O.R. contract fell for con-
sideration in the case of Girija Prashad Pal v. The National Coal Co.
Ltd., AIR 1949 (Calcutta) 472. P.B. Mukharji, J. as His Lordship then
H .was observed in para 11 as follows:
MARWAR TENT FACTORY v. U.O.I. !RAY, J.) 135

"The words f.o.r. are well known words in commercial
contracts. In my judgment they mean when used to qualify
A
the place of delivery, that the seller's liability is to place the
goods free on the rail as the place of delivery. Once that is
done the risk belongs to the buyer."

Reference may also be made in this connection to the decision of B
this Court rendered in The Commissioner of Sales-Tax, Eastern Divi-
sion, Nagpur v. Husenali Adamji and Co., [1959] 2 Supp. SCR 702. In
that case under the terms of the contract the respondent Company
whose place of business was situate in Chanda in the erstwhile Central
Provinces had to load diverse quantities of 'sawar' logs on railway
wagons and to despatch the same from Chanda and other railway
stations in the Central Provinces to Ambernath, a town in the erst- c
while Province of Bomaby. Clause 2 of the contract reserved the right
of the consignee to examine the goods on arrival at Ambernath and to
reject the same if they were found, in the opinion of the factory
manager, not to conform with the specifications. Clause 6 also pro-
vided that the goods shall be measured under the supervision of the D
factory's representative, the decision of the factory manager af
Ambernath would be binding on the contractor and by clause 7 the
prices of the goods shall be 'F.O.R. Ambernath'. The question arose
was as to when and where the property in the logs passed from the
respondent to the consignee and whether the respondent was liable to
pay sales tax under the provisions of the Central Provinces and Berar E
Sales Tax Act, 1947. The Sales Tax Department levied the tax on the
respondent on the ground inter alia that the property in the logs passed
from the respondent to the factory consignee under section 23 of the
Indian Sale of Goods Act, 1930 when the logs were loaded in the
wagons at railway stations within the Central Provin_ces and the rail-
way receipts taken in the name of the factory were forwarded to the F
latter. It was held:

"that on a proper construction of the contract as a whole
the intention of the parties was that the respondent would
send the logs by rail from the different stations in the Cent-
ral Provinces to Ambernath where the factory manager G
would inspeci, measure and accept the same if in his
opinion they were of the description and quality agreed
upon. Consequently, as the respondent sent the logs and
left it to the factory to appropriate to the contract such of
them as they accepted as of contract, quality and descrip-
tion, the property in the logs did not pass to the buyer by H
136 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

the mere delivery to the railway for carriage but passed
A only at Ambernath when the logs were appropriated by the
factory with the assent of the seller within the meaning of
section 23 of the Indian Sale of Goods Act, 1930."

. It is also convenient to refer·to the provision of Section 23(2) of
B the Indian SaJe·of Goods Act, 1930. This sub-section provides that:

"(2) Where, in pursuance of the contract, the seller deli-
vers the goods to the buyer or to a carrier or other bailee
(whether named by the buyer or not) for the purpose of

c
transmission to the buyer, and does not reserve the right of
disposal, he is deemed to have unconditionally appro-
priated the goods to the contract."
-
In the instant case, in view of the terms and conditions of the
contract embodied in clause 11 of the Schedule of acceptance of tender
regarding the place of delivery 'F.O.R. Jodhpur', the property in the
D goods passed immediately on from the seller after delivering the goods
and loading the same in the railway wagons at Jodhpur for transmis-
sion to the buyer, the consignee, without reserving any right of dis-
posal. The seller is deemed to have unconditionally appropriated the
goods to the contract only under section 26 of the said Act, the goods
remained at seller's risk until the property therein is transferred to the
B buyer. As stated earlier that the property in goods has been transfer-
red to the buyer by the seller by delivery of the goods and loading the
same at Jodhpur in railway wagons. In this connection reference may
be made to Section 39( 1) of said Act. Considering the aforesaid provi-
sions of The Sale of Goods Act, 1930 as well as the terms and condi-
tions of delivery i.e. 'F.O.R. Jodhpur' the irresistible conclusion that
p follows is that tlie property in the goods together with the risk passed
from the seller to the buyer i.e. from consignor to the consignee as
soon as the goods were loaded in the railway wagons at Jodhpur as per
the terms of delivery i.e. F.0.R. Jodhpur. Therefore, the finding of
the Trial Court that the risk throughout ramained with the appellant
until the goods were actually delivered to the Commandant, C.0.D.,
G Kanpur is wholly wrong and illegal. The further finding of the Trial
Court that the risk was governed with the condition No. 4( !) of the
Schedule of Acceptance of Tender and the property in the goods i.e.
the tents did not pass until the same were actually delivered to the
Commandant, C.O.D. Kanpur and the Commandant, C.0.D. Kanpur
was not liable for loss of the tents during the period of transit by the
H railways is also illegal and bad. As stated hereinbefore on considera-
'.

MARWAR TENT FACTORY v. U.0.1. [RAY, J.J 137

tion of the place of delivery as well as the terms of delivery embodied
A
in clause 11 of the Schedule of Acceptance of Tender, the property in
the goods along with the risk in the goods passed from the appellant to
the respondent No. 5 when the goods were delivered and despatched
by railway wagons at Jodhpur i.e. F.O.R., Jodhpur. The consignee,
Commandant, C.O.D., Kanpur is therefore, liable for the price of 224
tents which was deducted by him from the other bills of the appellant. B
The findings of the Trial Court which were confirmed by the Division
Bench of the High Court are, therefore, liable to be set aside and the
claim of the plaintiff-appellant should be decreed.

As regards the claim of interest on the unpaid price of 224 tents
amounting to Rs.51,912 for the period from 1.1.1969 to 1.12.1972@
12% per annum, the Courts below disallowed the claim on the findings c
that no claim for the price of the goods had been made against the
railways, nor any notice under Section 78-B of the Indian Railways Act
had been served on respondent Nos. 3 and 4, and the suit was barred
by limitation against the Railways. We have already held hereinbefore
that the appellant is entitled to get not only the price of the goods but D
also the interest thereon for not making the payment of the price of the
goods within a reasonable time. The interest @ 12% per annum was
claimed by the plaintiff-appellant on Rs.51,912 being the price of 224
tents for the period from 1.1.1969 to 1.12.1971. It is appropriate to
refer in this connection to the relevant provisions of Section 61(2) of
the Sale of Goods Act, 1930 (Act 3 of 1930) which reads as follows: E

"61(2): In the absence of a contract to the contrary, the
Court may award interest as such rate as it thinks fit on the
amount of the price-

(a) to the seller in a suit by him for the amount of the F
price-from the date of the tender of the goods or from the
date on which the price was payable,

(b) to the buyer in a suit by him for the refund of the
price in a case of a breach of the contract on the part of the
seller-from the date on which the payment was made." G

In the instant case, undoubtedly, it has been found by the Courts
below that the short delivery of 224 tents occurred during the transmit
of the said goods by the railways. It is also an admitted fact that the
respondent No. 5, the Commandant, C.O.D. Kanpur deducted the
price of the said 224 tents from the other bills of the contractor i.e. the H
138 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

appellant and did not pay the same The appellant has claime~ interest
A in respect of the price of the said goods being not paid to the appellant
within a reasonable time from the date of delivery of the goods i.e. for
the period from 1. 1.1969 to 1.12.1971. The respondent No. 5 did not
dispute the claim of the appellant in ibis regard. His only plea was that
in the notices under Sectim;i 80 of the Code of Civil Procedure served
B on the respondents the claim of interest was not made and as such the
claim of interest could not be allowed. In the case of B.B. Bose v.
National Coal Trading Company, AIR 1966 (Patna) 346, the plaintiff
filed a suit for recovery of price of goods sold to the defendant. Before
filing the suit the plaintiff served a demand notice on the defendant. In
the demand notice Ex. 2, no claim for interest was put by the plaintiff.
It was urged on behalf of the defendant that there was no stipulation
C for payment of interest in case the price remained unpaid in the con-
tract and as such the plaintiff could not claim any interest on the
unpaid amount. This was negatived by the High Court, Patna and it
was held:

D " .......... That is, no doubt, true, but the demand
clearly was for the outstanding balance price of c~al which
the plaintiff had supplied to the defendant. The supplies
had been effected upto the 26th June, 1954, and in the
normal course, the price ought to have been paid by the
defendant within a reasonable time of the deliveries, but
E the payment had been delayed for nearly three years and
plaintiff was obliged to institute the present suit for reco-
very of the price. In such circumstances, it was within the
discretion of the court to award interest to the plaintiff at a
reasonable rate on the amount of the price under S. 61(2)
of the Sale of Goods Act. The price was undoubtedly pay-
F able when the notice of demand (Ex. 2) was served by the
plaintiff upon the defendant and there can be no doubt that
the rate of 6 per cent per annum which the Court awarded
was a reasonable rate."

Similar question cropped up for decision in the case of Mis
G M.K.M. Moosa Bhai Amin, Kata v. Rajasthan Textile Mills,
Bhawanimandi, AIR 1974 Raj. 194= 1974 Raj LW 77. In thi$ case the
plaintiff filed the suit for price of the goods aelivered as w~ll as for
interest on the unpaid price. The claim regarding interest' was dis-
allowed by the District Judge on the ground that there was no stipula-
tion for payment of interest in case the price of the goods supplied
H remained unpaid. It was contended on behalf of the plaintiff that even
MARWAR TENT FACTORY v. U.O.L [RAY, J.l 139

in the absence of the contract, the plaintiff was entitled to reasonable A
interest under Section 61(2) of the Sale of Goods Act, 1930. The
supply had been effected upto September 18, 1962 and in normal case
the price of the goods ought to have been paid by the defendant within
a reasonable time of the deliveries but the payment had been delayed
• for nearly a year which compelled the plaintiff to bring the suit for
recovery of the price. It has been held that in such circumstances, the B
lower courts should have exercised discretion in favour of the plaintiff
and awarded interest on the amount of the price of the goods under
Section 61(2) of the Sale of Goods Act. The High Court of Rajasthan
allowed interest @ 6% per annum which was considered to be a
reasonable rate of interest.
c
On a conspectus of all the decisions referred to before as well as
the provisions of Section 61(2) of the Sale of Goods Act, we are
constrained to hold that the plaintiff is entitled to get a decree of
interest on the unpaid price from l.1.1969 to 1.12.1971 @ 6% per
annum which is considered to be a reasonable rate of interest, as
claimed by the plaintiff-appellant. D

In the premises aforesaid the appeal is allowed and the judg-
ments and the decree of the Courts below in so far as they rejected the
claims regarding the price of 224 tents and interest thereon are set
aside. The plaintiff-appellant's claim for the price of the said goods as
well as interest thereon@ 6% per annum for the period from l. l.1969 E
to l.12.1971 is hereby decreed. The appeal is thus allowed with costs
quantified at Rs.4,000. The claim for interest@ 6% per annum for the
period from 1. 1.1972 till date of payment of amount unpaid is allowed.

Y. Lal Appeal allowed.
F