SALES OF GOOD ACT 1930 IN INDIA

The Sale of Goods Act, 1930:
Definitions of some terms used in the Sale of Goods act:
 Buyer: Means a person who buys or agrees to buy goods
 Delivery: Means voluntary transfer from one person to another.
 Goods: Goods are said to be in deliverable state, when they are in such state, the buyer
would under the contract be bound to take delivery of them.
 “Document of Title Goods”: A document of title to goods may be described as any
document used as proof of the possession or control of goods. The following are
recognized as documents of title to goods:
• Bill of Loading
• Railway Receipt
• Warehouse keepers certificate
• War finger’s certificate.
• Dock warrant.
 Insolvent Person: A person is said to be insolvent who cannot pay his debts as they
become due.
 Price: Means the consideration for a sale of goods.
 Property: Means the general property in goods and not merely a special property.
SALE OF GOODS ACT 1930:
“An act to define and amend the law relating to the sale of goods”
The sale of goods act, 1930 governs the contracts relating to sale of goods. It applies to the whole of
India except the State of Jammu & Kashmir. The act first came into force on the 1st
of July 1930. The
act contains Sixty-Six sections. A few amendments in the act were made by Sale of Goods
(Amendment) act 1963.
It is the most common of all commercial contracts and its knowledge of its main principals is essential
for all classes of the community.
A contract of sale of goods results, like any other contract, by an offer by one party & its acceptance by
the other. Thus it is a consensual transaction. The parties to the contract enjoy unfettered discretion to
agree to any terms like relating to delivery and payment of price, etc. The sale of goods act does not
seek to fetter this discretion. It simply lays down certain positive rules of general application for those
cases where the parties have failed to contemplate expressly for contingencies which may interrupt the
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smooth performance of a contract of sale, such as the destruction of a thing sold, before its delivered or
the insolvency of the buyer, etc. The act leaves the parties free to modify the provisions of the law by
express stipulations.
1. CONTRACT OF SALE:
A contract of Sale of goods is a contract whereby the seller transfers or agrees to transfer the property in
the goods to the buyer for a price. The term contract of sale is a generic term and includes both a sale &
an agreement to sell.
 Sale and Agreement to sell:
Where under a contract of sale, the property in the goods is transferred from the seller to the buyer (i.e.
at once) the contract is called “a sale” but where the transfer of the property in the goods is to take place
at a future time or subject to some condition thereafter to be fulfilled, the contract is called as “an
agreement to sell”. An agreement to sell becomes a sale when the time elapses or the condition, subject
to which the property in the goods is to be transferred, is fulfilled.
In a contract of sale:
• There must be an offer to sell the goods at a price and subject, sometimes, to certain terms and
conditions. This is usually a quotation.
• There must be an acceptance to buy (usually a purchase order)
But. If a supplier sends a quotation and the Purchase order stipulates conditions at variance with the
term in the quotation, it is a counter offer and the supplier must accept the revised terms to give them the
legal status of the contract.
The contract may provide for:
• Immediate delivery of the goods or
• Immediate payment
• Or Both.
• Delivery or payment by installments.
• Delivery or payment or both at a future date.
 Essentials of a contract of sale:
1.) Two Parties:
There must be two distinct parties i.e. a buyer & a seller, as a person cannot buy his own goods to
affect a sale and they must be competent to contract.
2.) Goods:
Goods means every kind of movable property other than actionable claims and money and includes
stock & shares, growing crops, grass, and things attached to or forming a part of the land which are
agreed to be severed before sale or under the contract of sale.
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Goodwill, trademarks, copy-rights, patents rights, water, gas, electricity, decree of a court of law are
all regarded as goods.
Goods are classified into 3 types:
• Existing goods
Goods which are physically in existence and which are in seller’s ownership and/or
possession at the time of entering the contract of sale are called existing goods. Where seller
is the owner & has a general property in them and if he is an agent, he has the right to sell
them. Existing goods are further classified into 2 types:
a) Specific goods:
Goods identified and agreed upon at the time of the making of the contract of sale are
called Specific Goods.
e.g Where A agrees to sell B a particular radio bearing a distinctive number there is a
contract of sale of specific or ascertained goods.
b) Unascertained goods:
Goods that are not separately identified or ascertained at the time of making of the
contract are known as unascertained goods.
e.g. If A agrees to sell to B one bag of sugar out of the lot of one hundred bags lying
in his go down, it is a sale of unascertained goods because it is not known which bag
is to be delivered..
• Future goods
Goods that are to be manufactured, produced or acquired by the seller after the making of the
contract of sale are called future goods.
e.g. If A Agrees to sell B all the milk that his cow may yield during the coming year, this is a
contract for the sale of future goods.
• Contingent goods
Goods, the acquisition of which by the seller depends upon an uncertain contingency are
called contingency goods.
e.g. If A agrees to sell to B a specific rare painting provided he is able to purchase it from its
present owner this is a contract of sale of CONTINGENT GOODS.
3.) Price:
The consideration for contract of sale must be money consideration called the “Price”. If goods are
sold or exchanged for other goods, the transaction is barter, governed by the transfer of property act.
But if goods are sold partly for goods and partly for money, the contract is one of sale.
• The price may be fixed, or
• The price may be left to be fixed in a manner agreed upon, or
• The price may be determined in the course of dealing between the two parties or
• May be fixed as per the valuation of a third party.
If the price is not fixed as per these provisions, the buyer “ shall pay the seller a reasonable price”.
e.g A agrees to exchange with B 100 kegs of barley at Rs 60/kg for 52 bullocks valued at Rs 300 per
bullock & pay the difference in cash. Held the contract was a contract of sale.
4.) Transfer of General Property:
There must be a transfer of general property as distinguished from special property in goods from
the seller to the buyer. If A owns certain goods, he has general property in the goods. If he pledges
them with B, B has special property in the goods.
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e.g if A owns certain goods , B has general property in the goods. If he pledges them with B,B has
special property in the goods.
5.) Essential Elements of a Valid Contract:
All essential elements of a valid contract must be present in the contract of sale.
2. CONDITIONS & WARRANTIES:
Before a contract of sale is entered into, a seller frequently makes representations or statements, which
influence the buyer to clinch the bargain. Such representations or statements differ in character and
importance. Whether any statement or representation made by the seller with reference to the goods is a
stipulation forming part of the contract or is a mere representation forming no part of the contract,
depends on the construction of the contract. If there are no such representations then the concept of “
buyer beware” applies. This means the buyer gets the goods as they come and it is no part of the seller’s
duty to point out the defects in the goods to the buyer.
A stipulation in a contract of sale with reference to goods may be a condition or a warranty.
Condition: A condition is a stipulation, which is essential to the main purpose of the contract. It goes to
the root of the contract. Its non fulfillment upsets the very basis of the contract, it is defined as “an
obligation which goes so directly to the substance of the contract, or in other words so essential to its
very nature, that its non-performance may fairly be considered by the other party as a substantial failure
to perform the contract at all.
Warranty: A warranty is a stipulation, which is collateral to the main purpose of the contract. It is not
of such vital importance as a condition. It is defined as “ an obligation, which, though it must be
performed, is not so vital that a failure to perform it goes to the substance of the contract”. If there is a
breach of a warranty, the aggrieved party can only claim the damages, as it has no right to treat the
contract as repudiated.
Whether a stipulation is a contract of sale is a condition or a warranty depends on each case on the
construction of the contract as a whole.
 Distinctions between a condition & a warranty:
1.) Difference as to Value:
A condition is a stipulation, which is essential to the main purpose of the contract. A warranty is a
stipulation, which is collateral to the main purpose of the contract.
2.) Difference as to Breach:
If there is a breach of a condition the aggrieved party can repudiate the contract of sale, but in case
of a breach of a warranty, the aggrieved party can claim damages only.
3.) Difference as to Treatment:
A breach of a condition may be treated as a breach of a warranty. This would happen where the
agreed party is contended with damages only. A breach of a warranty however, cannot be treated as
a breach of a condition.
The distinction between the two i.e. Condition & warranty can be explained as follows:
A Man buys a particular Horse, which is warranted quiet to ride & drive. If the horse turns out to be
vicious the buyer’s only remedy is to claim damages. But if instead of buying a particular horse, a man
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asks a dealer to supply him with a quiet horse & the horse turns out to be vicious, the stipulation is a
condition, & the buyer can reject the horse, or keep the horse & claim the damages.
 Express and Implied Conditions & Warranties:
Conditions & Warranties may be either express or implied. They are said to be express when at
the will of the parties they are inserted in the contract and they are said to be implied when the law
presumes their existence in the contract automatically though they have not beed out into it in express
words. Implied Conditions & Warranties may however be negative or varied by express agreement, or
by course of dealing between the parties or by usage of trade.
Implied Conditions:
Unless otherwise agreed the law incorporates the following implied conditions:
1.) Condition as to Title:
The first implied condition on part of the seller is that, in the case of a sale, he has the right to sell
the goods at the time when the property is to pass. As a result of this condition if the sellers title
turns out to be defective the buyer is entitled to reject the goods and the recover the price.
e.g. A purchased a car from B who had no Title to it. A used the car for several months. After that, the
two owners spotted the car & demanded it from A. Held, that A was bound to hand over that car to its
true owner & that A could successfully sue B the seller without Title, for the recovery of the purchase
price even though several months had passed.
2.) Condition in a sale by description:
“ Where there is a contract of sale of goods by description, there is an mplied condition where the
goods shall correspond to the with the description. If the article tendered is different in any respect,
it is not the article bargained for, the other party is not bound to take it”. Further the fact that the
buyer has examined the goods, will not affect his rights to reject the goods, if the deviation of the
goods from the description is such which could not have been discovered by casual examination i.e.
if the goods show any latent defects.
e.g. a ship was sold by description viz , “copper fastened vessel” but actually it was partly copper
fastened. Held, that the goods did not correspond to description & hence could be returned or else if the
buyer took the goods, he could claim damages for breach. This was even though the ship was sold
subject to all faults & defects
3.) Condition in a sale by sample:
When under a contract of sale, foods are supplied according the a sample agreed upon, the implied
conditions are:
a. The bulk sample shall correspond to the sample in quality
b. The buyer shall have a reasonable opportunity of comparing the bulk with the sample.
c. The goods shall be free from any defect, rendering them Unmerchantable, which would not
be apparent on reasonable examination of the sample.
e.g. A certain shoes were sold by sample by the French Army. The Shoes were found to contain paper
not discoverable by ordinary inspection. Held, the buyer was entitled to the refund of price plus
damages.
4.) Condition in a sale by sample as well as by description:
There is an implied condition that the bulk of the goods shall correspond both with the sample and
with the description. If the goods supplied correspond only with the sample and not with the
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description Or vice- versa, the buyer is entitled to reject the goods. The bulk of the goods must
correspond with both.
e.g A agreed to sell to B some oil describes as “Foreign refined rape oil warranted only equal to
sample”. the goods tendered were equal to sample but contained an admixture of Hemp oil. Held,B
could reject the goods.
5.) Condition as to fitness or quality:
Normally there is no implied condition or warranty as to quality or fitness for any particular purpose
of goods supplied, the rule of law being let the “buyer beware”. But an implied condition is deemed
to exist, if the following conditions are satisfied:
a. The buyer, expressly or impliedly, should make known to the seller the particular purpose for
which the goods are required.
b. The buyer should rely on the seller’s skill or judgment. And
c. Goods sold must be of a description which the seller deals in the ordinary course of his
business, be it a manufacturer or not.
e.g A approached B, a motor car dealer & asked for a comfortable car for touring purpose
recommended his Bugatti car, a Trade name & also showed a specimen of the same. A there upon
ordered for a bugatti car, which was supplied. The car proved to be unsuitable for touring purposes. A
claimed to reject the car & recover back the purchase money paid by him. It was held that he was
entitled to do so because, while ordering that car by its trade name he was still relying on the sellers skill
& judgment as regards the suitability of the car for the specific purpose.
6.) Condition as to merchantability:
This condition is implied only when the sale is by description; the following conditions are to be
met:
a. The seller should be a dealer in the goods of that description, whether he is the manufacturer
or not.
b. The buyer must not have any opportunity of examining the goods, or there must be some
latent defect in the goods, which would not be apparent on reasonable examination of the
same.
e.g. Where A purchases a certain quantity of black yarn from B, a dealer in yarn, and finds if damaged
by white ants, the condition as to merchantability has been broken and A is entitled to reject as
unmerchantable.
7.) Condition as to Wholesomeness:
This condition is implied only in a contract of sale of eatables and provisions. In such cases the
goods supplied must not only answer to description and be merchantable but must also be
wholesome i.e. free from any defect, which render them, unfit for human consumption.
e.g. A bought milk from B a dairy owner. The milk was contaminated with germs of typhoid fever, A’s
wife on taking the milk became infected and died of it. B was held liable in damages.
Implied Warranties:
Unless otherwise agreed the law also incorporates into a contract of sale of goods the following implied
warranties:
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1.) Warranty of Quiet Possession:
In every contract of sale, the first implied warranty on the part of the seller is that “the buyer shall
have & enjoy quiet possession of the goods.” If the quiet possession of the buyer is in anyway
disturbed by a person having superior right than that of the seller, the buyer can claim damages from
the seller.
e.g. The plaintiff a lady purchased a second hand typewriter from the defendant. She thereafter spent
some money on its repairs and used it for some months. Unknown to the parties, the typewriters was
a stolen one and the plaintiff was compelled to return the same to its true owner. She was held
entitled to recover from the seller’s for the breach of the warranty, damages reflecting not merely the
price paid, but also the cost of repair.
2.) Warranty of freedom from encumbrances:
Where the goods shall be free from any charge or encumbrance in favour of any third party not
declared or known to the buyer before or at the time when the contract is made” If the goods are
afterwards found to be subject to a charge and the buyer has to discharge the same, then there is a
breach of warranty & buyer is entitled to damages.
e.g. A, the owner of the watch, pledges it with B. After a week obtains possession of the watch from B
for some limited purpose and sells it to C. B approaches C and tells him about the pledge affair. C has to
make payment of the pledge amount to B. There is breach of this warranty and C is entitled to claim
compensation from A.
3.) Warranty of disclosing the dangerous nature of goods to the ignorant buyer:
The third implied warranty on the part of the seller is that, if the goods sold are of dangerous nature,
he will warn the buyer of the probable danger. If there is a breach of warranty the buyer is entitield
to claim compensation for the injury caused to him.
e.g. A purchases a Tin of disinfectant powder from B. B knows that the lid of the tin is defective and if it
is opended without special care it may be dangerous, but tells nothing to A. A opens the tin in the
normal way, whereupon the disinfectant power flies into her eyes and causes injury. B is liable in
damages to A as he should have warned A of the probably danger.
3. BUYER BEWARE: DOCTRINE OF CAVEAT EMPTOR.
The maxim of caveat emptor means, “let the buyer beware”. According to the doctrine of caveat emptor
it is the duty of the buyer to be careful while purchasing goods of his requirement and, in the absence of
any enquiry from the buyer, the seller is not bound to disclose every defect in the goods of which he
may be cognizant.
The buyer must examine the goods thoroughly and must see that the goods that he buys must be suitable
for the purpose of which he wants them.
If the goods turn out to be defective or do not serve his purpose, the buyer cannot hold the seller liable
for the same, as there is no implied undertaking by the seller that he shall supply the goods, which suits
the buyers purpose. If, therefore, while making purchases of the goods the buyer depends upon his own
skills and makes a bad choice, he must curse himself for his own mistake, in the absence of any
misrepresentation or guarantee by the seller. This doctrine too has certain exceptions.
e.g. A, a farmer, bought from B, a butcher, the carcass of a dead pig for consumption and left it hanging
up, intending to return after completing other business and take it away. In his absence C, a farmer, on
seeing and wishing to buy it, was referred to A and bought it of A. It turned out unsound and unfit for
human consumption. It was held that no warranty of soundness was implied by law between farmers A
and C.
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4. TRANSFER OF PROPERTY:
There are primarily 3 stages in the performance of a contract of sale of goods by a seller, viz:
1.) The transfer of property in the goods.
2.) The transfer of possession in the goods.
3.) The passing of the risk.
Transfer of property in the goods from the seller to the buyer is the main object of a contract of sale.
Property in Goods means the ownership of goods, whereas “possession of goods” refers to the custody
or control of goods.
Hence it is important to know the precise moment of time at which the property in the goods passes
from the seller to the buyer for the following reasons:
1.) Risk follows ownership:
Unless otherwise agreed, risk follows ownership, whether delivery has been made or not and
whether the price has been paid or not. Hence the risk of loss lies with the owner. When the property
of the goods gets transferred to the buyer, the goods are at the buyers risk, whether the delivery has
been made or not. But if the delivery has been delayed by fault of either the buyer or seller, the
goods are at the risk of the party at fault. Thus risk and Property go together.
e.g. B contracts to purchase 30 Tons of apple juice from S. S crushes the apples, puts juice in casts
and keeps it ready for delivery. B, however, delay to take the delivery and the juice goes putrid and
has to be thrown away. B is liable to pay the price.
2.) Action against Third Parties:
When the goods are in anyways damaged or destroyed by the action of third parties, it is only the
owner of the goods who can take action at that time.
4.) Insolvency of the Seller or the Buyer:
In the event of insolvency of the seller of the buyer, whether the official receiver or Assignee can
take over the goods or not depends on whether the property in the goods has passed from the seller
to the buyer.
5.) Suit for Price:
The seller can sue for the price, unless otherwise agreed, only if the goods have become the property
of the buyer.
 PASSING OF PROPERTY:
What does “Property in Goods” mean?
Ans: It means ownership of the goods.
But it should be understood that “Property in Goods” is not the same as “Possession of Goods”.
Possession of goods refers to the custody of goods.
The rules regarding the passing or property in goods are contained in Section 18-25 of the act.
Primary Rules of ascertaining the when the property of the rights gets transferred to the buyer as
follows:
1.) Goods must be ascertained:
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Where there is a contract for the sale of unascertained goods, no property in the goods is transferred
to the buyer unless and until the goods are ascertained.
Ex: Under a contract of sale, B was entitled to cut teak tree’s of more that 12 in Girth. The stumps of the
tree’s after cutting had to be 3 inches high. Held in these circumstances the property in the timber that
was cut would pass to B when the trees are cut. Till the trees were felled, they were not ascertained.
2.) Intention of the parties:
Where there is a contract for the sale for specific or ascertained goods, property in them passes to the
buyer at the time when the parties intend to pass. For purpose of ascertaining the intention of the
parties, regard shall be had to the terms of the contract, conduct of the parties & the circumstances of
the case.
E.g.: S offers to sell B a certain machine for Rs. 5000/-. B refuses to buy it unless certain work was done
on it to put it under proper running conditions. S replied that B could get it done himself and when the
cost of repairs was known B might pay S Rs 5000 less the cost of repairs. To this B agreed and took the
machine to his repair shop. While being repaired the machine was destroyed without any fault of the
repairman. The property in the machine did not pass from S to B.
But where the intention of the parties as to the time when the property in the goods is to pass to the
buyer cannot be ascertained from the contract, the rules contained in Sec 20 to 24 apply.
These rules are as follows:
1.) Specific Goods:
The rules relating to the transfer of property of specific goods are as follows:
Passing of property at the time of contract:
When there is an unconditional contract for sale of specific goods in a deliverable state, the property in
the goods passes to the buyer when the contract is made. Deliverable state means such a state that the
buyer under the contract be bound to take delivery of them. The fact that the time of payment of the
price or the time of delivery of the goods, or both, is postponed does not prevent the property in the
goods, passing at once.
Ex: X sells to B a horse, which is to be delivered to B the next week. B is to pay the price on delivery, B
asks his servant to keep the horse separate from the other horses. The horse dies before it is delivered
and paid for. The property of the goods has passed to B and he has to bear the loss.
Passing of property delayed beyond the date of the contract:
Goods not in a deliverable state: Where there is a contract for the sale of specific goods not in a
deliverable state, i.e.; the seller has to do something to the goods to put them into a deliverable state, the
property does not pass until such a thing is done and buyer has notice of it.
Ex: There is a contract of sale for a machine weighing 30 Tons and embedded into the concrete floor. A
part of the machine was destroyed while being removed. Held, the buyer was entitled to refuse to take
the machine, as it was not in a deliverable state.
When the price of goods is to be ascertained by weighing: Where there is a contract for the sale of
specific goods in deliverable state, but the seller is bound to weigh, test, measure or do some other act or
thing with reference to the goods for the purpose of ascertaining the price, the property does not pass
until such act or thing is done, and buyer has notice thereof.
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2.) Unascertained Goods:
Where there is a contract for the sale of unascertained goods, the property is the goods do not pass to
the buyer until the goods are ascertained. Until goods are ascertained there is merely an agreement to
sell.
Further under section 23 states that where there is a contract for sale of unascertained or future
goods by description & goods that description and in a deliverable state are unconditionally
appropriated in the contract, the property of the goods thereupon passes to the buyer.
The “ascertainment of the goods” and their unconditional “appropriation to the contract” are two
pre-conditions for the transfer of property from the seller to the buyer in case of unascertained
goods.
Ascertainment is a process by which the goods answering the description are identified and set apart.
Ex: in a sale of 20 hog-heads of sugar out of a large quantity, 4 were filled and taken away by the
buyer. The remaining 16 were subsequently filled and the buyer was informed of the same. The
buyer promised to take them away, but before he could do so the goods were lost. Held the property
had passed to the buyer at the time of the loss.
3.) Goods sent on approval or “ on sale or return”: under sec 24, Where goods are delivered to the buyer
on approval or “on sale” or “on return” or other similar terms, the property there in passes to the buyer:
a. When he signifies his approval or acceptance to the seller.
b. When he does some act adopting the transaction.
Ex: Goods are delivered by A to B on “sale or return”. They are further delivered by B to C and then by
C to D on similar terms. The goods are stolen while in custody of D. As between A and B and B and C,
has not passed to D. As such, C cannot recover the loss from D, but is bound to pay the price to B and B
is bound to pay the price to A.
Reservation of rights of disposal:
The property in goods, whether specific or unascertained, does not pass to the buyer if the seller
reserves the right of disposal of goods.
If for Ex: it is the term of the contract that the buyer is to pay for the goods before delivery, the seller
reserves the right for disposal. In such a case the property of the goods does not pass to the buyer until
the conditions imposed by the seller is fulfilled.
5. SALE BY NON-OWNERS: Sections 27 – 30.
The general rule of law is that “no one can give that which he has not got”. Only an owner of the goods
can transfer a good title. This rule is expressed by the Latin maxim
“ Nemo dat quod non habet”.
Examples:
1.) A, the hirer of goods under a hire purchase agreement sells them to B, B, through a bonafide
purchaser, does not acquire the property in the goods. At the most he acquires such an interest as
the hirer had.
2.) A finds a ring of B and sells it to a third person who purchases it for a value & in good faith. The
true owner i.e. B can recover from that person, for A having no title could pass none the better.
The above rules, there are certain exceptions:
1.) Sale by a person not the owner or title by estoppels:
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Where the true owner by his conduct or by an act of omission, leads the buyer to believe that the
seller has the authority to sell and induces the buyer to buy the goods, he shall be estopped from
denying the fact of want of authority of the seller. The buyer in such a case gets a better title than
that of the seller.
Ex: A tells B within the hearing of C that he is the owner of certain goods which infact belong to C.
After sometime B buys those goods from A. The title of B will be better than that of A and C will be
precluded from disputing B title to the goods.
2.) Sale by a mercantile agent:
A mercantile agent is the one who in the customary course of his business, has, as such agent
authority either to sell goods or to consign goods for the purpose of sale or to buy goods, or to raise
money on the security of the goods. The buyer of the goods from a mercantile agent, who has no
authority from the principal to sell, gets a good title to the goods if the following conditions are
satisfied:
a. The agent should be in possession of the goods or documents of the title to the goods
with the consent of the owner.
b. The agent should sell the goods while acting in the ordinary course of business of a
mercantile agent.
c. The buyer should act in good faith
d. The buyer should not have at the time of the contract of sale notice that the agent has no
authority to sell.
Ex: F, the owner of a car delivered it to H a mercantile agent for sale at not less that Rs 575. H sold the
car for Rs 145 to K who bought it in good faith and without notice of any fraud. H misappropriated the
money. F sued to recover the car from K. Held, as H was in possession of the car with F’s consent for
the purpose of sale, K obtained a good title to the car.
3.) Sale by one of several joint owners:
If one of the several joint owners, who is in sole possession of the goods by permission of the other
co-owners, sells the goods, a buyer in good faith of those goods gets a good title to the goods.
4.) Sale by a person in possession under a void able contract:
When the seller of goods has obtained their possession under a voidable contract, but the contract
has not be rescinded at the time of the sale, the buyer acquired a good titile to the goods, provided he
buys them in good faith and without notice of the seller defect of title.
Ex: A purchases a piano from B by fraud. A has a voidable title to the goods. Before B reincides the
contract, A sells the piano to C, who buys in good faithand in ignorance of the fraud. C gets a good title.
5.) Sale by seller in possession after sale.:
Where the seller having sold goods, continues to be in possession of the goods or documents of the
title to the goods and sells them either himself or through a merchantile agent to a person who buys
in good faith and without notice of previous sale, the buyer gets a good title.
Ex: A sells certain goods to B and promises to deliver the goods the next day. Before delivery A sells &
delivers the goods to C who buys the goods in good faith and without prior knowledge of sale to B. C
gets a good title to the goods not withstanding that the property had, before he purchased, passed to B.
B’s only remedy in this case is against A.
6.) Sale by a buyer in possession after a sale:
Where a person having bought or agreed to buy goods obtains, with the concent of the seller ,
possession of the goods or documents of the titile to the goods and sells them either himself or
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through an agent, the buyer who acts in good faith and without notice of any lien or other right of
the original seller in respect of the goods gets a good title
Ex: A bought some furniture on hire – purchase, the ownership to pass to him on the payment of the last
installment. A sold the furniture to B before paying the last instalment. A sold the furniture to B before
paying the last instalment. B purchased the furniture bona-fide. Held, B having bought in good faith,
had obtained a good title to the furniture.
7.) Sale by an unpaid seller:
Where an unpaid seller who has exercised his right of lien or stoppage in transit re-sells the goods,
the buyer acquires a good title to the goods as against the original buyer.
8.) Exceptions in other acts like Indian Contract Act 1872, under a sale by finder of lost goods.m A sale
by a pawnee or pledgee or sale by sale by official receiver or official assignee.
6. PERFORMANCE OF THE CONTRACT OF SALE:
Duties of the seller and the buyer:
It is the duty of the seller to deliver the goods & of the buyer to accept and pay for them, in accordance
with the terms of the contract of sale.
Unless otherwise agreed, delivery & payment of price are concurrent conditions. In other words, no
delivery need be given, if the buyer is not willing to pay the price, nor need the buyer pay the price,
unless the seller us ready and willing to give the delivery.
Delivery:
It is defined in the act as “a voluntary transfer of a possession from one person to another.” Delivery of
goods may, therefore be;
1.) Physical or actual delivery: The physical possession of the goods is handed over by the seller to
the buyer.
2.) Symbolic Delivery: The deliver is made by delivering some symbol. Ex: Delivery of a railway
receipt properly endorsed.
3.) Constructive Delivery: There is only an acknowledgement by the person in possession of goods
that he holds them on behalf of another.
Rules Regarding Delivery:
1.) Delivery of Part of Goods: Part of goods sold may amount to delivery of the whole if it is so
intended and agreed. But, however, where the part is intended
2.) to be severed from the whole, part delivery does not amount to delivery of the whole.
3.) Unless agreed otherwise, the seller is not bound to deliver the goods, the buyer applies for
delivery.
4.) Place of Delivery: Where at the place at which delivery of the goods is to take place is specified
in the contract, the goods must be delivered at that place during business hours on a working
day. Where there is no specific agreement as to place, the goods sold are to be delivered at the
place at which they are at the time of sale.
5.) Time of Delivery: When under the contract of sale, the seller is bound to sell the goods to the
buyer, but no time for sending them is fixed, the seller is bound to send them within a reasonable
time. What is a reasonable time is a question of fact.
6.) Cost of Delivery: Unless otherwise agreed, all expenses of and incidental to the making of
delivery are borne by the seller, but all expenses of and incidental to obtaining of delivery are
borne by the buyer.
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7.) Delivery of Wrong Quantity: Where the seller delivers to the buyer a quantity of goods, less that
he contracted to sell, the buyer may reject them. But, if the buyer accepts the goods delivered he
should be required to pay for them at the contracted rate. Where a larger quantity is delivered,
the buyer may accept the goods included in the contract and reject the rest or he may reject the
whole. If the buyer accepts the whole of the goods so delivered, he shall pay for them at the
contract rate.
8.) Installment Deliveries: The buyer is not bound to accept delivery by installment, unless
otherwise agreed.
9.) Delivery to the carrier or wharfinger: Delivery of the goods by the seller to a carrier for
transmission to buyer or to wharfinger for safe custody is prima facie deemed to be a delivery of
the goods to the buyer, unless the right of disposal has been recovered by the seller. The seller is
bound to make with the carrier such a contract of carriage as properly protects the interest of the
buyer. If he fails to do so, he is liable in damages to the buyer.
10.) Liability of the buyer: When the seller is ready and willing to deliver the goods and
requests the buyer to take delivery and buyer does not within a reasonable time after such
request take delivery of the goods, he is liable to the seller for any loss occasioned by his neglect
or refusal to take delivery.
11.) Where goods are delivered to a buyer, which he has not previously examined, he is not
deemed to have accepted them, unless he has reasonable opportunity of examining them and
ascertaining whether they conform to the contract.
7. UNPAID SELLER AND HIS RIGHTS:
Who is an unpaid seller?
A seller is deemed to be an unpaid seller when –
1.) The whole of the price has not been paid or tendered;
2.) A bill of exchange or other negotiable instrument has been received as a conditional payment & the
condition on which it was received has not been fulfilled by reason of dishonor of the instrument.
The following conditions must be fulfilled before a seller can be deemed to be an unpaid seller:
1.) He must be unpaid and the price must be due.
2.) He must have an immediate right of action for the price.
3.) A bill of exchange or other negotiable instruments was received but the same has been
dishonored. When payment is made by a negotiable instrument it is usually a conditional
payment, the condition being that the instrument shall be duly honored. If the instrument is not
honored the seller is deemed to be an unpaid seller.
Rights of an unpaid seller:
These may be broadly classified under 2 heads
1.) Rights against goods
2.) Rights against the buyer personally.
1.) Rights against goods: An unpaid seller has the following rights against the goods
a. Right of Lien
b. Right of Stoppage in transit.
c. Right of Resale.
Lien of Goods: The word “lien” means to retain possession of. An unpaid seller who is in possession of
goods, is entitled to retain them in his possession until payment or tender of the price in the following
cases, namely:
a.) Where the goods have been sold, without any stipulation as to credit.
b.) Where the goods have been sold on credit, but the term of credit has expired.
c.) Where the buyer becomes insolvent.
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Lien can be exercised only for the non-payment of the price, and not for any other charges due against
the buyer.
Ex: The seller cannot claim lien for go down charges for storing the goods in exercise for his lien of the
rights.
Termination of Lien:
An unpaid seller, looses his lien in the following cases:
1.) When the seller delivers the goods to a carrier for the purpose of transmission to the buyer,
without reserving a right of disposal of the goods to himself
Ex: Seller take Railway Receipt in the name of the buyer or his carrier.
2.) Where a buyer or his agent lawfully obtains the possession of the goods
3.) By waving the right of lien.
4.) Where he ascends to a sub sale by the buyer.
5.) Where he takes a security from the buyer for the payment of the price, in place of his lien
2.) Rights of stoppage in transit
The right of stoppage in transit is a right of stopping the goods while they are in transit, resuming
possession of the goods as long as they are in the course of transit, & retaining possession until payment
or tender of the price.
3.) Right of Re-sale:
The unpaid seller can re-sell the goods :
1) Where the goods are of perishable nature.
2) Where the seller expressly reserves theright of resale in case the buyer shoul make default.
3) Where he gives notice to buyer of his intention to resale the goods & the buyer does not within a
reasonable time pay or tender the price.
Rights of an unpaid seller against the buyer personally:
These are the rights, which an unpaid seller may enforce against the buyer personally. These rights of
the seller against the buyer personally are called Rights in personam as against the rights in rem( i.e
rights against the goods & are in addition ti his rights against the goods. The rights in personam are
explained as follows:
1) Suit for Price
2) Suit for damages for non-acceptance.
3) Repudiation of contract before due date.
4) Suit for interest
14

CASE NO-1
G. Gangi Reddy Vs. Depot Manager/Incharge, IML Depot, Karimnagar and others
LegalCrystal Citation : legalcrystal.com/432414
Court : Andhra Pradesh
Reported in : 2001(2)ALD590; 2001(3)ALT686
Judge : S.B. Sinha, CJ and ; S.R. Nayak, J.
Subject : Commercial
Decided On : Feb-13-2001
Acts : Constitution of India - Article 226; Indian Contract Act, 1872; Sale of Goods Act, 1930
Case Number : WA No. 639 of 1997
Appellant : G. Gangi Reddy
Respondent : Depot Manager/Incharge, IML Depot, Karimnagar and others
Advocate for Appellant : Mr. I. Agareddy, Adv.
Advocate for Respondent : Mr. G. Manohar, Adv.
Excerpt:
Constitution - writ jurisdiction - Article 226 of Constitution of India - conditions of contract cannot be
enforced by way of writ proceedings - direc ..... 8. It is now a well-settled principle of law that no
equitable relief can be granted where the party's hands are tainted.
Judgment:ORDER
S.B. Sinha, CJ
1. This appeal is directed against an order dated 18-12-1996 passed by a learned single Judge of this
Court in WP No.15028 of 1996 whereby and whereunder the writ petition filed by the appellant herein
was dismissed.
2. In the writ petition, the petitioner claimed for the following reliefs:
'For the reasons stated in the accompanying affidavit it is prayed that this Hon'ble Court may be pleased
to issue any appropriate writ, order or direction preferably a writ in the nature of mandamus declaring
15

the action of the respondents 1 and 3 in not making payment to the petitioner of the amount of
Rs.78,800/- as directed by respondent No.2 through letter dated 2-4-1994 as illegal and arbitrary and
consequently direct the respondents to pay the said amount with interest at the rate of 15% from
December, 1993 and pass such other and further orders as the Hon'ble Court may deem fit and proper in
the circumstances of the case'.
3. Before the learned single Judge, as also before us, the contention raised on behalf of the appellant is
that the competent authority meaning thereby the General Manager (Excise), having himself instructed
the Depot Manager (Arrack) for releasing of a sum of Rs.78,800/- in terms of his letter dated 2-4-1994,
the respondents herein could not have raised a contention for the first time in the writ petition that a
certificate was falsely issued by the ADMin connivance of the petitioner. According to the learned
Counsel the purported fraud alleged at the hands of the petitioner could not have been taken recourse to
for the purpose of obtaining the relief to the writ petitioner in public law remedy having regard to the
fact that prior thereto the principles of natural justice had not been complied with.
4. There cannot be any doubt that enforcement of the conditions of contract is not permissible in a writ
proceeding. The petitioner claimed the refund of the said amount inter alia on the ground that the same
arose out of a breach of contract. In a given case, a writ Court may direct payment of the amount despite
a general bar to the effect that normally no money claim can be adjudicated upon in writ proceedings,
when the concerned authorities make a clear admission in this regard.
5. The question before the learned single Judge, as also before us, is as to whether having regard to the
averments made in the counter-affidavit by the respondents herein, the writ petition could have been
allowed.
6. The answer to the aforementioned question must be rendered in negative.
7. The Court in exercise of its jurisdiction under Article 226 of the Constitution of India would consider
the materials on record which are brought before it and would not proceed to ignore it simply on the
ground that a purported admission as regards the alleged entitlement to the said amount has been
accepted by the respondents inasmuch as thereafter a fraud has been detected. If the direction issued by
the General Manager (Excise) was based on the certificate of the ADM, which according to the
respondents was falsely procured, the entire edifice of the writ petition fails.
8. It is now a well-settled principle of law that no equitable relief can be granted where the party's hands
are tainted. So far as the allegations of commission of fraud or fabrication of a false certificate is
concerned the same may involve a disputed question of fact. Such a disputed question of fact can be
adjudicated upon only in a properly constituted civil suit and not in any proceedings. In State of U.P. v.
Bridge and Roof Co. (India) Ltd., : AIR1996SC3515 , B.P. Jeevan Reddy, J., speaking for the Bench
held:
'15. In our opinion, the very remedy adopted by the respondent is misconceived. It is not entitled to any
relief in these proceedings i.e., in the writ petition filed by it. The High Court appears to be right in not
pronouncing upon any of the several contentions raised in the writ petition by both the parties and in
merely reiterating the effect of the order of the Deputy Commissioner made under the proviso to Section
8D(1).
16. Firstly, the contract between the parties is a contract in the realm of private law. It is not a statutory
contract. It is governed by the provisions of the Contract Act or, may be, also by certain provisions of
16

the Sale of Goods Act. Any dispute relating to interpretation of the terms and conditions of such a
Contract cannot be agitated, and could not have been agitated, in a writ petition. That is a matter either
for arbitration as provided by the contract or for civil Court, as the case may be. Whether any amount is
due to the respondent from the appellant-Government under the contract and, if so, how much and the
further question whether retention or refusal to pay any amount by the Government is justified, or not,
are all matters which cannot be agitated in or adjudicated upon in a writ petition. The prayer in the
writpetition viz., to restrain the Government from deducting particular amount from the writ petitioner's
bill (s) was not a prayer which could be granted by the High Court under Article 226. Indeed, the High
Court has not granted the said prayer.
17. Secondly, whether there has been a reduction in the statutory liability on account of a change in law
within the meaning of sub-clause (4) of Clause 70 of the Contract is again not a matter to be agitated in
the writ petition. That is again a matter relating to interpretation of a term of the contract and should be
agitated before the arbitrator or the civil Court, as the case may be. If any amount is wrongly withheld
by the Government, the remedy of the respondent is to raise a dispute as provided by the contract or to
approach the civil Court, as the case may be, according to law. Similarly if the Government says that
any over-payment has been made to the respondent, its remedy also is the same'.
9. I laving regard to the aforementioned authoritative pronouncement of the Apex Court, we are of the
opinion that no relief can be granted to the appellant herein. The writ appeal is devoid of merit and the
same is accordingly dismissed. No order as to costs.
CASE NO-2
The Fertilizers Corporation of India Ltd. Vs. The Tata Iron and Steel Co. Ltd.
Court : Punjab and Haryana
Reported in : AIR1965P& H143
Judge : Shamsher Bahadur, J.
Decided On : Aug-19-1964
Acts : Indian Sale of Goods Act - Sections 39; Indian Contract Act - Sections 91
Case Number : Civil Revision No. 444 of 1963
Appellant : The Fertilizers Corporation of India Ltd.
Respondent : The Tata Iron and Steel Co. Ltd.
Cases Referred :
In General Papers Ltd. v. Pakkir Mohideen and Bros.
Excerpt:
' (6) In my opinion, the Courts at Hoshiarpur clearly have jurisdiction to try the suit as part of the cause
of action arose there.
17

Judgment:ORDER
(1) This rule at the instance of the Fertilizer Corporation of India, Nangal, is against the appellate
judgment of the Senior Subordinate Judge, Hoshiarpur, who affirmed the decision of the trial Judge
returning its plaint for presentation to the proper Court.
(2) The petitioner is plaintiff field a suit for recovery of its Rs.897.26 P. against two defendants, the Tata
Iron and Steel Company Limited, Calcutta, and the Union of India through the General Manager,
Northern Railways. The second defendant was later dropped and the suit proceeded only against the
respondent Tata Iron and Steel Company. The suit was founded on the purchase order of 13th of
January, 1959, in pursuance order of which the plaintiff asked the respondent to supply certain goods
through the second defendant as carriers. The goods consisting of M. S. rounds and angles were to be
handed over to the railway authorities at Tata Nagar for despatch to Nangal Dam railway station for
delivery to the plaintiff against railway receipt No. 066811 of 21st of February, 1959. According to the
invoice, the consignee is 'Tata Iron and Steel Company Limited, Nangal Dam Railway Station'. The
freight was pre-paid and the invoice was addressed to the Chief Accounts Officers, Nangal Fertilizers
through the State Bank of India, Nangal Township. According to the assertions made in the plaint the
delivery of the goods was taken by the Nangal Fertilizers Corporation on 7th of March, 1959, after
making full payment. The delivery took place at Nangal and the payment was also made to the seller
through the State Bank of India at Nangal.
(3) The petitioner complains of having received short supply. Whereas in the railway receipt it was
mentioned that 543 pieces were despatched, actually 560 were received and the bill was, however, for
577. After prolonged correspondence, the plaintiff brought a suit for recovery of a sum of Rs. 897-26 P.
on account of short supply of 17 pieces.
(4) On behalf of the defendant, a plea was raised that the Hoshiarpur Court had no jurisdiction to try the
suit and this question has been tried as a preliminary issue. The trial Judge and the lower appellate Court
in agreement with him have held that the delivery having been made to the carrier, the property in the
goods passed to the buyer at Tata Nagar and no part of the cause of action arose at Hoshiarpur where the
suit was brought. Reliance has been placed on sub-section (1) of section 39 of the Indian Sale of Goods
Act which provides that:
'Where, in pursuance of a contract of sale, the seller is authorised or required to send the goods to the
buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of
transmission to the buyer........is prima facie deemed to be a delivery of the goods to the buyer'
(5) The applicability to sub-section (1) of section 39 could have been placed beyond dispute if the
transaction had consisted only of the delivery of the goods to the railway authorities at Tata Nagar for
delivery to the petitioner. This is not, however, so. The invoice and the railway receipt show that the
payment was to be made at Nangal through the State Bank of India and delivery was also to be made
there, the goods being consigned in the name of the seller. Under the column 'consigned to ' in the
invoice, it is mentioned thus: 'Messrs. Tisoo Limited Nangal Dam Railway Station'. It cannot be said
that the delivery in the instant case was made to the railway for delivery to the buyer.
The railway administration as carrier was to transmit the goods from Tata Nagar to Nangal Dam, but
what is of significance to note is that the consignment is despatched to Nangal Dam railway station
where delivery is to be made against payment through the State Bank of India. In my opinion, the
authority on which reliance has been placed by the learned counsel for the respondent cannot be invoked
in support of the proposition that in such circumstances the Court at Hoshiarpur had no jurisdiction to
18

try the suit. In this authority of Martineau J. in Firm Nand Lal Das Mal v. Firm Mian Muhammad Ali
Ali Bhai, AIR 1922 Lah 474
(2) the delivery was made by the seller of the goods sold, to the railway company to be despatched to
the buyer and it was held that it operated as delivery to the buyer under section 91 of the Contract Act,
which is in the same terms as section 39(1) of the Sale of Goods Act. The facts of that case were
different and there is hardly any discussion in the short judgment of Martineau I
Mr. Jain for the petitioner, has placed reliance on two bench authorities which are more to the point. In
General Papers Ltd. v. Pakkir Mohideen and Bros., AIR 1958 Mad 482 it was held by Chief Justice
Rajamannar and Panchapakesan Ayyar J. that where the goods are despatched from Madras to Tenkasi,
where the amount is actually collected from the buyer, the cause of action arose at Tenkasi where the
payment is to be made. In that case, the prices were 'ex-godown Madras' and the goods were to be
despatched by railway to Sattur railway station. The entire price and charges were paid by the buyer at
Tenkasi. The petitioner in the present case actually paid the price at Nangal Dam and the goods were
taken against payment. This was a part of the cause of action and the suit was maintainable at
Hoshiarpur. Reference may also be made to Firm Dessee Veerabhadrayya Venkata Subbayya v,
Biswanath Jagdish Prasad, AIR 1962 Andh Pra 338 which is a judgment of Chief Justice P. Chandra
Reddy and Jaganmohan Reddy J. It was held in this case that
'the performance of the contract is part of the cause of action and a suit in respect of breach can be field
at the place where the contract should have been performed or its performance completed. In cases of
contract of sale of goods (1) the place where the goods have to be delivered, or (2) the place where the
payment of money towards the price of the goods is to be made, is the place of performance and the
Court of that Place will have jurisdiction to entertain the suit in respect of non-delivery of goods in
accordance with the contract.'
(6) In my opinion, the Courts at Hoshiarpur clearly have jurisdiction to try the suit as part of the cause of
action arose there. This petition will, accordingly, be allowed and the rule made absolute. The costs
would abide the event. The counsel for the parties have been directed to appear before the trial Judge on
21st of September, 1964.
(7) Revision allowed and Rule made absolute.
CASE NO-3
Sramajibi Stores Vs. Union of India
Court : Delhi
Reported in : AIR1982Delhi76; 20(1981)DLT459
Judge : Prakash Narain, C.J.
19

Decided On : May-08-1981
Acts : Sale of Goods Act, 1930 - Sections 64A
Case Number : First Appeal No. 48 of 1973
Appellant : Sramajibi Stores
Respondent : Union of India
Advocates: R.S. Oberoi,; A.B. Dayal and; R.K. Anand, Advs
Cases Referred :
Ltd. v. Pitty
Excerpt:
The appellant could not supply coats and capes which were merely waterproofed but had to supply
waterproofed coats with and without capes, as well as coats, made from Cotton Canvas of a particular
kind. Unreal interpretation would defeat the object of a provision like Section 64A of the Sale of Goods
Act.
Judgment:
Prakash Narain, C.J.
(1) These appeals- come before me on a difference of opinion between my learned brothers Sachar, J.
and Kumar, J.
(2) The appellant had entered into a contract with the respondent to supply the following:
'(A)Gapes waterproofed, with detachable hoods made from Cotton Canvas special (Chemically)
waterproofed mineral Khakhi. (b) Coats waterproofed, with detachable hoods made from cotton canvas,
special (Chemically) waterproofed, mineral Khakhi. (e) Coats, waterproof (without Hood), made from
cotton canvas, special (Chemically) waterproofed. Dyed Mineral Khakhi.'
(3) Subsequent to the contract being entered upon, it is not disputed, excise duty payable on cotton
canvas was increased. The appellant, thereforee, claimed a further sum of Rs. 2,21,695. 36 on account of
increase in costs of production of the above articles. The respondent disputed its liability to pay the
amount. Accordingly, the matter was referred to arbitration in terms of the arbitration agreement
between the parties. Shri P. H. Ramchandani, the sole arbitrator, by an award dated January 29, 1972
rejected the claim of the appellant observing that the duty was increased on the raw material, that is, on
cotton canvas and not on the finished goods which were required to be supplied under the contract. He
further held that the appellant could not take advantage of section 64A of the Sale of Goods Act, 1930.
The respondent moved an application under Section 14 of the Arbitration Act, 1940 for filing of the
award and making the same a rule of the Court. The appellant filed objections against the award. These
two matters were registered as two suits on the Original Side of this Court. The learned Single Judge by
his judgment dated April 30, 1973 made the award a rule of the Court and passed a decree in terms
thereof. He dismissed the objections Filed by the appellant. In consequence, the appellant filed two
appeals F.A.O. (OS) 47 and F.A.O.(OS) 48 of 1973. These came up for hearing before Sachar and
Kumar, JJ. As noticed earlier, the two learned Judges have given differing opinions. Sachar, J. has held
20

that Section 64A of ihe Sale of Goods Act would not be attracted and the view expressed by learned
Single Judge was correct. Kumar, J on the' other hand, has taken the view that it would be attracted.
(4) Section 64A of the Sale of Goods Act reads as under :-
'(A)Unless a different intention appears from the terms of the contract, in the event of any tax of the
nature described in Subsection (2) being imposed, increased, decreased or remitted in respect of any
goods after the making of any contract for the sale or purchase of such goods without stipulation as to
the payment of lax where tax was not chargeable at the time of the making of the contract, or for the sale
on purchase of such goods tax, paid where tax was chargeable at that time,-
(A)if such imposition or increase to takes effect that the tax or increased tax, as the case may be) or any
part of such tax is paid or is payable, the seller may add so much to the contract price as will be
equivalent to the amount paid or payable in respect of such tax or increase of tax, and he shall be
entitled to be paid and to sue for and recover such addition ; and
(B)if such decrease or remission so takes effect that the decreased tax only, or no tax, as the case may
be, is paid or is payble, the buyer may deduct so much from the contract price as will be equivalent, to
the decrease of tax or remitted tax, and he shall not be liable to pay, or be sued for, or in respect of, such
deduction.
(2)The provisions of Sub-section (1) apply to the following taxes, namely :-
(A)any duty of customs or excise on goods ; (b) any tax on the sale or purchase of goods.
(5) Both my learned brothers are agreed that Section 15 of the Sale of Goods Act would govern the
contract in question. The goods agreed to be sold by the appellant were goods which were to be
identified by description. It is, thereforee, necessary to keep in mind the description of the goods in the
contract. What is agreed to be sold by the appellant to the respondent are the items reproduced above.
The appellant could not supply coats and capes which were merely waterproofed but had to supply
waterproofed coats with and without capes, as well as coats, made from Cotton Canvas of a particular
kind. If the appellant merely supplied waterproofed coats and capes, the goods could rightly be rejected.
He had to supply water-proofed coats and capes made of cotton canvas, special (Chemically) treated and
made waterproofed by this Chemical treatment. Coats and capes of any other material which may be
waterproofed could have been rejected as not answering to the description of the goods agreed to be
sold. thereforee, though cotton canvas, special (Chemically) waterproofed was no doubt the raw
material from which the coats and capes had to be fabricated only these coats and capes which were
fabricated from cotton canvas, special (Chemically) waterproofed could answer the description of the
contracted goods. In such a situation if the excise on raw material went up, in my opinion, it could not
be said that Section 64A of the Sale of Goods Act was not attracted. One may look at it from another
point of view. Suppose the ban was imposed on production of cotton canvas, special (Chemically)
waterproofed, in such a situtation, it could not be said that the contract had to be performed as there was
no ban on the production of coats and capes made of cotton canvas of that type. The contract in such an
event would be frustrated. If that be the correct proposition, then increase in the excise duty on the
principle or dominent raw material would certainly attracted Section 64A of the Sale of Goods Act.
(6) In interpreting statutes, one does not have to give a literal interpretation. The object of the statute has
to be looked into. Unreal interpretation would defeat the object of a provision like Section 64A of the
Sale of Goods Act. The interpretation has to be purpose-full.
21

(7) Learned Counsel for the respondents urges that the contract was for supply of nine items, each made
of different materials. It may be so. We are concerned here only with three items, mentioned above.
(8) Reliance was placed on the Single Bench decision of the Bombay High Court in Central Hindusthan
Italian Trading Co. {private) Ltd. v. Pitty . Brothers (private) Ltd. : AIR1962Bom222 . That was a case
in which clause (b) of Sub-section (1) of Section 64A of the. Sale of Goods Act came up for
construction. It only laid down that it is not appropriate or possible to give to the words (deduct and
'deduction' in Sub-section (b) of Section 64A (should be clause (b) of Sub-section (1) of Section 64A), a
meaning which relates to the physical act of deduction at the time of payment of price. As the report
does not reproduce the entire judgment, it is not possible to take much assistance from it, as the facts are
not known.
(9) In my opinion keeping in view Article 14 of the Constitution, a purposeful or a fair approach has to
be adopted in contracts between the State and citizens. In any case the purpose for which Section 64A
was enacted has to be kept in view. The purpose obviously was that increase or decrease in duty should
be taken not of in the case of contracts concluded prior to the increase or decrease. No party should be
made to unnecessarily gain or suffer on account of State action in increasing or decreasing duty. I,
thereforee, agree with the view expressed by my learned brother Kumar, J. and will, thereforee, accept
the appeals. The result would be that the award will be set aside and the objections filed by the appellant
would be accepted.
(10) The case will now go back to the Division Bench of Sachar, and Kumar, JJ. to dispose of the
appeals in the light of the opinion given by m
CASE NO-4
M/s. Goodwill Super Markets Vs. Indian Railway Catering & Tourism Corporation Ltd.
Court : Delhi
Judge : VALMIKI J. MEHTA
Decided On : Mar-12-2014
Appellant : M/s. Goodwill Super Markets
Respondent : Indian Railway Catering & Tourism Corporation Ltd.
Judgment:
* IN THE HIGH COURT OF DELHI AT NEW DELHI + FAO No.74/2014 12th March, 2014 % M/S.
GOODWILL SUPER MARKETS ..... Appellant Through: Mr. Siddharth Joshi, Advocate. Versus
INDIAN RAILWAY CATERING & TOURISM CORPORATION LTD. ..... Respondent Through:
CORAM: HON’BLE MR. JUSTICE VALMIKI J.MEHTA To be referred to the Reporter or not?.
VALMIKI J.
MEHTA, J (ORAL) C.M. No.4664/2014 (exemption) 1. Exemption allowed subject to just exceptions.
C.M. stands disposed of. C.M. No.4667/2014 (condonation of delay in re-filing) 2. For the reasons
stated in the application, delay of 57 days in re- filing the appeal is condoned. C.M. stands disposed of.
+ FAO No.74/2014 and C.M. Nos.4665/2014 (stay) and 4666/2014 (filing of additional documents) 3.
22

This first appeal is filed under Section 37 of the Arbitration & Conciliation Act, 1996 (hereinafter
referred to as ‘the Act’) against the impugned order of the court below dated 7.9.2013 by which
objections filed by the appellant under Section 34 of the Act were dismissed.
4. The respondent herein i.e Indian Railways Catering and Tourism Corporation Ltd was the claimant in
the arbitration proceedings. The claim as filed by the respondent in the arbitration proceedings was
essentially a claim for balance due on account of stocks of “Rail Neer” supplied by the appellant to the
respondent. The basic claim of the respondent was stated in para 14 of the claim petition and which was
that “Rail Neer” sold for the year 2007-08 was of the amount of Rs.50,41,825/but amount received was
only Rs.38,66,440/- and therefore the balance amount of Rs.11,75,385/- was said to be due and payable
and for which the main claim petition was filed.
5. The appellant herein appeared in the arbitration proceedings and contested the claim. The appellant
also filed the counter claim. However, when we refer to the written statement filed by the appellant, the
specific figures of amounts due to the respondent/claimant was of Rs.11,75,385/- on account of the
figure of sales made and payments made have not been disputed. In para 14 of the written statement
only adjustments have been prayed for against the respondent/claimant, and therefore surely onus was
upon the appellant herein to make good its case. Both the arbitrator and the court below noticed the
aspects which were the contentions of both the parties and have held that the claim of the
respondent/claimant of Rs.11,75,385/- being the balance due on account of sale of stocks was due.
6. Before proceeding further, it is relevant to note that scope of hearing objections under Section 34 of
the Act is limited. The aspects of appreciation of evidence and conclusions to be derived at from the
record falls in the realm/jurisdiction of the Arbitrator and the court hearing objections under Section 34,
and much less the appellate court hearing the appeal against an order dismissing the objections, cannot
interfere unless the findings are against the law (Section 28(1)(a) of the Act) of the land or against the
contractual provisions(Section 28(3) of the Act) or are totally perverse. When on the basis of evidence
on record, a particular finding is arrived at and two views are possible of the situation, the Award cannot
be said to be illegal or violative of the contract or perverse and nor can the order which dismisses the
objections under Section 34 against the Award be said to be illegal.
7. A reference to the objections filed shows that essentially what was contended on behalf of the
appellant was that the arbitrator has misread the evidence for arriving at the conclusion for passing of
the Award, and the claim petition of the respondent should not have been allowed. These types of
objections do not fall in the scope of Section 34 of the Act.
8. Also, though counsel for the appellant argues before me that appellant wanted to lead evidence with
respect to its defence/counter claims, however when a query was put to show as to whether such a
prayer was made before the arbitrator or even in the objections filed under Section 34, nothing to this
effect could be pointed out to this Court. In fact, as already stated above, objections filed by the
appellant under Section 34 show that the conclusions of the arbitrator drawn from the evidence on
record were/are being challenged.
9. The onus to prove the adjustments claimed by the appellant was upon the appellant and the appellant
failed to do so by leading of necessary evidence and therefore there is no illegality or perversity in the
action of the arbitrator in awarding the amount claimed by the respondent herein being the balance due
on the sale of stocks.
10. In view of the above, there is no merit in the appeal, and the same is therefore dismissed, leaving the
parties to bear their own costs. MARCH12 2014 Ne FAO No.74/2014
23

CASE NO-5
Hindustan Steel Limited Vs. The Secretary-cum-Commissioner, Water Resources Department,
Government of Bihar and Ors.
Court : Patna
Judge : S. Nayer Hussain, J.
Subject : ;Civil
Decided On : May-10-2005
Acts : Sale of Goods Act, 1930 - Sections 39 and 39(1); Code of Civil Procedure (CPC) (Amendment)
Act, 2002 - Sections 20
Case Number : Civil Revision No. 1669 of 2000
Appellant : Hindustan Steel Limited
Respondent : The Secretary-cum-Commissioner, Water Resources Department, Government of Bihar
and Ors.
Advocate for Appellant : Pushkar Narain Shahi and Ram Vinay Sharma and Ritesh Kumar No. 1,
Advs.
Advocate for Respondent : A.P. Jittu, SC II and Binod Kumar, JC to SC II
Disposition : Revision allowed
Excerpt:
Sale of Goods Act, 1930, Sections 20 and 39(1) - Territorial jurisdiction-Money suit rejected for lack of
territorial jurisdiction--Submission by peti ..... In this connection he relies upon several decisions of this
Court as well as of the Hon'ble Supreme Court and Privy Council, namely, AIR1966Pat346
,AIR1979Pat146 ,AIR1990SC1753 and AIR 1938 Privy Council 152, which held that the goods passes
from consigner to the consignee as soon as goods are loaded for consignment. He further contends that
Section 39(1) of the Sale of Goods Act clearly shows that responsibility of the seller is not over by
loading the goods for consignee. Since the matter is well settled that the possession of goods passes
from consigner to consignee as soon as goods are loaded, hence in the said circumstances, the delivery
of goods had taken place at Dhanbad. Therefore, the suit was clearly not maintainable at Supaul and the
learned Subordinate Judge I, Supaul had no territorial jurisdiction to hear the said suit. The learned
Court below has completely overlooked the said facts and circumstances as well as provisions of law
and has rejected the defendant's petition merely by holding that the said issue will be decided at the time
of final adjudication. In my view, there is no occasion for continuing the suit as the Court had no
territorial jurisdiction to hear it and the learned Court below itself has held that the suit is concerned
with the interest of public at large, therefore, it requires more attention of the Court and hence in the
24

interest of public at large the learned Court below should not have allowed the suit to continue knowing
full well that it was not maintainable there.
Judgment:
S.N. Hussain, J.
1. Heard learned counsel for the parties.
2. The petitioner is a defendant in Money Suit No. 7 of 1996, which was filed by the plaintiffs-opposite
parties in the Court of the learned Subordinate Judge-l, Supaul for realisation of certain amounts from
the defendant. The petitioner is aggrieved by order dated 25.3.2000 passed in the aforesaid suit, by
which the learned Subordinate Judge I, Supaul rejected the defendant's petition for returning the plaint
to the plaintiffs after holding that the suit was not maintainable at Supaul.
3. The contention of the learned counsel for the petitioner is that the defendant-petitioner is a
Government of India Enterprise having its office at Calcutta and its branch offices at Dhanbad and
Patna. He further contends that an order was placed by the Director, Purchase and Transport,
Government of Bihar to the defendant in 1973 for supply of 4,600 metric tonnes steel sheet piles, out of
which 1200 metric tonnes was for Supaul as detailed in the plaint. It was further stated that in 1976 also
order was placed for supply of 375 metric tonnes of steel rods for Supaul. He further claimed that the
said suit was filed for a money decree with respect to short supply of 133.038 metric tonnes regarding
the first order of 1973 and 36.100 metric tonnes with regard to second order of 1976 and hence a money
decree of Rs. 23,32,097.10 was claimed alongwith some cost etc.
4. Learned counsel for the petitioner submits that he filed a petition dated 27.5.1997 for returning the
plaint to the plaintiffs as the suit was not maintainable at Supaul. He further contends that the agreement
took place at Dhanbad and delivery of goods to the carrier was also made at Dhanbad, whereas payment
was made at Calcutta head office of the defendant. He also claimed that there is no office of the
defendants at Supaul, rather branch office with which the arrangement was made was at Dhanbad.
Learned counsel for the petitioner further submits that Section 39 of the Sale of Goods Act, 1930,
specifically provides that the delivery of goods to a carrier or a wharfinger is delivery of goods to the
buyer and hence the goods were delivered to the carrier at Dhanbad. In this connection he relies upon
several decisions of this Court as well as of the Hon'ble Supreme Court and Privy Council, namely, :
AIR1966Pat346 , : AIR1979Pat146 , : AIR1990SC1753 and AIR 1938 Privy Council 152, which held
that the goods passes from consigner to the consignee as soon as goods are loaded for consignment.
Learned counsel for the petitioner further contends that without considering the aforesaid facts and
circumstances as also provisions of law the learned Court below passed the impugned order, which is
illegal, arbitrary and perverse.
5. On the other hand, learned counsel for the opposite parties vehemently opposes the contention of the
learned counsel for the petitioner and submits that paragraph 23 of the plaint specifically shows that the
cause of action arose at Supaul where the goods were to be delivered and furthermore the payments for
the goods were made from Supaul by the Executive Engineer and the materials were also to be delivered
at Supaul. Hence, he submits that the suit was rightly filed at Supaul and the Court below had full
jurisdiction to decide the suit. He further submits that the defendant-petitioner deals with the business all
over the country and hence it cannot be said that his place of business is in a particular town or city. He
further contends that Section 39(1) of the Sale of Goods Act clearly shows that responsibility of the
seller is not over by loading the goods for consignee. Further contention of the learned counsel for the
opposite parties is that after Amendment of 2002 in the Code of Civil Procedure (hereinafter referred to
25

as 'the Code' for the sake of brevity) this civil revision is not maintainable. Hence, he submits that the
impugned order of the learned Court below is legal and proper and needs no interference.
6. After hearing the learned counsel for the parties and after perusing the materials on record, it is quite
apparent that the head office of the defendant-petitioner is Calcutta, whereas its branch office is at
Dhanbad.
Admittedly, the defendant has got no office at Supaul. Section 20 of the Code specifically provides that
every suit shall be instituted in a Court within the local limits of whose jurisdiction the defendant at the
time of commencement of the suit resides or carries on business there. The explanation of the said
section also provides that a corporation shall be deemed to carry on business at its sole or principal
office in India or in respect of any cause of action arising at any place where it has also a subordinate
office at such place.
7. In the aforesaid circumstances it is quite apparent that only those Courts have territorial jurisdiction to
hear the suit where either the defendant resides or the cause of action has arisen or where the agreement
had taken place. Here it is an admitted fact that the defendant neither resides, nor has any branch office
at Supaul. Furthermore, it is also apparent that although the decision was taken by the authorities
concerned at Patna but the agreement took place at Dhanbad and the delivery of goods were made by
the defendant to the carrier at Dhanbad. Since the matter is well settled that the possession of goods
passes from consigner to consignee as soon as goods are loaded, hence in the said circumstances, the
delivery of goods had taken place at Dhanbad. So far other responsibilities of the defendant-petitioner
are concerned, they cannot affect the specific provisions of Section 20 of the Code. Furthermore,
although the payments were made by the Executive Engineer, Supaul but the said payments were made
at Calcutta as is apparent from the plaint itself. Therefore, the suit was clearly not maintainable at
Supaul and the learned Subordinate Judge I, Supaul had no territorial jurisdiction to hear the said suit.
The learned Court below has completely overlooked the said facts and circumstances as well as
provisions of law and has rejected the defendant's petition merely by holding that the said issue will be
decided at the time of final adjudication. In my view, there is no occasion for continuing the suit as the
Court had no territorial jurisdiction to hear it and the learned Court below itself has held that the suit is
concerned with the interest of public at large, therefore, it requires more attention of the Court and hence
in the interest of public at large the learned Court below should not have allowed the suit to continue
knowing full well that it was not maintainable there.
8. In the said circumstances, the impugned order is set aside and the learned Court below is directed to
return the plaint to the plaintiffs for filling it before a Court of appropriate territorial jurisdiction.
9. With the aforesaid direction this civil revision is allowed
26

CASE NO-6
Kailash Sharma Vs. The Patna Municipal Corpn. and Ors.
Court : Patna
Judge : Navaniti Prasad Singh, J.
Subject : ;Contract
Decided On : Aug-21-2008
Acts : Sale of Goods Act, 1930 - Sections 13(2), 32, 42 and 59; Constitution of India - Article 14
Case Number : CWJC No. 9730 of 2006
Appellant : Kailash Sharma
Respondent : The Patna Municipal Corpn. and Ors.
Advocate for Appellant : Dineshwar Mishra and Surendra Mishra, Advs.
Advocate for Respondent : Ajay Bihari Sinha, Adv.
Disposition : Petition allowed
Excerpt:
In the said counter affidavit the only reason given is that the fogging machines supplied by the petitioner
have not been found fit for the purpose of killing the mosquitoes, as has been reported by the Assistant
Health Officer and they have recommended for return of those logging machines and as such payment
has not been made. 6. Better particulars were required by this Court for justifying the action from the
respondent- Corporation and as such a fresh counter affidavit was filed on 20.8.2008. To the said
counter affidavit Annexure A is the letter of the Assistant Health Officer, Bankipur Anchal, dated
7.3.2006. This is Annexure A to the counter affidavit and really disclosed the reason for non payment.
27

In this connection one may usefully refer to Section 13(2) of the Sale of Goods Act, 1930, which clearly
states that where there is a warranty then at best the purchaser can raise a claim for damage but can not
repudiate the transaction itself as is being sought to be done by the Corporation. The stand of the
Corporation is clearly arbitrary and is not sustainable in law. It was thus bound to make payment within
one week in the month of August, 2005 itself and not having done so, they have failed to abide by the
terms of agreement set up by themselves.
Judgment:
Navaniti Prasad Singh, J.
1. Petitioner is the Branch Manager and authorized representative of M/s Post Control (India) Pvt.
Limited.
2. Pursuant to notice inviting tender dated 21.4.2005 issued by the Patna Municipal Corporation for
supply of Fogging machine/Ultra Low Volume machine, for combating with mosquito menace in the
town. Petitioner responded. There were technical discussions, which were held on 9.5.2005. The
Technical Committee of the Corporation unanimously approved the purchase of Ultra Low Volume
Machine with remote control manufactured in Germany. The Corporation accepted the tender initially
for three machines with pending order for four more fogging machines alter evaluating the performance
of three machines. As per the said order dated 2.7.2005 the total payment of Rs. 17,04,4000/- for the
three machines were to ho made within one week from the date of supply of machines. It was further
ordered that the Company would arrange for installation and training of staff free of cost and the
delivery was to be made within one month of the order. The machines had to have a warranty of the
Company for a period of one year.
3. After receipt of the order on 13.8.2005, the three machines were duly delivered to the Corporation
and acknowledged by them. Bills regarding payments were then submitted and received by the
Corporation on 22nd August. 2005. Employees of the Company came and gave practical demonstration,
of all the three machines and all the three machines were found satisfactory and were accordingly
certified by representative of the Corporation also as would be evident from Annexure 4 the letter of the
Company to the Corporation bearing endorsement of the representative of the Corporation. Then starts
the problem.
28

4. On 27th December, 2005, after waiting for i.e. more than three months, for payment, which was due
within a week of delivery of the said machines, the Company wrote to the Corporation drawing its
attention and repeated requests were made but there was no response.
5. After the writ application was filed, a counter affidavit was filed by the Corporation on 25.6.2008
sworn by Additional Commissioner, Patna Municipal Corporation. In the said counter affidavit the only
reason given is that the fogging machines supplied by the petitioner have not been found fit for the
purpose of killing the mosquitoes, as has been reported by the Assistant Health Officer and they have
recommended for return of those logging machines and as such payment has not been made.
6. Better particulars were required by this Court for justifying the action from the respondent-
Corporation and as such a fresh counter affidavit was filed on 20.8.2008. To the said counter affidavit
Annexure A is the letter of the Assistant Health Officer, Bankipur Anchal, dated 7.3.2006. This is
Annexure A to the counter affidavit and really disclosed the reason for non payment. In the letter it is
admitted that the machines having been received, it were used in different areas and were not found
effective enough to kill the mosquitoes. It was opined that probably machines were fit for crop spraying
but not for urban uses. It may also to be noted that this is the first communication of this nature being
made after six months of having received the machines and used it, then in Annexure B, by the Assistant
Health Officer, New Patna Circle, here, the only problem, pointed out by him is that during its use a
pressure cap of the machine was blown out and as such he thought that machines have some defects and
should be returned. This communication is also of 9th March, 2006. This is followed by communication
of the Chief Engineer dated 1.6.2006 (Annexure-C to the counter affidavit) where again the only thing
that is said is that during working in one of the machines, pressure cup was blown away, which should
be replaced and the Corporation was contemplating of returning the machines. This communication is
nine months utter receiving and using the machines.
7. At the bar it is stated that whenever necessary, machines are even today being used. It is thus,
submitted that the Corporation has for public purpose out of public fund sought to purchase the
machines after satisfying itself of the technical requirements. Machines were ordered. After full
demonstration they were accepted on satisfactory performance having done. The respondents were
obliged to make payment, as agreed by themselves, within one week of delivery but the payments are
now being with-held on the ground that the Corporation is contemplating of returning the machines
though till date no formal communication has been made though machines were supplied in August,
2005 and we arc in August, 2008. It is thus submitted that the action of the respondents in with-holding
the payment is nothing but n pretence of an excuse, which is not sustainable in law. It is further
29

submitted that the respondents are functioning in public law domain and even otherwise arc required to
act in accordance with Article 14 of the Constitution. The action being per se arbitrary and
unreasonable, they are liable to be directed to abide by the terms of the contract and consequently make
payment as promised, for, State must do what is just and fair and not raise technical objection to defeat
the legitimate claims of the petitioner.
8. Heard learned Counsel for the parties and with their consent this writ application is being disposed of
at the stage of admission itself.
9. In my view, the facts are sufficienty enough to establish a contract and supplies pursuant to the
contract, which was duly accepted. Once supply was accepted then it does not lie with the Corporation
to repudiate the transaction and return the goods even if something goes wrong when it is duly covered
by warranty stipulation. Here I may point out that the very act of having received the machines, seen the
demonstration, used it and retained for a such long time is a valid acceptance within the meaning of
Section 42 of the Sale of Goods Act, 1930. Here I must refer to Section 32 of the Sale of Goods Act,
1930 first.
10. Payment and delivery are concurrent condition.-
Unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions, that
is to say, the seller shall be ready and willing to give possession of the goods to the buyer in exchange
for the price, and the buyer shall be ready and willing to pay the price in exchange for possession of the
goods.
10. In the present it would be seen that the law provides that payment and delivery are concurrent but
that is subject to an agreement otherwise. Here the agreement was for payment within one week of
delivery. What lo talk of one week, almost three years have gone bye, therefore, the first breach is by the
State itself.
11. Now one may refer to the alleged blowing up of a pressure cap. This does not by any stretch of
imagination show any defect in the machine. Pressure caps are generally safety device.
12. Learned Counsel for the petitioner submits that this is not covered by warranty and if the
Corporation wants replacement thereof, they were required to pay but could not under threat of
repudiating the transaction same itself fore the company to supply the same free of cost. In this
connection one may usefully refer to Section 13(2) of the Sale of Goods Act, 1930, which clearly states
30

that where there is a warranty then at best the purchaser can raise a claim for damage but can not
repudiate the transaction itself as is being sought to be done by the Corporation. This section has been
read with Section 59 of the Act. Relevant parts of Sections 13(2) and 59 are quoted hereunder:
Section 13(2)- Where a contract of sale is not severable and the buyer has accepted the goods or part
thereof, the breach of any condition to be fulfilled by the seller can only be treated as a breach of
warranty and not as a ground for rejecting the goods and treating the contract as repudiated, unless there
is a term of the contract, express or implied, to that effect.
Remedy for breach of warranty.- (1) Where there is a breach of warranty by the seller, or where the
buyer elects or is compelled to treat any breach of a condition on the part of the seller as a breach of
warranty, the buyer is not by reason only of such breach of warranty entitled to reject the goods; but he
may-
(a) set up against the seller the breach of warranty in diminution or extinction of the price; or
(b) sue the seller for damages for breach of warranty.
13. Thus even if it were a case of breach of warranty, which is pleaded against, the Corporation could
not repudiate the sale transaction itself.
14. Thus, on all counts the Corporation is at fault in law in not making the payment. The stand of the
Corporation is clearly arbitrary and is not sustainable in law. The facts do not support the respondents.
They are all pretence of an excuse to with-hold payment. Therefore, I have no hesitation in directing that
the Corporation is bound by the agreement propounded by themselves and bound by the terms thereof. It
was thus bound to make payment within one week in the month of August, 2005 itself and not having
done so, they have failed to abide by the terms of agreement set up by themselves. They are thus liable
to be directed to abide by the terms and consequently to make due payment forthwith. If payments arc
made within a period of one month from the date of production of a copy of this order before the
Municipal Commissioner, Patna, then the petitioner would give full due discharge in that regard but in
case payments are not made within one month then payments would be liable to be made along with
interest at the rate of 12% per annum from the date payments are due till the payments are made.
With the above observation and direction, this writ petition stands allowed.
31

CASE NO-7
Kalka Prasad Ram Charan v. Harish Chandra
January 24, 2012 · by Vivek Kumar Verma · in Contract Law, Sale of Goods. ·
Kalka Prasad Ram Charan v. Harish Chandra
AIR 1957 All 25
(Section 54(2) of Sale of Goods Act, Right of an unpaid seller, Right to lien)
FACTS:
Harish (H) entered into a contract for sale of 67 thans of silk with Kalka Prasad (K) (a partnership firm).
10 thans were delivered immediately. Delivery of the remaining, were not accepted by K. H sold off the
remaining thans and then notified the K about the sale. But due to a government control order the sale
fetched a price considerably less than what had been agreed between the two. H brought a claim to
recover the damages after deducting the price from the sale.
HELD
Trial Court: There was a contract. Case awarded to H without considering the question whether notice
of the intended sale was given to K.
HIGH COURT:
Contentions
H
1. Breach of contract, as delivery of the 57 thans not accepted and no payment made.
2. Two notices had been sent to K, one stating that if they did not accept the 57 thans they would
have to pay damages and second stating that the 57 thans had already been sold.
32

3. S.54 (2) of SOGA not applicable as a seller’s exercise of the right of lien begins when a demand
for delivery is made from him by the buyer and is followed by a refusal by him. But since this
did not happen so it was not an exercise of lien, as per section 47[1] of SOGA.
4. Buyer (K) falsely denied the formation of contract, so cannot claim relief under section 54(2).
K
1. Completely denied the existence of any such contract.
2. Claimed they were agents for H for the sale of the silk.
3. Since, no notice of the sale had been given to K therefore he was not liable to pay any damages.
(section 54 (2)[2] of SOGA)
Decision:
1. No notice was sent to K. H’s own munim contradicted him in his deposition, claiming that only
an oral statement was made, further H was unable to produce any secondary statement proving
his statement.
2. If lien would arise only when demand for the said goods is made then the interpretation of
section 47 would be very narrow. H had sold the thans in exercise of lien as per S.47 and that
S.54 (2) would be applicable. The mere fact that K made a false claim about not entering into a
contract is not sufficient to take the case out of the purview of section 54(2). Therefore seller
cannot claim any damages from buyer.
3. As 67 thans were determined by both parties, the goods were ascertained and were in a
deliverable state. Under Section 20[3], Sale of Goods Act the property in the goods passed to the
buyer as soon as the contract was made, so the seller was merely a bailee.
4. H should have sued under S.55[4], claiming the full amount, but now the court cannot award him
damages as that would give Harish a decree for an amount larger than what he had claimed. No
damages can be claimed for the 57 thans. For the remaining 10 thans, K is liable to pay with
interest.
33

CASE NO-8
Beale v. Taylor
Beale v. Taylor
[1967] 3 All ER 253
(Sale by Description, Section 13 of Sale of Goods Act)
FACTS:
Taylor published an advertisement to sell a car describing it as “white, 1961, herald convertible….”
Relying on that description Beale came to see the car. Since he did not have a licence, he did not
actually take a test drive, but just sat on the passenger side. After the test run he also saw a metallic disc
on the rear of the car with the figure 1200 on it. He bought the car believing it to be the 1961 model.
When he got the license he found the car unsatisfactory. On examination, the mechanic told him that the
car was made up of two cars welded together, the front portion was one 948 model while the rear
portion was the 1200 model. Further the car was found to be in unroadworthy and unsafe. Beale filed a
suit claiming damages.
ISSUE: Whether the transaction was sale by description?
CONTENTIONS:
Plaintiff
B is entitled to damages (1) for breach of the condition as implied by sec. 13[1](Car should correspond
with its description) (2) as money was paid on a consideration which had wholly failed (3) for breach of
an implied condition of roadworthiness.
34

Defendant
It was not a sale by description but sale of a particular car as seen, tried and approved. The buyer had
ample opportunity to inspect and test the car.
HELD
Trial Court: The sale was not a sale by description as B had seen, tried and approved the said car.
COURT OF APPEAL (SELLERS, J)
1. Both the parties are innocent because no one could see from an ordinary examination that it was
made of two cars welded together.
2. There is a sale by description even though the buyer saw the car before purchasing it. A thing is
sold by description as long as it is not sold merely as a specific thing but as something
corresponding to a particular description. The buyer relied in part on that particular description
in buying the car.
3. Ideally the buyer should have returned the car to the seller, but since this is not the case, B is
only entitled to the price difference(actual price-scrap value)
CASE NO-9
Digamber Pershad Kirti Prasad v. State of Uttar Pradesh and Ors.
Digamber Pershad Kirti Prasad v. State of Uttar Pradesh & Ors.
AIR 1996 All 1
(Section 2o and 26 of Sale of Goods Act)
FACTS:
Digambar Pershad, D got the contract of felling trees and collecting timber through an agreement to
sell. D commenced the work of felling trees. All the trees were felled, sawn and timber was collected at
35

a central point for transportations. D claimed that all precautions had been taken to avoid inflammatory
material around the storage area, and watchmen were also appointed to keep vigil. Fire broke out and
destroyed the timber. The state (S), however, demanded the amount due under the sale. D filed a writ
petition against the State of UP.
ISSUE: Whether the title of the goods, actually pass to D at the time of signing of the contract?
CONTENTIONS:
Plaintiff (D)
1. Title to the goods had not passed to D as the stage of removing timber had not reached.
2. There was no completed sale but only an agreement to sell as the payment was yet to be made.
3. Before the sale was completed, the subject-matter of the contract was destroyed by fire and,
therefore, the contract stood frustrated and hence D was not liable to pay.
Respondents (S)
1. The sale of the lot in question was completed the moment it was approved. D is liable to pay as
the fire had taken place after the contract had been concluded.
2. The conditions in the contract clearly mentioned that the property and the risk in the goods both
passed to D at the time of signing of the contract.
HELD (Petition DISMISSED)
1. (w.r.t 1st
issue) Just because the payment had not been made in full and timber was not actually
removed does not mean that transfer of property had not taken place. Transfer of property in the
goods depends on the facts and circumstances and intention of the parties to the contract. The
agreement was not subject to any future condition of the full payment, but the agreement became
a concluded contract when the auction was accepted by the competent authority and the
possession of the trees was transferred to D. Thus, Section 20[1] of SOGA would be applicable.
2. (w.r.t 2nd
contention of S) S. 26[2] of SOGA is applicable. The condition (21) clearly provided
that after 30 days from the date of acceptance of the contract or from the date of commencement
of work, (whichever is earlier) the buyer will be fully responsible for the damage caused to the
goods. Since this time had passed the risk was with the buyer.
LAW POINT(S)
36

To pass property in the goods actual delivery is not necessary, but if the goods are ascertained and in
deliverable state, then the property will pass in the goods immediately upon the contract having been
made, notwithstanding the time of payment of the price or the time of delivery of goods, or both, having
been postponed.
[1] Where there is an unconditional contract for the sale of specific goods in a deliverable state, the
property in the goods passes to the buyer when the contract is made, and it is immaterial whether the
time of payment of the price or the time of delivery of the goods, or both, is postponed.
[2] Unless otherwise agreed, the goods remain at the seller’s risk until the property therein is transferred
to the buyer, but when the property therein is transferred to the buyer, the goods are at the buyer’s risk
whether delivery has been made or not:
CASE NO-10
RAVINDER RAJ (THE PETITIONER) V/S MARUTI UDYOG LIMITED (RESPONDENT NO.
1) & M/S COMPETENT MOTORS CO. PVT. LTD. (RESPONDENT NO.2)
• When & What 1985 – 1986 The Petitioner, Mr. Ravinder Raj books a Cream Colour Maruti 800
Car by Paying Rs.10000/- July 15, 1988 Respondent 2 informs the Petitioner that his Maruti Car
Allotment has Matured for Delivery Feb 16, 1989 The Petitioner pays a sum of Rs.78351.05
towards the total cost of the Car. March 01, 1989 There is an increase in the excise duty payable,
causing a price hike of Rs.6710.61. March 18, 1989 Ravinder Raj received a letter from
Respondent 2 to deposit the excess amount payable. April 05, 1989 The Petitioner under protest
pays the excess amount.
37

SALES OF GOOD ACT 1930 IN INDIA

SALES OF GOOD ACT 1930 IN INDIA

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