C.i.f. rejected goods and implied merchantable quality principles kept responsibility with the canalising agency in pending proceedings.

In a c.i.f. sale of imported raisins rejected as unfit for human consumption, the court applied the Sale of Goods Act principles on sale by sample, implied merchantable quality, and the buyer's right of inspection and rejection. It held that endorsement of the bill of lading and transfer of title did not, by itself, absolve the canalising agency of responsibility where the consignment had been rejected by Port Health Authorities and statutory proceedings were pending. The petitioner was not required to bear sole responsibility for the port and customs process, and the agency was directed to take steps in relation to those proceedings for the limited purpose of the rejected goods.

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Issues: Whether, on rejection of imported raisins as unfit for human consumption and not conforming to the contractual and statutory standards, the petitioner could compel the State Trading Corporation to reship the goods and, in the meantime, treat the Corporation as responsible for the goods and the port and customs proceedings.

Analysis: The goods were imported on a c.i.f. basis through the State Trading Corporation and were sold on high seas by endorsement of the bill of lading. The Court applied the principles governing sale by sample, implied condition as to merchantable quality, and the buyer's right of inspection and rejection under the Sale of Goods Act, 1930. Since the consignment had been rejected by the Port Health Authorities and the report indicated that the raisins were not fit for human consumption, the Court held that the Corporation could not escape responsibility merely by relying on transfer of title. At the same time, the Court noted that the petitioner could not be compelled to deal with the port and customs authorities as if it were solely the owner for all purposes while the rejection and confiscation-related proceedings were continuing.

Conclusion: The State Trading Corporation was directed to take steps in relation to the customs and port proceedings and was treated as the owner for that limited purpose. The petitioner was not granted an unqualified mandamus for reshipment, but the petition succeeded to the extent of the directions issued against the Corporation and the Port Trust.

Final Conclusion: The writ petition resulted in a limited protective direction in favour of the petitioner, with corresponding responsibility cast on the State Trading Corporation for the pending proceedings and related action concerning the rejected consignment.

Ratio Decidendi: In a c.i.f. transaction involving goods rejected before acceptance for non-conformity and unfitness, transfer of title by endorsement does not by itself absolve the canalising agency of responsibility; the court may direct it to answer the consequences of the rejected consignment in the pending statutory proceedings.

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