1. This is a suit for the recovery of Rs. 25,266.34 as damages on account of the loss suffered by the plaintiff on account of the supply of inferior quality of oil cake by the defendant.
2. The plaintiff is a registered partnership firm and carries on export business in oil cakes. The defendant is a limited company and produces and manufactures as well as exports oil cakes. On 15-7-61 the defendant sold to the plaintiff 3000 bags weighing 5325 mds. Not what is commercially known under its patent name `Decorticated Cotton-Seed Cake Expellers' for export to United Kingdom at the rate of Rs. 11.50 per md. Again on 24th July 1961, the defendant sold to the plaintiff a further lot of 2000 bags weighing 3550 mds. Of the same oil cakes at the rate of Rs. 1,200 md. On account of these transactions the plaintiff paid a sum of Rs. 1,09,787.50 as price of the oil cakes including bardara and empty bags. Both these transactions were entered into through brokers Messrs Shakoor Zikar & Company. The oil cakes thus purchased were exported to United Kingdom in three lots of 720, 1400 and 2080 bags respectively. The first two lots were shipped by s. s. Egidia and the third lot by s.s. Circassia. According to the plaintiff as was the practice the aforesaid decorticated cotton seed cakes had to contain oil and alubiminoid between 43 to 45 Y. And it was on this basis that the goods were treated in local and international markets and this was also the basis on which the goods were sold by the defendant to the plaintiff. The price was also paid accordingly. An assurance was also given by the defendant to the plaintiff through the broker that the oil cakes were 100 up to the mark so far as the quality, fitness and contents of oil and alubiminoid were concerned and there was not the slightest defect in them and they were fit for export as they were of International standard. However, when the goods reached the United Kingdom it was found on analysis that the oil cakes contained oil and alubiminoid to the extent of 36.35 % on receiving this report from the United Kingdom the defendant was immediately approached and Seth Haji Abdul Rehman who was the director of the defendant-company was contacted. The broker and one representative of Messrs Hussaini Co. Accompanied the plaintiff. It may be mentioned here that Hussaini Co. Had also purchased same goods from the defendant.
3. Seth Haji Abdul Rehman was appraised of the result of the analysis and he expressed his complete surprise and suggested to the plaintiff to have the second analysis. On his suggestion a fresh analysis was made and the oil cakes were found still more deficient: in their oil and alubiminoid contents to the extent of nearly 1 %. The result of this analysis was also communicated to the defendant and this time Haji Hashim a representative of the defendant happened to meet the plaintiff. On account of this deficiency the cotton-seed cakes were treated to be undecorticated. As a result of this the plaintiff was obliged to pay to their buyers in United Kingdom the total claim of - -1384/17/9 equivalent to Rs. 18,369.44 in Pakistani currency. Besides this, the plaintiff was also deprived of his bonus voucher entitlement of the value of Rs. 2,774 which would have been earned if the goods had been found to be of the standard quality which had been purchased and paid for.
4. The loss to the disentitlement of bonus vouchers come to Rs. 6,896.90 as the market price of bonus vouchers of Rs. 100 at that particular time was Rs.
185. Thus the total loss which the plaintiff suffered came to Rs. 25,266.34. In spite of repeated demands the defendant did not pay the amount and therefore the present suit was filed.
5. The defendant resisted the suit. Both the transactions were admitted but it was denied that the basis of the export to the United Kingdom was ever disclosed by the plaintiff. It was also admitted that the transaction :related to the decorticated cotton-seed expellers but it was denied that any guarantee with regard to the quality or percentage was given. It was expressly stated in the document purported to have been given by the broker that the percentage, was not guaranteed.
6. The sale was as per sample. It was denied that the goods which were purchased by the plaintiff from the defendant were exported. It was also denied that there was any practice or usage that the goods had to contain 43 to 45 % of oil and alubiminoid nor the goods ,always contained any such percentage. It was also denied that either the sale was made or the payment was made on any basis or any assurance was given as to 100 % up to the mark about quality, fitness and contents. So they were not concerned with the analysis of the goods. The allegation that the goods were undecorticated was also challenged. In the written statement the emphasis was laid on the documents which were produced by the broker containing the clause that the percentage was not guaranteed and further there was no stipulation that the goods were intended for export to United Kingdom.
7. On the basis of these pleadings the following issues were framed.
8. "(1) Were the goods purchased by the plaintiffs for export to United Kingdom as alleged?
(2) Was any guarantee or assurance as to percentage of fat and protein, given by the defendants?
(3) Is there any usage or practice that oil cakes always contain 43 to 45 % of oil and alubiminoid and whether the price is dependent upon percentage of oil and alubiminoid contents?
(4) Were the goods exported by the plaintiffs same which were purchased from defendants? If so, what is its effect?1
(5) Was any fraud committed by the defendants?
(6) Was any loss or damage occasioned to the plaintiffs? If so, can the defendants be heldliable for the same?
(7) Is the plaintiffs firm registered?
(8) Are the defendants entitled to compensatory cost?
(9) Were the goods supplied by the defendant undecorti--cated? If so, what is its effect?"
9. Before answering the issues it would be necessary to briefly re-state the evidence which was led by the parties.
10. On behalf of the plaintiff Fayyaz Ahmed Malik who was the partner of the plaintiff firm appeared in the witness box in support of the case. Six witnesses, Muhammad Yaqoob, Sultan A.I, Ahmed, Sadaruddin, Abdul Sattar and Abdul Shakoor were examined in Court while three witnesses namely, Mr. Ronald Alfred Rabnett, Mr. Lilian Marjorie Chamberlain, and Mr. Jack Hubert Hamence who were residents of London were examined on commission on the basis of the interrogatories and cross inter--rogatories. On the other hand Hashim A.I the Managing Director of the defendant and two more witnesses Raza A.I and Abdul Latif were examined in rebuttal of the case.
11. Firstly I will take up the evidence of the witnesses produced on behalf of the plaintiff. The first witness is Fayyaz Ahmed Malik. He is the partner of the plaintiff's firm. He stated that their main business was export of oilcakes since 1959 and the defendant-company was well known and reputable firm manufacturing oil cakes. In the second week of July 1961, Shakoor and Zikar & Co., brokers informed him that the defendant was offering for sale 6000 bags of decorticated cotton- seed cakes containing 43% protein and fat combined at the rate of Rs. 11 per md. Besides the cost of empty bags where--upon he immediately contacted the foreign buyers ins London and Liverpool, and on hearing from them he decided to purchase the cotton-seed cakes and contacted the brokers on 14th July 1961. The defendant finding his interest increased the rate to Rs.
12. 11.50 per md. This he agreed. After acceptance the defendant said that they were withdrawing the guarantee as to the percentage of protein and fat but simultaneously assured that the goods were of standard quality. On the basis of this assurance he agreed to purchase 5800 mds. Of cotton- seed cakes which were lifted in two lots and subsequently shipped under proper marking. Again two lots of 1400 bags and 700 bags were also purchased. He also produced the various documents about the shipping of the goods. One lot of 1400 bags was sold on their behalf by Ameeji Valeeji Sons to Fuerst Bros. Ltd., London. The landing was supervised by General Supdts. & Co. Ltd. At the port of discharge. Correspondence in this respect was produced. He further stated that all the three consignments to United Kingdom had been sold on the basis of the London Cattle Food Trade Contract No. 6. When the goods were analyzed by the buyers through their analysts it was found that they " ere deficient in protein and fat by about 6.80 %. He along with the broker and a representative of Hussaini & Co., contacted Seth Haji Abdul Rehman of the defendant's firm who suggested second analysis. The request to that effect was made to the buyers but the result was the same. On account of this, the loss was suffered in sale price as well as bonus vouchers. In cross-examination he stated that he did not enter into written contract nor the broker gave him any sale-bate. No sample was shown to him as he was aware that he was purchasing from a very reputable firm. However, he had seen the goods when he had got the delivery. He had talked with Haji Hashim over the telephone before entering into the contract. He denied the suggestion that Haji Hasbim informed him that they could give no guarantee as the goods were produced from cotton seeds which were of inferior quality. He further stated that before the goods were shipped no samples were taken. He had informed the defendants that he had to export the goods and besides their firm was known as exporters in the markets. He further admitted in the cross-- examination that if the goods were purchased on a guarantee basis samples had to be taken at Karachi in the presence of the sellers and the buyers. He further stated that from March 1955 till the later part of 1966 the export of undecorticated oil cakes was banned by the Government of Pakistan and there was no consumption of decorticated cakes in the local market.
13. The second witness is Muhammad Yaqoob whose firm is engaged in the work of survey of goods which are exported. Their head office is located in Geneva while their branch offices are situated throughout the world including London and Karachi. The work of surveying is done by their office at the port of discharge under the instructions of the shippers. The result of tile analysis carried out by their exports are issued by their office and such reports are recognised by the State Bank of Pakistan. He further stated that in 1961 the goods were received in England exported by the plaintiff and one consignment of 1400 bags by Ameeji Valeeji & Sons on behalf of the plaintiff and samples were taken from various lots which were subsequently analysed in different laboratories. With regard to the shipment by Ameeji Valeeji he stated that their papers did not show that the consignment was shipped on behalf of the plaintiff.
14. The third witness is Sultan A.I who is one of the employees of the Ameeji Valeeji & Co., and is incharge of export depart--ment. The record of all the exports are maintained. In 1960 1400 bags of Pakistan decorticated oil cakes were shipped on account of plaintiff to United Kingdom. According to him these goods were to contain at least 43 % oil contents. He produced the document therein a claim was made by the buyers against Ameeji Valeeji & Sons on account of the deficiency of oil and alubiminoid in the goods which were shipped. The claims are received after the goods are analyzed at the place of destination. He produced various documents in support of his evidence.
15. He denied that Ameeji Valeeji had any oil mill or he ever worked in any oil mill. He could not say the number of the mills which produced the type of goods in question at Karachi or whether any special machine was required to manufacture those goods. He accepted the suggestion as correct that when the goods was manufactured from wholesome seeds they were called undecorticated while these manufactured from such seeds, after their scales had been removed were called decorticated. No samples, according to him were taken at Karachi.
16. The fourth witness is Ahmed who is also an employee of Ameeji Valeeji acd was godown incharge.
17. In 1961 he had received 2080 bags of decorticated cakes from Bengal Oil Mills Ltd. Which were directly loaded in the wagons without having been stored and the goods were marked `Fair Fairina', Liverpool. Again on 22nd July 1961, 120 bags of the same goods were received from Bengal Oil Mills Ltd. He further stated that he received a further consignment of 200 bags of the same goods on account of the plaintiff from Bengal Oil Mills Ltd. A regular register is maintained for the receipt of the goods as well as for the goods which are sent out of the godown. All the goods which were received were entered in the register. These goods had been received in the trucks of Sadruddin contractor but the goods did not bear any mark of Bengal Oil Mills Ltd. In the re--examination he stated that the goods which are marked at the time of export bear the marking of the exporter and not of the manufacturer.
18. The fifth witness is Sadruddin who is a haulage contractor. On 21st July 1961 he got a delivery order of 3000 bags of decorticated goods from the plaintiff, which were to be lifted from Bengal Oil Mills.
19. On the same day he collected 2080 bags and on 22-7-61 he collected 120 bags. The first lot was marked `fair Fairina' Liverpool. The second lot was also put the same mark except its destination shown as Glasgow. The goods were transported to the godowns of Ameeji Valeeji. He further stated that on 29th July 1961, he collected 2000 bags from Bengal Oil Mills Ltd. On account of the plaintiff.
20. 1400 bags were marked as FBCP 6207 `Cardiff' and 600 bags were marked as 'Fair Fairina' Glasgow.
21. While collecting the goods one slip is given to the suppliers and one slip to the godown incharge where the goods are subsequently deposited. He produced the slips in that behalf. In the cross- examination he stated that the delivery order which he had received from the plaintiff was deposited at the office of Bengal Mills after the goods were collected, and he kept a copy with himself. He had seen the goods personally before collecting them. He did not remember if his trucks had collected any goods from any other oil mill during the whole year of 1951. He had hauled some goods from Burma Oil Mills in 1963 but he did not remember the number of bags.
22. The sixth witness is Abdul Sattar. He was working in the Clearing Forwarding Department of Ameeji Valeeji. On 21st July and 29th July 1961 he had handled two shipments on behalf of the plaintiff and had shipped them. These goods were originally brought to their godown in the trucks owned by Sadruddin Juma, and were directly loaded in the railway wagons to be taken to the shipyard. The goods were marked as 'Fair Fairina' Liverpool.
23. The seventh witness is Abdul Shakoor who is a partner of Shakoor Zikar & Co., and had acted as broker in bringing about the transactions between the parties. He stated that he brought about the transactions in question and produced the documents in support of it. According to him the transactions involved 3000 bags of decorticated cotton-seed oil cakes. He further stated that decorticated oil seed expellers were known to have 43 % of oil content and 3 % of protein, but the contents may vary by 2 to 3 % adding further that 43 % represented oil and protein contents. He was asked by the defendant for the sale of decorticated cotton-seed oil cakes in 1961 and, therefore, he contacted the plaintiff and told him that the goods in question belonged to Bengal Oil Mills Ltd., which were always known to contain 43 Y. Of oil and protein contents. Only 5000 bags of the goods were sold by the defendant to the plaintiff through him. He had also some goods to Hussaini & Co. About the same time. These goods were not sold by sample. He admitted that the defendant never told him that the goods contained 43 oil and protein content, but in fact it was understood that the goods in question would be of that quality. His opinion was based on the fact that the goods of that description contained 43 % of oil and protein as market practice. He further stated that at one time Haji Hashim the Managing Director of the defendant refused to guarantee that the goods in question contained 43 % of oil and protein content. But after the plaintiff refused to finalize the deal Haji Hashim assured him that these goods were of first class quality and their contents were in all respects satisfactory although he refused to give any guarantee. Haji Hashim did not refuse to guarantee the description of the goods but he refused to guarantee the percentage of the contents. He further stated that most of the goods in question were meant for export although a minor percentage might be sold for local consumption. He continued that after the plaintiffs showed him the telegram which was received from the buyers in the United Kingdom he contacted Haji Abdul Rehman in the presence of the plaintiff and a representative of Hussaini & Co., and Haji Abdul Rehman expressed his surprise that the goods in question were found short of 43 % contents. Haji Abdul Rehman again assured him that the goods were of good quality and there must be some mistake committed by the analyst, and therefore he suggested a fresh analysis. After the second analysis report was received he went to see Haji Hashim the Managing Director of the defendant who also expressed his surprise and sympathy but stated that he was not in a position to help. The goods purchased by Hussaini & Co., also met within the same fate for it was found to contain only 35 to 36 % of oil and protein content. Consequently Hussaini & Co., filed a suit against the defendant in which too he appeared as a witness. He further stated that by looking at the goods he could not be able to say about the percentage of their oil and protein content. As a matter of practice when the goods are sold in the market they are presumed to be of fair quality. According to him the machine which produced decorticated cotton-oil seeds could equally produce undecorticated goods. He did not know if the defendant manufactured undecorticated goods in 1965. He also produced a writing Exhs. 28/4 and 28/5 which he had passed on to the defendant, and gave no copy to the plaintiff. This document was delivered to the defendant without the knowledge of the plaintiff. In this document it was shown that the decorticated oil cakes were sold without guaranteeing the percentage. However, the entries that he made in his books did not show that the goods were without any guarantee. In the cross- examination he admitted that the plaintiff had no direct contact with the defendant when the transactions were finalised. He had written Exhs. 28/4 and 28/ 5 at the instance of Haji Hashim Managing Director of the defendant but he gave no intimation of these writings to the plaintiff. He admitted that it was true that after the report of the analyst was received he had gone to see Haji Hashim but was told that since no guarantee had been given respecting the goods he could be of no assistance. According to him it was correct that the goods which were meant for export and were guaranteed to contain 43 % of oil and protein were purchased on the basis of special contract. He was not aware that the Government of Pakistan had fixed different percentage of oil and protein contents of goods at different times. He was aware of the existence of Export Promotion Bureau but he could not say what was its function or whether any standard of the quality of goods was fixed by it.
24. Then comes the evidence of the three witnesses who were examined on commission. They were the analysts. Mr. Lilian Marjorie Chamberlain was the official analyst of the Cattle Food Trade Association since about 2 years. Mr. Ronald Alfred Abnott was the partner in Salamon & Seaber and was engaged in analytical chemistry since 1931. Mr. Jack Hubert was the senior partner in Wn.
25. Bernard Dyer and Partners (1948) Limited, London Analytical and Consulting Chemists. He was the public analyst, Official Agricultural Analyst and had 3 7 years experience of the examination of the animal feeding stuffs. The company to which he belonged was official analyst. It was the unanimous opinion of Mr. R. A. Abnott and Mr. Jack Hubert that the samples which were tested by them were found to be deficient in oil and alubiminoid and were partially decorticated. They refused to concede that the samples could be said to be decorticated. According to them there was no recognised standard of decorticated cotton-seed oil cakes but decorticated goods of satisfactory quality should not contain less than 45 of protein and alubiminoid combined and more than 10% of fibre or husk. They stated that decorticated cotton-seed cake expellers was the name for the residue resulting from the removal of oil by expeller process from the commercial cotton-seed from which the cortex had been removed. They further stated that undecorticated cotton-seed oil cakes were made from undecorticated cotton-seeds. In order to decorticate the seed it would be passed through machines.
26. Mr. Ronald Alfred could not say what was the general limit in husk contents, or the percentage for cotton husk and lint. So far as Mr. Jack Hubert is concerned he stated that he was unable to give individual proportions of lint and husk but the combined total usually amounted to 22 %. Both of them were definite that the samples which they had analyzed were not decorticated and were partially decorticated. Mr. Lilian Marjorie Chamberlin certified in his evidence that the certificate No. 61-A1293 dated the 21st September 1951 and No. 61-A-960 dated the 14th September 1961 were issued by him after analyzing the cotton-seed cakes and the result was correctly mentioned by them. He also admitted that he had the occasion to determine the contents of cotton-seed-oil cakes shipped by the defendant and always found them containing over 45 % oil and protein and very rarely below 43 %. He too stated that satisfactory decorticated cakes should not contain less than 45 oil and 10 % of Fibre. According to him there was no satisfactory limit for husk but it could not be too much and had to be kept to the minimum. He could not give the percentage of the cakes which was made from undecorticated seeds. He further stated that undecorticated cotton oil seeds were the cotton oil seeds prior to decortication and were not normally used for the manufacture of cakes. They were passed through machines in order to decorticated them. With regard to the cakes in question he stated that on appearance they had certainly been partially decorticated and could be made from undecorticated seeds but could not give the percentage.
27. Now I take up the evidence on behalf of the defendant. The first witness is Hashim A.I. He is the Managing Director of the defendant-company. He stated that the plaintiff had purchased 5000 bags of decorticated oil-seed cakes in two lots on 14-7-1961 and 27-7-1961 at the rate of Rs. 11.50 per md. And Rs. 12 per md. Respectively; through the agency of Shakur brokers. He admitted that at no stage they had any talk with the plaintiff in relation to these transactions. According to him `decorti--cated' signified that the husk of cotton seeds was removed and the kernels were crushed.
28. With regard to the guarantee he stated that at no stage any guarantee was given, that the goods in question contained any particular percentage of oil and protein and the contracts were entered into in terms of their agreement embodied in the slips Exhs. 28/4 and 28/5 given to them by the broker. He further stated that the decorticated oil-seed cake contained about 35 % to 50 % of oil and protein content and the percentage depended upon the quality of the seed. For producing decorticated cakes special machine was required. No guarantee was given as they were not sure of the quality of the cotton-seeds from which those goods were prepared. At no stage they were informed by the plaintiff that the goods were intended for export as when such goods are sold for the purpose of export a special contract is drawn between the parties followed by the sample of goods being taken in three lots, one is meant to be retained by the seller, another to be retained by the purchaser and the third is sent to the overseas buyer. To support this he produced two documents Exhs. 30 and 31 which contained special clause prescribing the quality for the goods intended to be exported. He denied that any one from the plaintiff side came to see him in connection with the quality of the goods although he admitted that it was true that Shakoor broker had phoned him once saying that the percentage of the oil and protein content in those goods were found to be deficit and in reply he told him that since no guarantee was given on that score they were not responsible. He denied that his brother Abdul Rehman had anything to do with the company. In cross-examination he stated that the notes Exhs. 28/4 and 28/5 were given to him by Shakoor broker about 3/4 days after the agreement as it was an invariable trade practice to obtain such notes from the brokers. He further stated that special machinery for the manufacture of decorticated goods was permanently conditioned for that purpose and the goods were manufactured in three phases; firstly the seeds were proceed through a machine which removed the lint, they were then passed through a second machine which broke and removed the husk and finally the third machine crushed the kernels. He rejected the suggestion that if seeds were straightaway put to the third phase (expellers) without having processed them through the first two phases, undecorticated goods would be manufactured. He denied that their company ever manufactured or produced undecorticated goods. He further admitted that Bengal Vegetable Industries Ltd. Was a sister concern of their company and both the mills were situated within the same compound. Both these concerns were indepen--dent of each other, in all respects. He refuted the suggestion that one and the same machinery was used for producing the goods for their company as well as their sister concern. However, he admitted that it was true that undecorticated goods were manufactured by the sister concern for local sale. Both the concerns had the same Directors and therefore he bad also the authority to sell the goods for both.
29. According to him it was incorrect that decorticated goods were traded in the International market on the basis of 43 % of oil and protein contents. He was not aware of the functions of the Export of Promotion Bureau, Government of Pakistan. He was not aware of any institution by name Pakistan Standard Institute and therefore could not say whether their company was a member of that Institute. On seeing the pamphlet Exh. 32 he stated that it was correctly mentioned that the defendant company was one of the members of the Institute. But this aspect was dealt with by another Director Mr. A. S. Bengali. He also refuted the suggestion that the goods in question were sold in the market on the basis of fair and average quality. He added that it all depended upon the quality of the goods and the intention of the parties. He also talked of the samples of the goods sold to the plaintiff that were taken in the premises of their company and it was thereafter that the plaintiff approved the goods; adding further that in fact the plaintiff entered into the second contract only after he was satisfied, of the quality of the goods in question. They had given to guarantee with regard to the percentage of the `contents of the goods in question. When sold to the plaintiff the goods were sold as decorticated goods but without any guarantee as to the percentage of the contents and this was made clear to the broker when he initially contacted him.
30. He al The second witness is Raza A.I who deals in export business of oil cakes. He was a partner in the firm known as Dosa Industries and Oil Mills and owned an oil mill which was sold in 1952. He stated that the defendant possessed a special machinery for the manufacture of decorticated goods. He also talked of the three processes for manufacturing decorticated goods as stated by the previous witness. He further supported the previous witness that the percentage of the contents of protein and oil varies depending upon the quality of the cotton-seed. The goods prepared from the cotton seeds grown in the Sind region would contain 43% of protein and oil content combined but the goods produced from cotton-seeds known as F-4289 would produce goods containing 35 to 37% and 45 to 48%. Of protein and oil combined. According to him the decorticated goods may contain any percentage of oil and protein contents so long as they were manufactured through the process of three phases. He admitted that the decorticated goods which were meant to be exported to England invariably contained about 43% oil and protein contents as a matter of trade practice established in the country since quite some time. In cross-examination he stated that decorticated goods were not used in Pakistan, but were generally meant for export. He further admitted that when mention was made of decorticated goods it automatically meant the goods of the quality containing about 43 % of protein and oil contents. The quantity of husk which is introduced in the manufacturing of decorticated goods was only so much which was essential to get the proper extraction of oil but otherwise decorticated goods did not require the mixing of any husk. If the husk which had been removed from the kernels was once again mixed with the kernals and both items were then passed through the expellers the goods produced would not be called decorticated. He did not remember if the defendant possessed machinery for producing decorticated goods, but he supposed they must have it as every oil mill was equipped with such a machinery. It was possible that if instead of proceeding the cotton-seeds through the first phase they were straightaway passed through the expellers they would be crushed but normally this was not done as the special machinery would be damaged. He admitted that the crushing plates of the machinery were adjustable in that various types and sizes of seeds could be crushed by the same plates. He could not say whether defendant had been selling undecorticated goods. He had been purchasing decorticated goods from the defendants on account of his foreign principals and there had never been any complaint as to their quality and all those goods contained about 43% of protein and oil contents. He also stated that when the goods were intended to be exported to England it was necessary for the parties to have entered into a special contract on Form No. 6 prescribed by London Cattle Food Trade Association. To another Court question be stated that if an intending purchaser placed an order on the oil mill for decorticated goods it would normally be presumed that the goods were meant to be exported as decorticated goods were not sold within the country, but it might depend upon the special terms and conditions upon which, the parties had contracted. It would not be necessary to enter into such a contract if the goods are purchased by a local purchaser. Normally such goods are sent only to the United Kingdom except that once in a while an order may be placed upon a local manufacturer from continental countries. If the purchaser wanted to export the goods to United Kingdom it would be necessary for him to inform the seller as only those goods could be imported to the United Kingdom which contained 43 % of the oil and protein contents.
31. The third witness is Abdul Latif be is a partner in Tajuddin Flour Mills. He had purchased 50 bags of undecorticated oil cakes from the Bengal Vegetable Industries Ltd. On 21st October 1961, through Shakoor broker. He produced the bill Exh.
35. In cross-examination he stated that the Bengal Oil Mill and Bengal Vegetable Industries Ltd. Were sister concerns.
32. To summaries the contentions of the parties appearing in the evidence as reproduced above it is common ground between the parties that the transaction related to the decorticated oil--seed cakes and this was mentioned in the bills issued by the defendant in favour of the plaintiff. As already referred to in the evidence of both the sides this kind of oil cakes are manufactured through special process and by the machinery specially designed for the purpose. The cotton- seed has to go through three phases, firstly the seeds are processed through a machine which removes the lint, they are then passed through a second machine which breaks and removes the husk and finally the third machine crushes the kernels in order to extract oil. After the extraction of the oil, it is the residue which is assigned the name as decorticated oil-seed cakes. However, a percentage of oil and protein remains in the residue. The question what percentage remains in the residue has been hotly contested by the parties. According to the plaintiff it must contain minimum percentage of 43 % while according the defendant this varies and depends upon the quality of the seeds used in the process and ranges from 35 to 50%. It is an admitted position that the plaintiff sought guarantee about the percentage but this was not agreed to by the defendant. What the defendant guaranteed was the sale of the cotton decorticated oil-seed cakes. Though the guarantee was refused and it was contained in the note passed by the broker to the defendant yet no reference to it was made in the bills issued by the defendant in favour of the plaintiff. No such note was given by the broker to the plaintiff nor any copy of it was sent by the defendant to the plaintiff. However, the absence of any such reference in the bills or omission to supply the plaintiff with a copy of the note of the broker is immaterial as admittedly a guarantee was sought and it was expressly refused.
33. There is a dispute whether the sale was by sample. According to the defendant the sample was seen by the plaintiff and this was denied but however, it was admitted that the cakes had been seen on delivery. It is the case of the plaintiff that he intended to export the cakes to England and this information was given to the defendant. This contention was disputed by the defendant. In this connection it was pleaded by the defendant that in case of export of cakes to England a special form of agreement was drawn containing a clause guaranteeing the percentage of the oil and protein. The necessity of this form arises as according to the London Cattle Food Trade Contract No. 6 in force in England the percentage should not be less than 43 % otherwise the cakes are not merchantable in that country. It was also pleaded that the samples are prepared ; one is retained by the seller, the other is given to the buyer, and the third is dispatched to England for the purpose of analysis, in order to ensure that the percentage is not less than prescribed by the aforesaid London Cattle Food Trade Contract No. 6. These pleas were of course admitted by the plaintiff and neither any such form was drawn nor any sample was prepared. It was on account of London Cattle Food Trade Contract that on discovery of the deficiency of oil and protein, on analysis of the cakes, at the place of destination in England, the amount in proportion to be deficiency was deducted by the foreign buyers from the contract price. It was however, denied by the defendant that any loss was caused to the plaintiff. With this background I now propose to deal with the issues.
34. Issue No. 1.-The learned counsel for the plaintiff attempted to base this issue on the sole ground that the plaintiff was working as exporter of the cotton oil seed cakes but then conceded that there was no evidence either direct or circum--stantial to prove that the defendant had the knowledge that, the goods would be exported to England. In view of this candid admission the issue is answered in the negative.
35. Issue No. 2.-It was conceded by the learned counsel for the plaintiff at the time of arguments that there was no guarantees or assurance given as to the percentage. In view of this, this issue is answered in the negative.
36. Issues Nos. 3 and 9.-These are the important issues in this case. The question which arises for consideration is whether the defendant had supplied decorticated oil cakes. The answer to this must be in the negative in view of the evidence of the three witnesses who were examined on commission apart from other evidence and circumstances in the case. All the three witnesses as already pointed out while dealing with the evidence, were in complete agreement that the oil cakes were not found to be decorticated but were partially decorti--cated. They are independent witnesses and there is no reason to discredit their testimony. Their opinion is based on the result of the analysis. It was found that the oil cakes contained about 36% of oil and protein whereas the properly decorticated oil cakes should contain at least 45 %. It is true that their finding is based on the presence of the percentage of oil and protein in the oil cakes and it may be said that no guarantee about that percentage was given by the defendant but all the same the sale of the oil cakes was by its trade namely commonly known in the market and, therefore, the goods had to be of that standard. The presence of particular percentage of oil and protein in the cakes is the standard by which the cakes are judged, that is to say, whether they are decorticated or not.
37. According to the plaintiff the contract of sale was by description i.e. Under its known trade named as the decorticated goods and, therefore, the defendant was bound to supply those goods. In this connection he placed reliance upon section 15 of the Sale of Goods Act which lays down as under ---Whereas there is a contract for the sale of goods by description, there is an implied condition that the goods shall correspond with the description; and if the sale is by sample as well as by description, it is not sufficient that the bulk of the goods correspond with the sample if the goods do not also correspond with the description.--- It is a settled principle of law that the goods which are sold must correspond with the description under which the same are sold. If the goods do not answer that description it is not what has been sold. The section talks of implied condition, the principle of which has been stated in the Halsbury's Laws of England Vol. 34 at p. 50 as under "The general principle of the implied condition that goods sold by description must correspond with the description is clear and founded upon the consensual basis of the law of contract. If the description of goods tendered is different from that of the goods agreed to be sold, it is not the article bargained for and the buyer is not bound to take it. It is possible in theory to exclude this implied condition by express agreement, but the Courts are reluctant to construe the contract so as to permit this to be done, and clauses purporting expressly to exclude the implied condition that the goods must correspond with the description are narrowly construed."
38. The aforesaid implied condition represents the universal principle "sic aes pro auro veneat non valet". Apart from this implied warranty extended by the section there was an express condition in the very contract whereby the defendant was required to supply decorticated oil cakes to the plaintiff. The evidence shows that in this the defendant failed. Apart from the evidence of the three witnesses examined on commission there is the evidence of Abdul Shakoor broker who had brought about the transaction. He stated that the goods belonging to the defendant were always known to contain 43 % oil and protein contents and in fact it was understood that the goods in question would be of that quality. He further stated that his opinion was based on the fact that the goods of that description contained 43% as a market practice. Even Raza A.I the witness for the defendant admitted in the cross-examination.
39. "When mention is made of decorticated goods, it automati--cally means goods of the quality containing about 43 Y. Of protein and oil contents."
40. Of course the witness made certain other statements to support the case of the defendant but the same will be referred at a latter stage. Where the goods are sold under commercial description it is the duty of the seller to supply the goods which are saleable under that description. It is not sufficient to say that the goods although not answering the description are saleable g generally or under different name. The parties are dealing not for mere semblance or shadow of the thing designated, but for the thing itself as commonly understood in commerce, with the essential qualities which make it worth buying to a person who wants an article of that description.
41. The learned counsel for the defendant emphasised the fact that in this case the guarantee with regard to the presence of oil and protein in the oil cakes was-expressly refused and, therefore, the deficiency which was subsequently found on analysis could not render the defendant liable. There is no force in this contention for the obvious reason that the defendant had agreed to supply decorticated goods and, therefore, the goods which had to be supplied must answer that description with all the qualities which are usually to be found in the goods of that kind. It is no answer that the guarantee as to the percentage of the presence of oil and protein was not given. If on account of the deficiency in the oil and protein, the cakes are rendered undeeorticated it cannot be said that the goods which had been contracted for had been supplied. In this connection I would like to refer to the case of Wallis Son & Wells v. Pratt & Hayness (L R 911 A C 394).
42. In that case the respondents sold seed to the appellants as "common English sainfoin" on the condition that "sellers give no warranty expressed or implied as to growth, description or any other matters." The seed delivered to the appellants was not common English sainfoin, but giant sainfoin, a different and inferior seed. The appellants accepted the seed believing it to be common English sainfoin and resold it as such to other parties, to whom the appellants were obliged to pay damages for the mistake. It was held that "the appellants were entitled to the remedies applicable to a breach of warranty and to recover from the respondents the damages which the appellants had been obliged to pay to the other parties."
43. "If a man agrees to sell something of a particular description he cannot require the buyer to take something which is of a different description, and a sale of goods by description implies a condition that the goods shall corres--pond to it."
44. At another place it was observed "that description could by no circumstance have been more clearly certiorated as entering into the very essence of this contract and being one of its conditions. What has been delivered has been "giant sainfoin" a thing as distinct in agricultural knowledge from common English sainfoin as in ordinary commerce a silver watch would be distinct from a gold watch."
45. Of course it has not been explained what is partial decorti--cated cakes but as I gather from the evidence of the witnesses is that some quantity of husk is required to be introduced into the oil- seeds in order to extract oil and if this quantity of husk exceeds in substantial manner, the percentage of oil and protein which remains in the residue decreases, and goes below pormal percentage. It, therefore, appears that although the oil-seeds were put through various phases for the extraction of the oil a large quantity of husk was introduced. This would naturally increase the weight of the oil cakes and would reduce the percentage of oil and protein.
46. I may also refer to another case Wimble Sons & Co v. Lilieo & Son (London) ((192-22) 38 T L R 296).
47. There was a written contract made for the sale of Chilean partly decorticated cotton cake containing approxi--mately 40%. Protein and 10 % oil, but no guarantee of quality or analysis was given. The cake had to be in sound merchantable condition at the time of shipment. The greater part was Chilean partly decorticated cotton cake but was not in sound merchantable condition at the time of shipment and contained only 32.78 yo protein and 7.78%. Oil. It was held that in spite of no guarantee with regard to the quality or analysis a breach was committed by the seller and the goods which were supplied did not comply with the description. The contention that there was no guarantee about the quality or analysis was repelled. In this connection it was observed that: "The sale was, therefore, a sale by description, and there was an implied condition that the goods must comply with the description. The word "approximately" gave the sellers a certain latitude, but only a comparatively small latitude, and the protection given by the no-guarantee clause only extended to a reasonable variation from the mentioned standard. Here the variation was substantial, and the clause did not apply. The principle of Wallis v. Pratt applied. The goods disconfirmed from the contract in a substantial way, and there was something more than a breach of a mere collateral warranty. The case of Corton v. Mackintonsh was also in point. The buyers were entitled to the further damages claimed because of the variation from the contract description."
48. This observation equally applies to the present case. The sale was by description under-known trade name and this was not answered by the goods which were supplied by the defendant to the plaintiff as was found on analysis by the witnesses who were examined on commission.
49. I may also refer to a few more authorities laying down the same principles. In 5 B & A 240; 24 R R .344; there was a sale of copra cake not warranted free from defect rendering same unmerchantable, which would not be apparent on reasonable examination. The cake was adulterated with castor beans. It was held that the same could not be described as copra cake and, therefore, there was a breach of condition entitling the buyer to claim damages. Similarly in Nicol v. Codts (10 Ex. 191, 23 L Ex. 314; 102 R R 523) the sale was of foreign refined rape oil warranted only equal to sample, but was adulterated with heap oil. It was held that such admixture was not commercially known as "foreign refined rape oil" In Bostuck & Co. Ltd. v. Nicholson & Sons Ltd.
50. ((1904) 1 K B 725) the defendants contracted to sell the plaintiffs sulphuric acid. The plaintiffs were sugar refiners and manufacture of brewing sugar in the shape of invert and glucose; but the purpose for which the sulphuric acid was required was never communicated to the defendants.
51. The order given to the defendants was for `B. O. V.' or brown oil of vitriol. It was held that 'B. O. V.' meant sulphuric acid commercially free from arsenic, and that there bad been a sale by that description under section 13 of the English Act. In the present case also the sale was of decorticated oil cakes and it must necessarily contain the minimum percentage of oil and cakes in order to answer the description. In Allan v. Lake (18 O B 560) it was held that the sale of turnip seed as "skirving's sweds" was not a sale with a mera representation, not part of the contract, but by the description of the article, and that the contract was not satisfied by the tender of any other seed than "Skirving's swedes." In Vieler v. Schilizzi (17 C B 619; 25 L J C P 89;104 R R 815) the sale was of "Calcutta linseed tale quale". There was evidence that all linseed imported contained an admixture of from two to three per cent. Of other seeds, but the article delivered contained an admixture of fifteen per cent. Of mustard. It came, however, from Calcutta, and the plaintiff had sold it and it had been used as linseed. It was found that the article had lost "its distinctive character" so as not to be saleable as Calcutta linseed. Action of the purchaser for breach of warranty was upheld.
52. It now brings me to section 16 of the Sales of Goods Act which was referred to during the course of arguments. It reads 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 purposes 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 the 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 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."
53. Leaving the exceptions apart, this section excluded the implied warranty or condition as to quality or fitness for any particular purpose of goods supplied under a contract of sale. The particular purpose which was sought to be established in the case by the plaintiff was that he had purchased the oil cakes for export to England and this was also made known to the defen--dant. This contention was not established. In the first place it was conceded by the learned counsel for the plaintiff as already stated under Issue No. 1 that there was no evidence documentary or circumstantial, to prove that the defendant had the knowledge that the goods would be exported to England. Secondly the evidence shows that whenever the oil seeds were purchased for the purpose of exporting to England with the knowledge of the seller special forth of contract was drawn in which the guarantee about the percentage of the presence of the oil and protein in the oil cakes was given. No such form was drawn in the present case. Consequently the implied warranty or condition as to the percentage of oil and protein would be excluded by virtue of this section.
54. However, this does not clinch the matter as this section has to be read subject to the exceptions which have been laid down and particularly exception No. 2 which was relied upon by the plaintiff: This exception saves the implied warranty in case the goods are sold under a commercial description unless the defect which it contains is apparent on reasonable examination. So where the goods are sold under commercial- description it is the duty of the seller to supply merchantable goods i.e. Saleable under that description. The term merchantable has been subjected to interpretation in the case of Agha Mirza Nasarala Khoyee & Co. v. Gordon Woodrofe & Co. (Madras) Ltd. (AIR 1937 Mad. 40). It was laid down: "the term 'merchantable' as used in the Sale of Goods Act, is relative, the test being, are the goods merchantable or not under the particular description in the contract? It is not sufficient that the goods are marketable or saleable. The term, that the goods shall be of merchantable quality, is fulfilled when they do not differ from the normal quality of the described goods, including under the term 'quality' the state of condition as required by the contract." For this English cases were relied upon. In this connection it will be useful to refer to the observations made in Nusserwanjee Bomanjee Modi and others v. Gregson and others ((1869)
55. 4 L R Ex. 32) Victoria which reads as under :- "This rule of law entitling the purchaser in an ordinary commercial bargain for the supply of goods, not specific or agreed upon at the time but described generally as of a designated sort, to receive merchantable goods of that sort, is founded upon an obvious inference from the character of the transaction, that the parties are dealing not for the mere semblance or shadow of the thing designated, but for the thing itself as commonly understood in commerce, with the essential qualities which make it worth buying to a person who wants an article of that designation; in other words, that the buyer and seller, in the absence of anything to show an intention to the contrary, must be taken as intending to buy and sell respectively a merchantable article of the designated kind. "Another class of cases is that of goods bought under a specified commercial description, either by sample, or even after inspection of bulk. In such cases it is an implied term, notwithstanding, the sample or inspection, that the goods shall reasonably answer the specified description in its commercial sense. The sample in such cases is looked upon as a mere expression of the quality of the article, not of its essential character, and notwithstanding the bulk be fairly shown, or agree with the sample, yet if from adulteration or other causes not appearing by the inspection or sample, though not known to the seller, the bulk does not reasonably answer the description in a commercial sense, the seller is liable."
56. This authority lays down the principle contained in sections 15 and 16 of the Sale of Goods Act. The combined effect of these two sections is that the goods must answer the specified description in its " commercial sense". It, therefore, follows that the goods of specified description must not only answer the description but must also be saleable or merchantable under that description. These two conditions must be satisfied. So it is not suffice to say that the goods although not answering the description are saleable generally or under a different name. This is a complete answer to the contentions of the learned counsel for the defendant, that the oil cakes which were actually supplied to the plaintiff were not wholly un-merchantable but could be sold in the market. When the goods are sold under a particular description the same must be saleable under that description and if there is any defect found in the goods the seller is certainly liable for breach of warranty embodied in sections 15 and 16 of the Sale of Goods Act. I think too that where the article does not comply with such a warranty it may properly be said to be unmerchantable in the sense in which that word is used in relation to the transactions of this nature. This principle was also followed in the case of National Traders v. Hindustan Soap Works (AIR 1959 Mad. 112), In that case the contract was regarding "5 tons of Caustic Soda Solid No. 97/93 U. S. A. Origin". This authority further contains an observation made by the Privy Council in the case of Richard Thorold Grant v.
57. Australian Knitting Mills Ltd. (1936 P C 34. At p. 41), which I would like to reproduce here. It reads: "It may also be pointed out that there is a sale by description even though a buyer is buying something displayed before him at a counter; a thing is sold by description, though it is specific, so long as it is sold not merely as a specific thing but as thing corresponding to a description". This obser--vation fully answers the contention raised by the learned counsel for the defendant in the present case that the oil cakes had been inspected by the plaintiff: So notwithstanding the inspection of the oil cakes there was an implied warranty that the cakes should be fit for use in the manner in which the goods of the same quality and general character ordinarily would be used.
58. There is nothing in the special circumstances of the case to exclude or quality that implied undertaking. It was a defect of quality which seems to me undisputeable. It, therefore, follows that the want of guarantee regarding the percentage of does not in any manner exclude the implied warranty extended by the aforesaid two sections.
59. Yet proviso 4 to section 16 lays down that an express warranty or condition does not negative a warranty or condition implied by the Act unless inconsistent therewith. In the present case the refusal to give guarantee about the percentage of oil and protein is not inconsistent with the warranty or condition implied by sections 15 and 16. It is not the case of the defendant that he expressly told the plaintiff that the percentage would be the one actually found on analysis so that it may be said that the express warranty or condition negatived the warranty or condition implied by the Act. Moreover, it is in evidence of the broker that although the defendant was not prepared to give the guarantee about the percentage of oil and protein yet an assurance was given by the defendant that the goods were of first class quality and their contents were in all respects satisfactory. He further stated that although the defendant never told him that the goods contained 43 YO of oil and protein contents yet it was understood that the goods in question would be of that quality, and his opinion was based on the fact that the goods of that description contained 43%. Contents as a market practice. Even Raza A.I witness for the defendant admitted in his evidence that when the mention was made of decorticated goods it automatically meant goods of the quality containing about 43% of protein and oil contents. Thus this evidence leaves no doubt in my mind that whenever the contract is for the decorticated cotton-seed oil cakes, the percentage must be 43 % of oil and protein and the goods under that description are sold in the market containing that percentage. If the percentage falls short of it the oil cakes cannot be treated or termed to be decorticated oil cakes.
60. The learned counsel for the defendant relying upon the evidence of the defendant and his witness Raza A.I urged before me that the percentage of the oil and protein in the oil cakes depended upon the quality of the cotton seeds used for the extraction of oil. It was stated that if the cotton seeds were of inferior quality or 4-F, the percentage would between 35 to 40 whereas in good quality of seeds like Sind Cotton the percentage would be about 43 and above. This is altogether a new case set up. No such plea was taken in the written statement. What was pleaded in the written statement was in these words "There is no practice or usage as alleged nor that the goods sold always contained 43 % to 45 % of oil and alubiminoid."
61. This would not mean that the percentage would depend upon the quality of the seed which is used. There may be a slight variation but, as has been observed in the authority already quoted, this variation must be reasonable to the extent of one or two per cent. And cannot substantially reduce the percentage. Even no question was put to the witnesses examined on commission that the percentage depended upon the quality of seeds which were used. For the first time this suggestion was made to the plaintiff in cross-examination and it was repelled by him. It is, therefore, not possible to allow the defendant to set up altogether a new case during the course of evidence. A plea on which the case is based must be specifically stated in the pleadings and cannot be afterwards introduced. When this was pointed out to the learned counsel for the defendant he made a vain attempt by offering the explanation that it was not a plea but the question of evidence. Evidently, this explanation has no force and must be rejected.
62. Issue No. 4.-At the time of arguments this issue was not pressed by the learned counsel for the defendant and therefore it was dropped.
63. Issue No. S.-At the time of arguments this issue was not pressed by the learned counsel for the plaintiff and so it was dropped.
64. Issue No. 6.-This issue is divided into two parts. The first part relates to the loss or damages caused to the plaintiff while the second part relates to the liability of the defendant. I will only confine myself to deal with the first part as the second part admittedly depends upon the findings or.
65. Issues Nos. 3 and 9 which have already been answered in the affir--mative. Taking up the question of loss it was stated by the plaintiff that the oil cakes when they were analyzed were found to be deficient by 6.81% in protein and oil. In this he is supported by the reports of the analysts Exhs. 13 and 14. Even the second analysis did not improve the position. So according to the plaintiff he had to pay the prescribed rate of damage to the foreign buyers. This comes to L 1383-13 equivalent to Rs. 18,369.44. Final invoice Exh. 21 had been produced in proof of it. The genuineness of this document has not been challenged and no evidence to the contrary has been furnished. It was further the case of the plaintiff that he sustained loss with regard to bonus vouchers which he would have earned if the oil cakes had been found according to the standard and on this account he suffered a loss of Rs. 6,896.90. There is also no evidence to the contrary. Consequently there is no reason to reject the evidence of the plaintiff. The total amount thus works out to Rs. 25,266.34.
66. The plaintiff is entitled to this amount.
67. Issue No. 7.----This issue was dropped earlier vide the order dated the 12th January 1968.
68. Issue No. 8----- The question of compensatory cost to the defendant does not arise in view of the findings on other issues.