1966 (3) TMI 79 - SC - Indian Laws

Supreme Court rules on purchaser status, accounts settlement, and appeal outcome.

GORDON WOODROFFE & CO. Versus SHEIKH M.A. MAJID & CO.

GORDON WOODROFFE & CO. Versus SHEIKH M.A. MAJID & CO. - 1967 AIR 181, 1966 (0) Suppl. SCR 1 Issues Involved:1. Whether the defendants were acting as del credere agents or outright purchasers.2. Whether there was a settled account between the parties and if it could be reopened.Issue-wise Detailed Analysis:1. Whether the defendants were acting as del credere agents or outright purchasers:The primary question was to determine the nature of the relationship between the plaintiff and the defendants-whether the defendants were acting as del credere agents or outright purchasers of the goods. The High Court held that the defendants acted as del credere agents, but this decision was contested.The Supreme Court emphasized the distinction between a contract of sale and a contract of agency. The essence of a sale is the transfer of title to the goods for a price, making the transferee liable as a debtor for the price. Conversely, an agency to sell involves delivering goods to a person who sells them as the property of the principal, who remains the owner of the goods and is liable to account for the proceeds.The Supreme Court examined the nature of the contract, its terms, and the respective obligations of the parties. The contracts between the parties, including Exhibit P-1, indicated that the defendants were buying the goods for resale. The contracts fixed a definite price for the goods, which was inconsistent with the notion of an agency relationship. The defendants' actions, such as trimming and re-assorting the goods to meet London standards and the stipulation of time for delivery, further supported the view that the transactions were outright sales.The Court also noted that the plaintiff received statements of account and cheques based on these contracts without raising any objections, indicating acceptance of the terms. The defendants' lien on the goods for advances made was also consistent with the relationship of creditor and debtor rather than principal and agent.The Supreme Court concluded that the defendants were purchasers of the plaintiff's goods under the contracts and not agents for sale, overruling the High Court's view.2. Whether there was a settled account between the parties and if it could be reopened:The second issue was whether the accounts between the parties were settled and whether the plaintiff could reopen them. The trial court held that the accounts were settled and could only be reopened in cases of fraud, mistake, or other sufficient equitable grounds.The Supreme Court explained that a settled or stated account is one that is submitted and accepted as correct by the other party, which can be inferred from conduct. The plaintiff admitted receiving statements of account and cheques without raising objections, and even confirmed the correctness of the accounts in a memorandum (Ex. D-4).The Court distinguished between two kinds of accounts stated: one where a claim to payment is admitted by the other party, and another where cross items of account are adjusted, and a balance is struck, creating a new debt and a new cause of action. The accounts in this case fell within the latter category, and the equitable doctrine of settled account applied.The Supreme Court found no evidence of fraud, mistake, or other sufficient equitable grounds to reopen the accounts. The trial court's decision to allow a small sum for marine insurance rebate was upheld, but the plaintiff's other claims were rejected.Conclusion:The Supreme Court allowed the appeal, set aside the High Court's judgment, and restored the trial court's judgment dismissing the plaintiff's suit and granting the defendants' counter-claim. The defendants were entitled to costs in both the Supreme Court and the High Court.Appeal allowed.