MARWAR TENT FACTORY versus UNION OF INDIA AND ORS.

Citation: [1989] SUPP. 2 S.C.R. 127 · Decided: 09-11-1989 · Supreme Court of India · Bench: SABYASACHI MUKHERJI · Disposal: Appeal(s) allowed

Judgment (excerpt)

MARWAR TENT FACTORY 
v. 
UNION OF INDIA AND ORS. 
NOVEMBER 9, 1989 
[SABYASACHI MUKHARJI AND B.C. RAY, JJ.] 
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 
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 
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. 
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 
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 
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 
the total claim was of Rs. 74.972. 
127 
A 
B 
c 
D 
E 
F 
·G 
H 
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 
deducted from the appellant's bill. 
13 
c 
D 
Respondents 3 & 4 (Railways' Officials) filed a Statement that 
only 11 tents were delivered short for which the admitted liability was 
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. 
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. 
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 Div

Excerpt shown. Read the full judgment & AI analysis in Lexace.