British Paints (India) Ltd. vs Union of India
AIR 1971 CAL 393
Case Summary
[Quality or Fitness of Goods]
Facts
The Union of India invited tenders for the supply of paints described as “compound recolouring Olive Green Scamic 314” for faded tents. The plaintiff (British Paints India) submitted a tender with Sample No. 30/100.
While the laboratory initially rejected the sample, the Defence Department accepted the tender and placed an order for 500 Cwt. of paint at Rs. 256 per Cwt.
The contract required the goods to be inspected at Calcutta by an Inspector. If approved, the goods could be dispatched.
Extensions for delivery were granted up to April 30, 1953, due to delays in sourcing materials from the UK.
Out of 500 Cwt., 159 Cwt. was accepted while 341 Cwt. was rejected after inspection and reconditioning attempts.
The Union of India terminated the contract on May 1, 1953, citing non-delivery and poor quality. Despite reconditioning and further inspection at Kanpur, the authorities confirmed that the goods did not meet specifications.
The plaintiff alleged the rejection was arbitrary and sought damages of Rs. 93,724, including storage costs and interest.
Issues
Whether the Inspector’s rejection of the paint supplies was arbitrary or capricious.
Whether the tests conducted at Kanpur adhered to the terms of the contract.
Whether the plaintiff was entitled to damages for breach of contract.
Key Legal Provisions
Section 16(2), Sale of Goods Act, 1930 – Implied condition as to the quality or fitness of goods for a particular purpose where the buyer relies on the seller’s skill or judgment.
Doctrine of Finality of Inspection – Contractual provision stating that the Inspector’s decision regarding acceptance or rejection of goods is final and binding.
Section 55, Indian Contract Act, 1872 – Effect of failure to perform at a fixed time where time is of the essence.
Section 73, Indian Contract Act, 1872 – Compensation for loss or damages caused by breach of contract.
Judgement
The Court held that the Inspector’s rejection was not arbitrary. The Inspector acted on reports from the Kanpur testing authorities and applied his mind while reaching the decision.
The Kanpur tests were valid and conducted in compliance with the contractual terms.
The plaintiff’s allegations regarding the destruction of Sample 30/100 were unfounded, as the sample was confirmed to be intact until the contract was terminated.
The Court dismissed the suit for damages, ruling in favour of the Union of India. The rejection of supplies was justified as the goods failed to meet the required specifications.
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