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Ramanlal Maganlal Vs. Binani Commercial Co. Ltd. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtMumbai High Court
Decided On
Case NumberAppeal No. 49 of 1955
Judge
Reported inAIR1958Bom15; (1957)59BOMLR1131; ILR1955Bom1089
ActsSupply and Prices of Goods Act, 1950 - Sections 4, 4(1), 4(2), 5, 7, 10 and 14; Constitution of India - Article 249; Sale of Goods Act
AppellantRamanlal Maganlal
RespondentBinani Commercial Co. Ltd.
Appellant AdvocateManecksha, A.H. Mehta and ;C.N. Daji, Advs.
Respondent AdvocateM.J. Mistree and ;D.M. Rege, Advs.
Excerpt:
.....under section 4(1)(c) --whether such transaction comes within mischief of act--whether power of central government limited to fixing one maximum quantity only--whether open to central government to fix maximum quantity by means of some computation. ;the quantity mentioned in section 4(1)(c) of the supply and prices of goods act, 1950, is the quantity prohibited not merely for the purposes of sale but also for the purposes of agreement to sell or offer for sale. therefore whether a transaction is a sale or agreement to sell, if the sale or agreement to sell refers to a quantity which exceeds the maximum fixed under section 4(1)(c) of the act, that transaction comes within the mischief of the act and is prohibited by law and will be illegal. ;the power of the central government to fix a..........and maximum quantities of goods which can be sold-in one transaction and this can be done by the central government by a notified order. section 4(l)(c), which applies to the facts of this case provides that the central government may, by notified order, fix in respect of any goods the maximum quantity which may in one transaction be sold to any person. section 5 is important. that section prohibits any dealer -- and both the parties to the suit satisfy the definition of ''dealer', and there is no dispute on that score -- from selling, or agreeing to sell or offering for sale to any person any goods for a price and in a quantity exceeding the maximum fixed under section 4. section 14 provides for penalties for any person contravening any provisions of the act, which would include the.....
Judgment:

Chagla, C.J.

1. This is an appeal from a judgment of Mr, Justice Coyajee and the appeal came to be filed in the following circumstances: The plaintiffs filed a suit in respect of a contract arrived at between the parties in January 1952. By this contract the plaintiffs agreed to sell and the defendant agreed to buy 300 torn of eleelro-litic zinc at the rate of Rs. 171 per cwt. The plaintiffs gave delivery and defendant took delivery of 160 tons under this contract and no dispute survives with regard to tin's quantity. With regard to the balance of 140 tons defendant failed to take delivery, and the plaintiffs sold the same and there was a shortfall. The suit is filed in respect of the shortfall. The learned Judge passed a decree in favour of the plaintiffs and the defendant has come in appeal and the main contention that has been raised by Mr. Manecksha on behalf of the appellant -- which contention was not accepted by Mr. Justice Cuyajee -- was that the transaction in suit is void and illegal by reason of the provisions of Act LXX of 1950. Turning to that Act, as the preamble sets out, it is an Act to provide for the control of prices of certain goods and the supply and distribution thereof and the Act was passed alter the necessary resolution under Article 249 or the Constitution was passed. Trial article confers power upon the Parliament to legislate with respect to a matter in a State List, but this power can only be exercised in the national interest and on the Council of State passing a resolution supported by at least two-thirds of the members voting. This procedure having been complied with the Parliament has passed Act LXX of 1950. It is not disputed that the contract goods come within the ambit of the Act and Mr. Naneck-sha's contention is that the Act prohibits the particular transaction which was entered into between the parties and by reason of the prohibition the transaction has become void.

2. Now, Section 4 of the Act provides for the fixation of maximum price of goods and maximum quantities of goods which can be sold-in one transaction and this can be done by the Central Government by a notified order. Section 4(l)(c), which applies to the facts of this case provides that the Central Government may, by notified order, fix in respect of any goods the maximum quantity which may in one transaction be sold to any person. Section 5 is important. That section prohibits any dealer -- and both the parties to the suit satisfy the definition of ''dealer', and there is no dispute on that score -- from selling, or agreeing to sell or offering for sale to any person any goods for a price and in a quantity exceeding the maximum fixed under Section 4. Section 14 provides for penalties for any person contravening any provisions of the Act, which would include the provisions contained in Section 5. Therefore, reading Ss. 4 and 5 together to the extent they deal with maximum quantity the scheme is fairly clear. By a notification to be issued by the Central Government the maximum quantity which can be sold to any person in one transaction can be fixed. Although Section 4(l)(c) speaks of a sale when we turn to Section 5(c) what is -prohibited is not merely a sale but also an agreement to sell or an offer for sale. Therefore, whereas the notification would only refer to a sale in one transaction, the quantity mentioned in Sub-section (1) (c) of Section 4 becomes the quantity prohibited not merely for the purposes of sale but also for the purposes of agreement to sell or offer for sale. Therefore, with respect to the learned Judge, although he has gone into the question as to whether the transaction in suit is a sale within the meaning of the Sale of Goods Act, it is, in our opinion, unnecessary to consider that point because even from that aspect of the case whether the transaction is a sale or agreement to sell if the sale or agreement to sell refers to a quantity which exceeds the maximum fixed under Section 4(1)(c) then the transaction comes within the mischief of the Act and is prohibited by law, and it will be illegal.

3. Now turning to the relevant notification issued by the Government it is in the first instance significant to note that it was issued under Sections. 4, 7 and 10. We are not concerned with the latter two sections, but it Is pertinent to note that Government has purported to act under the power conferred upon it by Section 4 and with regard to the maximum quantity which may be sold under Section 4(l)(c) the notification provides that no dealer or producer, shall sell any non-ferrous metals exceeding one ton unless he has obtain-ed a declaration in writing from the buyer that the quantity proposed to be sold to him does not exceed his requirements for consumption for three months or in case the buyer is a dealer his requirements for normal trade for three months. On a plain reading of this notification it is clear that the Central Government has fixed a ceiling for the purposes of sale of non-ferrous metals and that ceiling is one ton; but the (notification goes on to provide that that ceiling may be exceeded provided certain conditions laid down in the notification arc satisfied. And the conditions are: (1) that a declaration in writing is obtained from the buyer that the quantity proposed to be sold to him does not exceed his requirements for consumption for three months; or (2) if the buyer is a dealer then he must obtain a declaration in writing that the quantity proposed to be sold to him does not exceed his requirements for normal trade for three months. Therefore, if a person sold non-ferrous metal without obtaining any such declaration he could not sell a quantity exceeding one ton because that is the ceiling fixed by the Central Government. But if he wanted to sell a quantity in excess of one ton it was incumbent upon him to obtain a declaration in writing whether the buyer was a dealer or not. And the Central Government fixes the ceiling in case of a non-dealer (who _ would be the ordinary consumer) at his requirements for consumption for three months and in the case of a dealer his requirements for normal trade for three months. As presumably the seller would not know what the requirements either of the consumer or of the dealer would be the Legislature thought it 'sufficient if the seller obtained a declaration in writing in that behalf either from the consumer or from the dealer. In our opinion, the plain language of this notification leaves no scope for any argument that it means differently from what is stated in clear and precise language. The first contention of Mr. Mistree is that notification does not fix a ceiling with regard to quantity at all. As we have already pointed out in the first place, it is clear that by stating that the notification was issued under Section 4 and looking to the subject-matter of the notification the Central Government was purporting to exercise the power conferred upon it by the Legislature. Of course, even -though an authority may purport to make rules within the ambit of the Act the rules may fail to carry out the intention of the authority and it may not be in exercise of the power conferred upon it. Therefore, it would be quite correct that the mere fact that the notification itself states that it is issued under Section 4 is not necessarily destructive of the argument that in fact the Central Government has failed to exercise, the power conferred upon It and no ceiling has been fixed. What Mr. Mistree urges upon us is that all that the notification does is not to fix a ceiling but to lay down a condition on which goods exceeding one ton may be sold. In our opinion it is impossible to accept that contention. That ceiling of one ton is clearly fixed by the notification. That ceiling cannot be exceeded and it is only in the latter part of the notification that the Central Government permits a seller to exceed that ceiling provided certain conditions are satisfied. Therefore, really what the notification does is to fix two ceilings: one the ceiling of one ton where no writing declaration is obtained by the seller and the other where a written declaration is obtained by the seller, in which case the ceiling is either three months requirements for consumption in case of a consumer buyer or in case of a dealer buyer three months requirements for normal trade.

4. The second contention urged by Mr. Mistree is that this notification is ultra vires Section 4(l)(c) and the argument is put forward this way: Section 4(l)(c) contemplates an immutable and unvarying ceiling and that all that is permissible to the Central Government is to fix one maximum quantity which may be sold to any one person in one transaction and it is suggested that inasmuch as even on the other reading of the notification two different ceilings are fixed the Central Government has exceeded its powers. What Mr. Mistree wishes to convey is that if the Central Government had fixed one ton as maximum with regard to any transaction then the notification would be infra vires but where different ceilings are sought to be set up depending upon different conditions then the Central Government has clearly exceeded the power of rule-making conferred upon it in Section 4. Now we see no reason whatever why we should limit the power of the Central Government conferred upon it by Section 4 in the manner suggested. In this connection it would again be necessary to emphasize the background of this legislation and the preamble which indicates the object which the Legislature had in mind in passing this legislation. The Act was passed in national interests and therefore national interests demanded that the supply and prices of certain types of goods should be controlled by the Central Legislature. The preamble also makes it clear when it says that the Act was to provide for the control of prices of certain goods and the supply and distribution thereof. Now India is a vast country with varying conditions. The prices vary from place to place; the supply of goods is adequate in one place and inadequate in another; and to suggest that the only power that the Parliament conferred upon the Central Government was to fix one maximum, which maximum was to be unalterable, is to ignore the requirements of the people and the necessity of regulating the supply and prices of goods in different manner in different places and under different circumstances. The power to fix a maximum quantity is not, in our opinion, limited to fix one maximum quantity under all circumstances. The power is implicit in the wide and general language used by the Parliament to fix different rnaxi-inums depending upon different circumstances and conditions, and this is exactly what the Central Government has done in this case. It has fixed a maximum of one ton which, according to the Central Government, is the normal quantity which any consumer should purchase and it has permitted an excess over this maximum only by satisfying certain important conditions which the Central Government has provided in the notification, namely, obtaining by the seller of a declaration in writing from the buyer or the dealer. Mr. Mistree has emphasized the fact that in Section 4 the expression used is 'fixed' and not 'prescribed' and he seems to suggest that there is an element of immutability in the expression 'fixed'. We do not accept the subtle distinction which is suggested to exist between ''fixed' and ''prescribed'. Undoubtedly the notification fixes the maximum quantity in the sense that selling in excess would come within the prohibition, but there is nothing in the expression 'fixed' which carries with it the connotation that the fixing should be one maximum which could not be altered or varied in different circumstances.

5. Some indication of the power intended to be conferred upon the Central Government is, to be found in the language of Section 4(2)(a), which provides that 'any such order may fix maximum prices or rates and maximum quantities for the same description of goods differently in different localities or for different classes of dealers or producers'. This provision clearly shows that the intention of the Parliament was not that there should be one maximum or that the power of the Central Government should be confined to fixing one maximum. On this being pointed out Mr. Mistree himself relies on this sub-section for the purpose of contending that the Government can only depart from one maximum provided the conditions laid down in Sub-section (2)(a) are satisfied and as in this case the conditions in Sub-section (2)(a) are not satisfied there was no power in the Central Government to fix different maximums. Now we do not read Sub-section (2)(a) as limiting the power of the Central Government to fix maximums. We think that it is an enabling provision and Parliament wanted to make it clear that the Central Government would have power under Section 4(l)(c) to fix different prices with regard to the same description of goods in different localities or for different classes of dealers or producers.

6. It is then urged by Mr. Mistree that in fixing the maximum quantity the Central Government must indicate arithmetically the quantity which is to be the maximum. It is said that in the first part of the notification that is done by fixing one ton as maximum but in the latter part of the notification no figure is mentioned and it is left to the computation of either the consumer or the dealer specifying in the declaration what his respective requirements are. It is pointed out that where the Legislature wanted to permit the Central Government not to fix maximum by indicating an exact quantity it was so provided as is to be found in Section 4(2)(b) which provides that an order may instead of specifying the maximum price or rate to be charged, direct that that price or rate shall be computed in such manner and by reference to such matter as may be provided by that order. According to Mr. Mistree this computation could only be resorted to in the case of fixing the maximum price; but there is no provision for fixing the maximum quantity and it is not open to the Central Government to fix maximum quantity by means of some computation. We are unable to accept this argument. The fallacy underlying this argument is in reading this sub-section as limiting the power to issue a notification under Section 4. This again is an enabling provision and we cannot read the sub-section as limiting the power of the Government under Section 4(l)(c) to fix the maximum either by indicating the actual quantity or by indicating a mode of computation by which the maximum could be arrived at.

7. Mr. Mistree conceded before us fairly, as indeed he had done before the learned Judge below, that if we were to come to the conclusion that the notification fixed a maximum quantity as provided in Section 4 and that in fixing the maximum the Central Government had exercised the power conferred upon it by Parliament then he had no answer to the plea of illegality put forth by the defendant. We wish also to make it clear that barring the contentions which we have set out in our judgment Mr. Mistree did not put forth any other contention in support of the plaintiffs' case. In the circumstances, as the quantity sold exceeded one ton and as no written declaration was obtained, we are of the opinion that the learned Judge with respect, was in error when he took the view that the transaction did not fall within the mischief of the Act. It is not disputed by Mr. Mistree, and it cannot be disputed, that if the transaction comes within the mischief of the Act then it is illegal because the transaction has been prohibited by the provisions of the Act and penalties have been prescribed for contravention of the same.

8. Mr. Manecksha has not disputed the findings of fact recorded on issues Nos. 5, 6, 7 and 8.

9. In the result the appeal is allowed. The decree passed by the Court below will be set aside. The suit will be dismissed with costs, including costs before the Commissioner. The respondents will pay the costs of the appeal. Liberty to the appellant to withdraw the sum of Rs. 500 deposited in Court.

10. Appeal allowed.


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