Assignment On Unpaid Seller With Cases

Unpaid Seller:
                                                                     Section 45 of sale of goods act 1930 defines unpaid seller.
An unpaid seller according to this section is a person to whom the whole price has not been paid or bill of exchange or such other negotiable instrument given to him has been dishonoured.
It also declares that any person who is in the position of a seller like agent is also considered seller
Features of unpaid seller:
Following are the features of unpaid seller
He must sells the goods on cash basis and must be unpaid.
He must be unpaid either wholly or partly.
If the price has been paid through a bill of exchange or other negotiable instrument,the same must be dishonoured.
He must not refuse to accept the payment when tendered.
Relevant cases:
In Pawan hans helicopters Ltd v Aes Aerospace Ltd the court decided that the petitoner is an unpaid seller  because he has not recieved the agreed sale price.Clearly the petitioner is an unpaid seller within the meaning of section 45.
2in .Mewar textiles Mills Ltd.v Sita Ram Basanti Bai Jain the court rejected the plea that agent can’t exercise his right of lien.The court decided that according to sub sec(2) of section 45 seller includes any person who is in the position of a seller it also includes agent so he may exercise his right of lien.
3.Mrs Preeti A lotlikar V Auspicio Rodrigues..
Rights of unpaid seller:
                                            The rights available to unpaid seller inevitably depends on weather the unpaid seller is a seller under sale or an agreement to sale.
Rights of unpaid seller in a sale:
                                                                                                                                                         The rights of unpaid seller has been clearly elaborated under section 46(1) of the act.An unpaid seller of goods,in a sale,by implication  of law has the following rights available to him,
1.Right of lien
2.Right to stoppage in transit
3.Right of resale.
Now i am going to discuss them one by one.
Right of lien:
                        Sections 47 to 49 provides for right of lien.
Meaning of lien;
                                Lien is the right to retain the possession and refuse to deliver them to the buyer until the price due in respect of them is paid to the buyer.
Circumstances under which right of lien can be exercised;
                         According to sub sec (1) of the section 47 Following are the three circumstances under which right of lien can be exercised.
1.where the goods has been sold without any stipulation to credit.
2.where the goods has been sold on credit,but the term of the credit has expired.
3.where the buyer becomes insolvent.
Other provisions regarding to lien;
According to sub sec (2) of the sec 47 the seller may exercise his right of lien even he possesses the goods as agent or bailee for buyer.
According to sec 48 where an unpaid seller has made part delivery of goods,he can exercise lien on the reminder.
According to sec 49(2) the seller may exercise his right of lien even though he has obtained a decree for a price of the goods.
Relevant case:R.K.Abdul Rahiman sahib and co V Express newspaper Ltd,the court in this case decided that lien in favor of seller applies to the cases where the properties in the goods have passed to the buyer,for a seller can’t be said to have a lien over his own goods.He can have a lien only on the goods which have become the buyer’s property.
2.Balaji paper agency V Mysore paper and Board Co.
In this case the court decided that the unpaid seller’s lien continues even after passing of the goods to purchser ,as long as the unpaid seller continues to remain in actual possesion of the goods sold.
Circumstances under which the unpaid seller loses his right of lien;
1.According to sec 49(1)(a) when then seller delivers the goids to carrier or other bailee for the purpose of trsnsmission to the buyer without reserving the right of disposal of goods the seller loses his right of lien

2.According to sec 49(1)(b) when the buyer or his agent lawfully obtains possession of the goods the seller loses his right of lien.
3.According to sec 49(1)(c) when the seller waives his right of lien.
4.According to sec 53(1) where the buyer disposes of the goods to third person with the consent of seller.
Relevant case Eduljee vs John Bros
                            Edluljee sold and delivered a refrigerator to John bros.It was not functikning properly John delivered it back to Edulijee.It was held that Eduljee could not exercise his lien over the refrigerstor. 
Right to stoppage in transit;
                                                    The right of the stppage of the goods mesns the right of stopping the goods while they are in trsnsit,to regain possession and to retsin them till the full price is made.
    The goods are said to be in transit from the time when the goods are delivered to a carrier or other bailee for the purpose of transmission to the buyer until the goods are recived  by buyer or his agent.when the goods are recieved by buyer or his agent on his behalf then the goods are no more in transit. 
          According to section 50 of sale of goods act 1930 the unpaid seller can exercises his right to stoppage in transit if the following conditions are satisfied.
The seller must be unpaid.
2.The goods must be in transit.The possession of the goods must be with an independent carrier.
3.The buyer become insolvent in the meantime.
If the goods reached the destination the he can’t exercise the right of stoppage in transit.
Example:-Henry sells 50 chairs to Smith.Henry delivers the chairs to a carrier for the purpose of transmission to Smith.Henry gets news that Smith has become insolvent.Henry can stop delivery.
Duration of transit;
                                    According to sec 51(1) the goods are said to be in trsnsit from the time when the goods are delivered to to carrier or to a bailee to carry them to the buyer until the delivery has been taken by buyer or his agent.
The goods are in transit,even if the buyer asks the carrier to take them to some other destination until they are delivered to the buyer at some other destination.
According to sec51(4) If the goods are rejected by the buyer and the goods are in the possession of the carrier,the transit is not at end,even if the seller has refused to take them back.
When the delivery has been taken from the carrier or bailee by buyer or his agent the goods are no more in transit.
In Hindusthan Lever limited and another Vs The Collector and District magistrate,sundargarh goods were entrusted to the transporter,before it reached the consignee the vanaspati ghee was seized by the marketing inspector.The consigee issued instruction of “stop payment” and the cheque given by him towards sale was dishonoured.The court decided that the company having not recieved the consideration it continued to be the owner of the goods under section45(1) and remained the owner of the goods according to section 51 of sale of goods act 1930.
Seller right of stoppage in transit ceases in following cases;
1.when the buyer or his agent obtains the delivery of goods before or after the goods have been reached at the destination.
2.where the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his agent.
3.when some of the goods have been delivered to the buyer or his agent under the circumstances which show that there is an agreement to give up possession of the whole of the goods.
4.when goods have been resold by the buyer with the consent of the seller.
How stoppage in transit is effected;
                                                                   According to section 52 the unpaid seller may exercise the right of stoppage in transit is exercised either
1.By taking actual possession of the goods, or
2.By giving notice of his claim to the carrier who holds the goods.
When such notice has been given to carrier or bailee he shall redeliver goods to,or according to the direction of the seller and the expenses of re-delivery shall be borne by seller.
In Classic Furniture manufacturing Co.Pvt .Ltd. Vs Dhl Lemiur Logistics Pvt Ltd and ors.   The court decided that the respondent was acting as a carrier and unless the freight charges and shipment charges of the respondent were not paid the respondent in terms of sec52(3) of soga 1930 had a lien over the goods booked.
Right of Resale;
                              In case of sale the seller has the right of resale accoring to sec 46(1)(a).
According to sec 54 an unpaid seller can resell the goods under the following circumstances.
In case where the goods are of perishable nature,the unpaid seller can resale the goods if following conditions are satisfied.
1.buyer fails to pay the money within reasonable time.
2.The seller is not required to give notice of resale to buyer.
In case if the goods are not perishable,the unpaid seller can resale the goods if the following conditions are satisfied.
1.seller has exercised his right of lien or stoppage of goods in transit.
2.Seller has given notice to buyer to pay the price within reasonable time and the buyer fails to pay the price.
The seller may recover from the original buyer damages for any loss occasioned by his breach of contract but the buyer shall not be entitled to any profit which may occur on the resale.
If notice is not given to buyer the unpaid seller shall not be entitled to recover such damages and the buyer shall not be entitled to thr profit,if any , on the resale.
In Kalka prasad Ram Charan V Harish Chandra the seller delivered 10 thans of silk out of 67.The buyer rejected the remaining delivery.The seller sold off the remaining.But due to a governmemt control order the sale fetched a price considerably less than what had been agreed between the two.The seller brought a claim to recover damages.The court decided that seller can’t claim the damages under sec 54(2) of soga because he has not given notice to buyer.
2.In kirorimal Kashiram Vs. BR Venkatachalapathy chettiar. The court decided that the right provided under sec 54(2) can only be exercised if the property in the goods has to pass to buyer.
3.In Bala Dat Vs. The union of india and ors. Court decided that under sec 54 if the seller gives notice of resale and resells the goods then difference between the original sale price and the price obtained after the resale is to recovered as damages for the loss occasioned by the breach of contract.

Rights of unpaid seller in case of agreement to sale;
Right to withhold delivery of goods;
Meaning;
                                          It means seller refuses to deliver goods to buyer.
     According to sec 46(2) where the property has not been passed to the buyer,the unpaid seller,can’t exercise right of lien,but get a right of withholding the delivery of goods ,similar to and co extensive with lien and stoppage in transit where the property has passed to the buyer. 
Conditions for withholding right;
                                                             The following conditions must be satisfied to exercise right to withhold the delivery of goods.
1.Seller must be unpaid seller.
2.Ownership of the goods has not been passed. 
It is pertinent to highlight that the “other remedies” mentioned under sec 46(2) of the act,have been understood to mean the remedies set out in Chpt 6 (suit for breach of contract) of the act... Firm Bachhraj Amolakchand V Firm Khupchand Nasrigdas and others.
Rights of unpaid Seller against buyer
                                                                     Following are the rights of unpaid seller against the buyer.
1.Suit for price; 
                             Sub sec (1) of sec 55 that where the property in goods has been passed to the buyer and the buyer wrongfully refuses or neglets to pay the price according to the terms of the contract the seller may sue him for the price of goods.
In Penguin Books Ltd V Boom Sales Company  the court pointed that im order to syue the buyer under sec 55(1) the following conditions must be satisfied
1.The property in goods has been passed to the buyer.
2.The property has passed under the contract of sale.
3.The buyer hss wrongfully negleted or refused to pay the price ,and
4.The price has become payable under the terms of the contract, are fulfilled.
In Sh.Devender Kumar Vs Mission Jan Jagriti blood Banks the defendant admitted the supply of goods in terms of invoice Ex.PW1/1.  The non payment of the value of goods is also been admittted by the defendant.Therefore by the virtue of sec 55 plaintiff being unpaid seller is having right to sue and recover the price of goods delivered to the defendant.
According to sec 55(2) if the property in goods has not been passed to the buyer,the unpaid seller may sue the buyer for the price if he wronfully neglets or refuses to pay the price.
The seller has to sue the buyer for the entire amount and not for the amount that according to him remains due to him after deducting the price fetched by the goods sold.   
In Vithaldas Vishram Vs Jagjivan Gordhandas the plaintiff brought a suit to recover the sum of money Rs 3750 which was payable by defendant on 31 june 1937 even though the property in goods was not passed to the buyer.The court decided the case in favor of plaintiff under sec 55(2).
2.Suit for damages;
                                     According to sec 56 where the buyer wrongfully neglets or refuses to accept and pay for the goods,the seller may sue him for damages for non performance.
The damages would be measured by the rule contained in sec 73 of contract act
The measure of the damages for the non acceptance is the estimated loss directly and naturally resulting in the ordinary court of event from the buyers breach of contract.Where there is an available market rate for the goods in question the proper measure of damages, prima facie,is to be ascertained by the difference b/w the contract price and the market price at the time of breach.If however,the market rate on the date of breach of the contract is not available, it is open to them to produce evidence regarding identity with a view to awarding proper damages.(T.R.Balakrishnan Vs State of Kerala)
3.suit for damages for breach;
Repudiation of the contract before due date;
                                                                                   When the buyer repudiates the contract before the date of delivery the seller may treat the contract as resind and sue for the damages for the breach.
The buyer is authorised under sec 60 either to threat the contract as subsisting and wait rill date of delivery or to resind it and sue for the damages when the other side repudiates the contract before delivery.Premier Auto Industries And others Vs Bharat Raj Royal Goyal and others.
Suit for interests;
                                 According to section 61(2)(d) when there is a specific agreement between the seller and buyer as to interest on price of goods from the date on which payment becomes due the seller may recover the interest from the buyer.