Appeals Nos 165 and 166 01 1965
Appeals from the judgment and decree dated May 7 1960 of the Madras High Court in OSA Nos 25 and 52 of 1956
SV Gupte Naunit Lal and R Thiagarajan for the appellants in both the appeals
NC Chatterjee section Balakrishnan for R Ganapathy lyer for the respondent in both the appeals
The Judgment of the Court was delivered by Bachawat J
The dispute arises out of a contract between the appellants and the respondent entered into on November 13 1951
The terms of this contract were recorded in writing in the form of a letter written by the respondent to appellant No 1 and set out below Messrs PSNS Ambalavana Chettiar and Company Ltd 260 Angappa Naicken Street Madras
Dear Sirs We confirm having purchased from you and the Madras Paper Marketing Company Madras 500 tons of Russian Newsprint as per the following description  About70 per cent in reels of 34 inches width  15 per cent in reels of 22 inches width
 15 per cent in reels of 36 inches width
at annas 9 per lb
Ex Wharf Bombay duty etc paid
The buyers are to take delivery within four days of the offer of delivery
Any wharfage etc up to the fourth day of the offer of delivery will be on seller s account and thereafter on buyer s account
We have also sold you about 415 tons of Russian newsprint in sheets in size of about 30X 42 760 mm X 1085 mm ex godown Madras at Re 0 9 6 per lb
We will keep the stock of sheets in our godown on your account free of rent
We shall advance you moneys against this newsprint at annas 8 per lb
This advance will carry interest at 5 per cent per annum
We will also charge you the exact amount of insurance which we pay to our Insurance Company against the goods
241 We shall pay Rs 560000 to your Bankers in Bombay and take delivery of the 500 tons of newsprint from the harbour in Bombay
Accounts wilt be made on the basis of the above arrangement and whatever one party is liable to pay to the other will be adjusted subsequently
Thanking you Yours faithfully For Express Newspapers Limited Director
 The document shows that the respondent agreed to buy from the appellants 500 tons of Russian newsprint in reels at 9 annas per lb ex wharf Bombay and to take delivery of the goods on payment of Rs 560000
At the same time the appellants agreed to buy from the respondent 415 tons of Russian newsprint in sheets then lying in a godown in Madras at 9 annas 6 pies per lb
upon the term that the appellants would pay the insurance charge and also interest at 5 per cent per annum on an amount equivalent to the price of the goods calculated at 8 annas per lb
The understanding was that the appellants would within a reasonable time take delivery of the goods bought by them in instalments and the accounts would be finally adjusted on the completion the deliveries
It may be mentioned that appellant No 2 carried on business under the name and style of Madras Paper Marketing Company
On November 26 1951 the parties orally agreed that instead of 500 tons the respondent would buy 300 tons of newsprint in reels and that instead of 415 tons the appellants would buy 300 tons of newsprint in sheets and the terms of the contract dated November 13 1951 would stand varied accordingly
On December 5 1951 the respondent took delivery of 300 tons of newsprint in reels on payment of Rs 318706 9 10 and a sum of Rs 57816 13 2 remained due to the appellants on account of the price of these goods
From November 29 1951 up to February 27 1952 the appellants took delivery of 122324 lbs
of newsprint in sheets on payment of
63032 15 9 to the respondent
Subsequently the appellants refused to take delivery of the balance 547501 lbs
of newsprint in sheets
Counsel for the parties agreed before us that March 29 1952 was the date when the appellants repudiated the contract
On April 21 1952 after giving notice to the appellants the respondent resold the balance goods to one GR Lala at 612 annas per lb
On April 18 1952 the appellants filed in the High Court of Madras CS No 175 of 1952 claiming from the respondent 242 Rs 57816 13 2 on account of the balance price of 300 tons of newsprint in reels and interest thereon
The respondent admitted the claim for the balance price
On July 30 1952 the respondent filed in the High Court of Madras CS No 262 of 1952 claiming a decree for Rs 62266 13 2 on account of the balance price of 122324 lbs
 the deficiency on resale of 547501 lbs
of the newsprint in sheets interest and insurance charges after setting off the sum of Rs 57816 13 2 due to the appellants
The principal defence of the appellants was that the contract with regard to 415 tons of newsprint in sheets was cancelled in November 1951 and that appellant No 2 was not a party to this contract
The appellants also denied the factum and validity of the resale
The two suits were tried
by Rajagopala Ayyangar J He dismissed CS No 175 of 1952 and decreed CS No 262 of 1952
From these two decrees the appellants filed two appeals in the High Court of Madras
A Division Bench of the High Court dismissed the two appeals
The present appeals have been filed on certificates granted by the High Court
The two Courts concurrently found that 1  appellant No was a party to the contract of purchase of 415 tons of newsprint in sheets 2 on November 26 1951 the parties orally agreed that instead of 415 tons the appellants would buy 300 tons of the newsprint and 3 there was no cancellation of the contract as alleged by the appellants
These findings are not challenged
The two Courts concurrently found that the resale held on April 21 1952 was genuine and was effected at a proper price on due notice and after proper advertisement
Mr Gupte attempted to challenge these findings but we see no reason to interfere with them
The principal argument advanced by Mr Gupte was that the property in the goods resold on April 21 1952 had not passed to the appellants and the resale was consequently invalid
We are inclined to accept this argument
It is to be noticed that the contract did not envisage any loan of money by the respondent to the appellants on the security of the newsprint in sheets
The payment of Rs 318706 9 10 was made by the respondent towards part discharge of its liability for the price of the newsprint in reels
No doubt the contract stated We shall advance you moneys against this newsprint at annas 8 per lb
This advance will carry interest at 5 per cent per annum
 But the real import of this clause was that the appellants would pay interest at 5 per cent per annum on an amount equivalent to the price of the newsprint in sheets calculated at 8 annas per lb
The respondent was not a pledge of the newsprint in sheets and had no right to sell the goods under section 176 of the 
The real question is whether the respondent had the right to resell the goods under section 542 of the 
243 The seller can claim as damages the difference between the contract price and the amount realised on resale of the goods where he has the right of resale under section 542 of the 
The statutory power of resale under section 542 arises if the property in the goods has passed to the buyer subject to the lien of the unpaid seller
Where the property in the goods has not passed to the buyer the seller has no right of resale under section 542
The question is whether the property in the 300 tons of newsprint in sheets had passed to the appellants before the resale
On November 13 1951 the respondent agreed to sell to the appellants tile stock of 415 tons of newsprint in sheets then lying in the respondent s godown in Madras
There was an unconditional contract for the sale of specific goods in a deliverable state and the property in the goods then passed to the appellants
But on November 26 1951 the contract was varied in a material particular
The parties agreed that the appellants would buy only 300 tons of the stock of 415 tons of newsprint then lying in the respondent s godown
The result was that in place of the original contract for sale of specific goods a contract for sale of unascertained goods was substituted
Rajagopala Ayyangar J held that the effect of the variation of the contract on November 26 1951 was that the appellants and the respondent became joint owners of the stock 45 tons
In our opinion this was not the correct legal position
The parties did not intend that the appellants would buy undivided share in 415 tons of newsprint
On November 26 1951 the bargain between the parties was that the appellants would buy and the respondent would sell 300 tons out of the larger stock of 415 tons
The appellate Court held that the property in the entire 415 tons passed to the appellants who were subsequently reviewed from their liability to take 115 tons and that the respondent could resell any 300 tons out of the larger stock of 415 tons
We are unable to accept this line of reasoning
It is true that originally the property in the entire 415 tons had passed to the appellants
But the result of the variation of the contract was to annul the passing of property in the goods
The effect of the bargain on November 26 1951 was that the respondent would sell and deliver to the appellants any 300 tons out of the larger stock of 415 tons
As from November 26 1951 the property in the entire stock of 415 tons belonged to the respondent
The parties did not intend that as from November 26 1951 the property in any individual portion of the stock of 415 tons would remain vested in the appellants
244 Section 18 of the provides that where there is a contract for the sale of unascertained goods no property the goods is transferred to the buyer unless and until the goods are ascertained
It is a condition precedent to the passing property under a contract of sale that the goods are ascertained
The condition is not fulfilled where there is a contract for sale of a portion of a specified larger stock
Till the portion is identified and appropriated to the contract no property passes to the buyer
In Gillett vs Hill1 Bayley B said Where there is a bargain for a certain quantity extra greater quantity and there is h power of selection in the vendor to deliver which he thinks fit then the right to them does not pass to the vendee until the vendor has made his selection and trover is not maintain able before that is done
If I agree to deliver a certain quantity of oil as ten out of eighteen tons on one can say Which part of the whole quantity I have agreed to deliver until a selection is made
There is no individuality until it has been divided
 No portion of 415 tons of the newsprint lying in the respondent s godown was appropriated to the contract by the respondent with the appellants s consent before the resale
On the date of the resale property in the goods had not passed to
the buyer Consequently the respondent had no right to resell the goods under section 542
The claim to recover the deficiency on resale is not suitable
The respondent to claim as damages the difference between the contract price and the market price on the date of the breach
Where no time is fixed under the contract of sale for acceptance of the goods the measure of damages is prima facie the difference between the contract price and the market price on the date of the refusal by the buyer to accept the goods see Illustration c to section 73 of the 
In the present case no time was fixed in the contract for acceptance of the goods
On March 29 1952 the appellants refused to accept the goods
The respondent is entitled to the difference between the contract price and the market price on March 29 1952
Counsel for both parties requested us that instead of remanding the matter we should assess the damages on this basis and finally dispose of the matter
We have gone through the materials on the record and with the assistance of counsel we assess the market price of the Russian newsprint in sheets on March 29 1952 at 8 annas per lb
Counsel on both sides agreed to this assessment
The claim of the respondent for Rs 678 5 1 on account of interest and Rs 1119 6 0 for insurance charges is admitted 1   873
245 before us by Mr Gupte
On this basis the final position is as follows Rupees Price of 122324 lbs
at 91 12 annas per lb
less Rs 63032 15 9 9596 14 3 Difference on 547051 lbsat 112 annas per lb
51286 0 6 Interest 6795 5 1 Insurance charges 
1119 6 0 Total amount due to the respondent  68797 9 10 Deduct amount due to the appellants  57816 13 2 Balance due to therespondent   10980 12 8 In the result Civil Appeal No 165 of 1965 is allowed in part the decrees passed by the Courts below are varied by substituting therefore a decree in favour of the respondent against the appellants for a sum of Rs 10980 12 8 with interest thereon at 6 per cent per annum from July 30 1952
The decrees for costs passed by the Courts below are affirmed
There will be no order as to costs in this Court
Civil Appeal No 166 of 1965 is dismissed
No order as to cost thereof
VPS CA 165 of 1965 allowed in part
CA 166 of 1965 dismissed


Summary:
On 13th November 1951 the respondent agreed to sell to the appellants a stock of 415 tons of newsprint in sheets then lying in the respondent s godown
On 26th November the parties varied the contract by agreeing that the appellants would buy only 300 tons out of the
stock of 415 tons
After taking delivery of a part of the newsprint the appellants refused to take delivery of the balance and repudiated the contract on 29th March 1952
On 21st April the respondent after notice to the appellants
resold the balance at a lesser rate
The suit flied by the respondent claiming from the appellants the deficiency on resale was decreed
In appeal to this Court Held 1 The claim was unsustainable
a As the respondent was not a pledge of the newsprint the respondent had no right to sell the goods under section 176 of the 
242H b A seller can claim as damages the difference between the contract price and the amount realised on resale of the goods where he has the right of resale under section 54 2 of the Indian 
But this statutory power of resale arises only if the property in the goods has passed to the buyer subject to the lien of the unpaid seller
Under section 18 of the Sale of Goods Act
it is a condition precedent to the passing of property under a contract of sale that the goods are ascertained
In the present case when the contract was originally entered into for the sale of 415 tons there was an unconditional contract for the sale of specific goods in a deliverable state and the property in those goods then passed to the appellants
But the effect of the variation was not to make the appellants and respondent joint owners of the stock of 415 tons
Nor was it merely to relieve the appellants from their liability to take 115 tons
The effect was to annul the passing of the property
so that
as from 26th November the property in the entire stock of 415 tons belonged to the respondent
The result was that in place of the original contract for sale of specific goods a contract for sale of unascertained goods was substituted
No portion of the stock of 415 tons was appropriated to the contract by the respondent with the appellants  consent before the resale
Therefore on the date of resale
the property in the goods had not passed to the buyer appellants and the respondent had no right to resell1243A E F H 244A B Gillett vs
Hill    applied
2 As no time was fixed under the contract of sale for acceptance of the goods under section 73 of the Indian Contract Act the respondent was entitled to the difference between the contract price and the market price on 29th March 1952 the date of repudiation as damages
244E C 240