1 mpt IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION SUMMONS FOR JUDGEMENT NO.427 OF 2007 IN SUMMARY SUIT NO.2274 OF 2007 Amity Interlink Steels Pvt.Ltd. .. Plaintiff versus International Auto Limited .. Defendant ... Mr.Anil Agarwal for the plaintiff. Mr.S.S. Kanetkar for the defendant. CORAM : D.G. KARNIK, J DATED : 15th July 2009 P.C:- 1. Heard both sides. 2. The plaintiff has filed this suit for recovery of the price of the goods, sold and delivered to the defendant. The defendant placed order on the plaintiff for supply of 2 coils of steel weighing 34 tonnes and 2 coils of steel weighing 26 tonnes. The goods were delivered by the 2 plaintiff to the defendant. There is no dispute about the supply by the plaintiff and receipt by the defendant. 3. Learned counsel for the defendant however submitted that the goods supplied by the plaintiff were defective and were therefore rejected. The defect was noticed by the defendant when goods were put to use. The plaintiff accepted that the goods were defective and the defective goods were returned. The defendant is therefore not liable to pay to the plaintiff the price. 4. From the record, it appears that in all about 40 tonnes of goods were supplied out of which about 27 tonnes of goods were returned. 13 tonnes of goods were used by the defendant for production. The plaintiff therefore refused to take back the said 113 tonnes of goods and the suit is for recovery of the price of 13 tonnes of goods. 5. So far as 27 tonnes of goods are concerned, plaintiff has given credit to the defendant and therefore, there is no dispute about the said goods. The question is whether the plaintiff is entitled to the price of 13 tonnes of goods which have been consumed by the defendant. \ 6. Undoubtedly, the defendant has a right to reject the goods which are not as per the specifications. The rules as 3 to the acceptance and rejection of goods are found in section 41 to 43 of the Sale of Goods Act. Section 41(2) of the Sale of Goods Act provides that the seller of the goods is bound to offer reasonable time to the buyer for examining the goods for the purpose of ascertaining whether they are in conformity with the contract. Section 42 provides that the buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them or when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller or when after the lapse of reasonable time, he retains the goods without intimating to the seller that he has rejected them. In the present case, the defendant had a reasonable opportunity of inspecting the goods before he consumed them. The consumption of the goods and their conversion of a final product amounts to an act by the buyer-defendant which is inconsistent with the ownership of the seller plaintiff. The defendant is therefore prima facie liable to pay the price of the 13 tonnes of goods concerned by it. 7. The defendant is a company with limited liability registered under the Companies Act 1956. It maintains the accounts regularly. It had made an application u/s.391 to 394 of the Companies Act, notice of which was issued to the plaintiff. In the said application, the defendant had shown 4 the plaintiff to be a creditor of the company to the extent of Rs.5,92,555.39 which is the value of the 13 tonnes of goods supplied by the plaintiff to the defendant. Thus the defendant has also accepted the liability in its own books of accounts and in the application made to the court under sections 391 to 394 of the Companies Act. In the circumstances, the defendant can be granted conditional leave subject to his depositing of the admitted amount. In this view, I pass the following order:- O R D E R 8. The defendant is granted conditional leave to defend the suit to the extent of the principal sum of Rs. 5,92,555.39 subject to his depositing that amount in the court within eight weeks. Defendant is granted unconditional leave to defend the balance claim of the principal sum and is also granted unconditional leave to defend the claim relating to interest. 9. In the event the amount mentioned above is not deposited, plaintiff shall have a liberty to apply for the decree for Rs.5,92,555.39. 10. On deposit of the amount, plaintiff is permitted to withdraw the amount deposited by furnishing a bank guarantee which shall be kept alive till the disposal of the suit. 5 11. Suit shall stand transferred to the list of commercial causes. Defendant shall file written statement within 12 weeks. (D.G. KARNIK, J)