Raghubar Dayal, J.
1. This appeal, by special leave, arises out of a suit instituted by theappellant for a declaration that he was not liable to pay a certain amountoriginally due from defendant-respondent No. 2 and for the issue of a permanentinjunction restraining the State Government, Madhya Pradesh,defendant-respondent No. 1 from continuing the proceedings for the recovery ofthe amount or for starting any fresh proceedings. The suit was decreed by theTrial Court but, on appeal, the High Court reversed the decree and dismissedthe appellant's suit.
2. The admitted facts of the case are that on December 24, 1956, respondentNo. 2 purchased at the public auction sale held by the Divisional ForestOfficer, Harda, the cut timber and arkat trees of coupe No. 9 Eastern, EastKalibhit Range, in Harda Forest Division, for Rs. 70,200. The appellant stoodsurety for the purchaser, viz., respondent No. 2. The purchase price was to bepaid in four instalments, according to para 4 of the deed of contract. Rs.17,600 were to be paid at once and were so paid. The other instalments were dueon March 1, May 15 and December 15, 1957. These instalments were not paid byrespondent No. 2 and hence respondent No. 1 took proceedings against theappellant for the recovery of the amount.
3. According to the terms of the contract, the contractor, respondent No. 2,was to commence his work of collecting and removing the cut timber within 1 monthafter furnishing a copy of the boundary certificate. This certificate, ExhibitD-1, was furnished on February 5, 1957 and stated that the respondent No. 2 hadclearly understood the boundaries of the areas covered by the lease and that hehad taken possession of the standing/felled/collected material in the aforesaidcoupe as announced at the auction and described in the said lease and that hewas satisfied that the quantity delivered to him agreed substantially with thatannounced at the auction.
4. The appellant Badri Prasad signed this certificate as a witness. The workcould continue upto June 30, 1958.
5. Interest was to be charged at 6 1/4 per cent per annum in respect of theinstalments not paid on the due dates. The removal of the forest producepurchased from the contract areas was to be according to specified routes and,after they had been examined at the depots specified in Clause 5 of the contractdeel. Clauses 5A and 5B of the contract made it incumbent on the forestcontractor respondent No. 2 to set apart certain timber for certain purposes tothe agriculturists and the residents of the villages till three months beforethe expiry of the contract. The Forest Contract Rules were deemed to be part ofthe contract entered into between respondent No. 2 and the State, by Clause 6 ofthe contract.
6. The formal deed of contract was signed by the Chief Conservator ofForests on May 3, 1957 and the preamble of the deed gives the date of themaking of the contract to be May 3, 1957.
7. The First Schedule to the Contract states :
'The forest produce sold and purchased consists of: All standing trees bearing hammer mark of marginally shown device at base andbreast height. All felled trees marked at the butt end and stumps with thedevice shown in the margin'.
8. This is signed by the contractor, respondent No. 2 and by the DivisionalForest Officer, Harda Division, dated December 24, 1956. The trace of the coupesold was signed by respondent No. 2 and the Divisional Forest Officer onNovember 29, 1956, prior to the actual auction sale. The Third Schedulerelating to the out-turn register was also signed by respondent No. 2 and bythe appellant who stood surety and the Divisional Forest Officer, on December24, 1956.
9. The security bond was signed by the appellant on December 29, 1956 and bythe Divisional Forest Officer on March 30, 1957 and was countersigned by theChief Conservator on May 3, 1957.
10. The entire coupe whose cut timber was sold to the respondent was dividedinto four sections A, B, C and D. This was done in accordance with r. 18 of theForest Contract Rules. This rule provides that the operations carried out inthe contract area under a forest contract for the sale of standing trees aredivided into two stages (a) cutting and (b) carting. Cutting operations includefelling and all processes of conversion etc. without removing it further fromthe place where it was felled than may be necessary to carry out suchprocesses. Carting operations include all operations for the removal of afelled tree, or its converted products from the place where the tree wasfelled, whether such removal be to a depot or to a saw mill or otherdestination. Sub-r. (2) of r. 18 authorizes the Divisional Forest Officer todivide the contract area, shortly termed a coupe, into such number of sections,not exceeding eight, as he may think fit. The Divisional Forest Officer canregulate and confine the operations of the forest contract in accordance withthe provisions mentioned in Clause (a) to (c) of that sub-rule. Clause (b)provides that a forest contractor can be allowed to carry out cuttingoperations first in sections 1 and 2 of the coupe only and as soon as he beginscutting operations in section 3 he shall be deemed to have surrendered all hisrights to the standing trees in section 1 and similar would be the result onhis beginning cutting operations in section 4 and so on, till all the sectionsof the coupe are completed. Clause (c) authorises the forest contractor tobegin carting operation from the sections whose trees he has begun to cut andprovides that his rights to the forest produce in section 1 cease when hestarts cutting operations in section 4, and so on.
11. The provisions of r. 20 apply contracts where the trees have been felledby the Forest Department and the felled trees only were sold to the forestcontractor. Sub-r. (3) makes rules 18 and 19 applicable to such contracts in sofar as they be applicable. Sub-r. (2) of r. 20 provides that a forestcontractor who has purchased felled trees shall remove all the trees purchasedby him under his contract.
12. Respondent No. 2, the contractor, began his operations in section A ofthe coupe in the last week of February, 1957. He defaulted in the payment ofthe second instalment which was due on March 1, 1957 and did not pay thatamount till April 25, 1957, though it was demanded several times from him. OnMarch 23, 1957 a notice, Exhibit P4, was issued to him. It stated :
'You are being informed through this notice thatthe removal of goods from the coupe by you is already in excess of the amountdeposited by you in the treasury. So please send the challan of the secondinstalment as soon as possible by the return load carrier, otherwise yourremoval of goods would be stopped and a report would be made to the higherauthority within two days'.
13. This was duly served on respondent No. 2.
14. On April 25, 1957 the appellant was told by the forest authorities thatno further removal of the forest produce would be allowed in view of thedefault of payment of the second instalment. The licence book and the transitpass were taken back by the Government Forester, Madanlal Pagare.
15. Fire broke out in the forest and the cut timber sold to respondent No. 2was burnt. The report about the loss from fire is Exhibit D2 dated April 29,1957 and is signed by the contractor and Sheoprasad Parashar, the Forest Guard.As a result of the fire the goods purchased by respondent No. 2 and not removedby then, ceased to exist. He did not pay the amounts due for the 2nd, 3rd and4th instalments.
16. The appellant sought to avoid his liability as surety for thenon-payment of the amount inter-alia on the ground that the contractorrespondent No. 2 had not been put in possession of the cut timber sold to himexcept of such timber which had been in section A of coupe No. 9, thattherefore there has been no transfer of property in the timber sold to him andthat he was therefore not liable for paying the amounts due on the 2nd, 3rd and4th instalments. It was averred by the appellant in paragraph 5(A) of theplaint :
'Thus it was clearly understood on both sides andalso explained by the Forest Department officials of defendant No. 1 and whichhas been all along implicit in the contract as per usual practices of theforest department that the possession of the goods of each respective sectionwill be delivered to the Contractor on payment of each instalment as statedabove. It was only on due payment of each instalment that the contractor was tobecome entitled to remove the goods in pursuance of the licence book suppliedto him by the forest department of defendant No. 1'.
17. In paragraph 5(B) it was stated :
'That the contractor or his licensee had no rightto remove the goods until the same was duly hammer marked by the representativeof the said forest department and until the licence and the transit pass wereduly-checked and signed by the Coupe Guard or such other representative as maybe present on the spot'.
18. Para 5(C) mentioned :
'That the contractor or his men were further liableto carry the forest produce for check and examination of forest Depot-officersof Ziri, Rahetgaon and Timarni established for that purpose and after the cutwood was checked by the Depot Officers, the same used to be marked with aspecial hammer mark, and unless that was done it was not lawful for any personto remove timber brought to the depot'.
19. Respondent No. 1 admitted what was stated in paras 5(B) & (C) of theplaint. It denied the understanding as averred in para 5(A) and what wasalleged in para 5(D) to the effect that it was after the processes mentionedearlier that delivery of the goods was deemed to be given to the forestcontractor and was to be at his disposal.
20. The main question urged before us is that the property in the cut timbersold and existing in sections B, C and D of the coupe had not passed to thecontractor before the fire broke out in the last week of April 1957 and thiscontention is based on the facts that the goods sold were not specific goods asthey had not been hammer-marked, that the goods in sections B, C and D couldnot be delivered till the 2nd, 3rd and 4th instalments had been paid and thatthe deed of contract was signed after the fire had taken place.
21. We may now consider the points urged in support of the contention thatthe property in the timber of sections B, C and D had not passed to respondentNo. 2.
22. The first schedule to the contract describes the property, forestproduce sold and purchased, thus :
'All standing trees bearing hammer mark ofmarginally shown device at base and breast height. All felled trees marked atthe butt end and stumps with the device shown in the margin'.
23. It is the case of the plaintiff-appellant that cut trees timber or cuttrees were sold. Para 2(A) of the plaint describes the property purchased as'the cut timber and arkat trees of coupe No. 9'. Clause (i) of para 2 of thestatement of the case filed on behalf of the appellant makes this further clearas it is stated therein that the contract was for the purchase of 'thecut-timber and cut-arkat trees'. It appears therefore that the expression about'all standing trees bearing hammer mark' in the description of forest producesold was inadvertently omitted to be struck out from the deed of contractthough there was no sale of standing trees to respondent No. 2.
24. Chapter XX of Part IV of Vol. I of the Central Provinces & BerarForest Manual (hereinafter shortly termed Forest Manual) gives the rules forthe disposal of forest produce. Rule 5 states that before forest produce isdisposed of it shall be properly marked. The standing trees are marked withhammer at two places, at the butt end and at the lower part, a little above thestem. The trees are to be felled so as to leave the lower hammer mark in theun-cut portion. The felled tree sold is subject to further processes of cuttingetc. The portions so cut have to be hammer marked, as only one such portionwill have the hammer mark which was first put at the butt end of the tree. Asecond special hammer mark is placed on these cut portions at the time ofchecking at the depot. The two hammer marks necessary to be put on the cutportions of the felled tree before they could be actually taken away from theforest area were not made on the cut timber existing in section B, C, and D andsold to respondent No. 2, as the felled trees in those areas had not been cutfurther by the contractor. The omission to put such marks does not make thegoods sold unascertained. The felled trees sold to the respondent No. 2 had abutt mark at the butt end. A similar hammer mark existed on the stem near whichthe felled tree must have lain, it being presumed that the rules for thefelling of trees were properly complied with by the forest authorities,mentioned above. The goods sold therefore were specified goods.
25. There is nothing in the contract that possession would not be deliveredover the cut timber in section B, C and D till the 2nd, 3rd and 4th instalmentshave been paid. The relevant provisions of r. 18 of the Forest Contract Rules,extracted earlier, do not contain any such restriction. It only provides thatthe operations necessary to be conducted by the contractor had to start withsection A or the first section and that the rights of the contractor to thematerial purchased would be deemed to be surrendered in certain circumstances.This has nothing to do with the payment of the instalments by the contractor.He can proceed to operate on the entire property purchased, according to hisinclination in accordance with the procedure, as regulated by the rules. Thereis therefore no force in the submission that there could have been no deliveryof possession over the produce sold and existing in section B, C and D till thevarious instalments had been paid.
26. The fact that the contract was signed by the Chief Conservator ofForests on May 3, 1957, after fire had broken out has no effect on the questionof delivery of possession of the produce sod and consequently on the passing ofproperty in the goods to the contractor respondent No. 2. The Chief Conservatorwho was the proper authority for entering into the contract of sale of propertyworth over Rs. 70,000/- had necessarily to sign the deed of contract subsequentto the actual auction sale and in view of the exigencies of the procedure to befollowed may have to sign after a substantial period of time.
27. The bid of respondent No. 2 at the auction sale had been provisionallyaccepted by the Divisional Forest Officer who is authorized under the rules toconduct the auction sale. The Divisional Forest Officer and respondent No. 2thereafter signed the deed of contract on December 24, 1956 the date on whichthe auction sale took place. The appellant, as surety, also signed the thirdschedule on December 24, and the security bond on December 24. Practically allthe formalities necessary for the execution of the deed except for thesignatures of the Chief Conservator, authorised to enter into a contract ofthis magnitude, had been completed. His formal signature on the deed ofcontract relates back the contract to the date of auction when the bid ofrespondent No. 2 was provisionally accepted and he and the Divisional ForestOfficer signed the contract.
28. In this connection, reference may be made to certain rules and theinstructions issued by Government to the various officers for complying withthose rules. Executive instructions on the preparation of forest contractagreements are printed at p. 125 of Vol. II of the Forest Manual. InstructionNo. 9 provides that if the parties have signed the deed on the same date, thatdate should be entered in the preamble, but if they had signed on two differentdates, then the later of those two dates should be entered in the preamble. Itwas in accordance with this instruction that May 3, 1957, the date on which theChief Conservator signed the contract was mentioned in the preamble of thecontract deed. That date therefore had not any real effect on the actual dateon which the sale of the forest produce took place in favour of respondent No.2.
29. Instruction 10 directs that the dates in Clause 2 of the prescribed deed ofcontract should be very carefully entered as they have an important bearing onthe deed and show the period during which the contract will remain in force.Such a period in the deed of contract Exhibit D is the period 'from the datethe forest contractor furnishes the necessary coupe boundary certificate afterthe inspection of the contract area to the 30th day of June 1958, both daysinclusive'. The coupe boundary certificate was furnished on February 5, 1957.It follows that the period for the operation of the contract was from February5, 1957 to June 30, 1958. This is a clear indication that the date in thepreamble has no real effect and that the contract, after its being duly signedby the competent authority, relates back to the date of sale.
30. Instruction 16 deals with the execution of the deed of contract. Clause(i) provides for the drawing up of the contract in triplicate. Clause (iii)requires the Divisional Forest Officer to initial the contract after checkingit before the lessee is asked to sign it. Clause (iv) provides that where the DivisionalForest Officer himself is empowered to execute the agreement he and the lesseeshould execute it together and Clause (v) provides that where the DivisionalForest Officer is not empowered to execute the agreement, it should be executedby the lessee and his signature should be attested and that the agreementshould then be sent as soon as possible to the Forest Officer empowered toexecute it, for his signature and attestation.
31. These instructions about the execution of the deed of contract plainly takeinto consideration the lapse of time between the execution by the lessee and bythe competent forest authority.
32. Instructions Nos. 38 to 48 are with regard to the auction of forestcontracts. It is the Divisional Forest Officer who is directed to take certainsteps. Instruction No. 45 provides that Divisional Forest Officers shouldordinarily allow themselves more than one day for the conduct of the auctionsales. Instruction No. 47 provides that where the agreements are to be signedby the Conservator or higher authority, the first instalments must still bepaid and the duplicate agreements signed by the contractor and his surety, ifany, and sent to the Conservator immediately. The Conservators should sign theduplicate agreements in token of acceptance and return them to the DivisionalForest Officers as soon as possible. The reason for this is that it isobviously only fair to a forest contractor that he should be in possession ofhis signed agreement before he starts work on his contract, i.e., before July1. In case the Conservators are not competent to sign the contract deeds suchdeeds will have to be sent by them to the Chief Conservator who is competent inview of r. 102A of Vol. I of the Forest Manual (under Chapter XIX) and therelevant orders of the Government to execute contracts for the sale of forestproduce upto an amount of Rs. 1,00,000 when payment is received in full at thetime of delivery and upto Rs. 10,000 or upto Rs. 50,000 with the previoussanction of the Provincial Government when payment is not received in full atthe time of delivery.
33. The exercise of this power by the Chief Conservator and other officersis subject to the rules given in the Government Notification and rule 1(a) ofthese rules relating to contracts for forest produce reads :
'No timber or other forest produce may beordinarily sold except on cash payment in full at the time of delivery. Paymentin instalments may, however, be considered as payment in full at the time ofdelivery provided that there is a clause in the agreement to the effect thatwhen Divisional Forest Officer considers that the value of any forest produceremoved by the purchaser equals or exceeds the amount of purchase money paid byhim upto that time, the Divisional Forest Officer may stop further removaluntil the purchaser has paid such further sum, as in the opinion of the ForestOfficer, may be sufficient to cover the excess value of the forest produceremoved or to be removed'.
34. In view of this rule it would be deemed that the payment of the purchaseprice had been made in full at the time of delivery, though the actual paymentwas to be made in four instalments.
35. We are therefore of opinion that the sale of the forest produce torespondent No. 2 was finalised on the date of sale subject of course to theacceptance of his bid by the competent authority, the chief Conservator ofForests and that the fact that the Chief Conservator signed the deed on May 3,1957, does not make the sale effective from the date of his signature. His signaturesdo not ratify any action of the Divisional Forest Officer which he took beyondhis competence, but simply completes the execution of the deed of contract andrelate back its execution to the date on which the sale took place and thecontractor and the Forest Officer had signed the document.
36. We may now refer to the approach of the High Court to this question ofthe deed of contract operating from the date of its execution by respondent No.2. It was of opinion that respondent No. 2, and the Divisional Forest Officer,had made the contract in December 1956 long before April 28, 1957 and even ifthe Divisional Forest Officer was not competent to enter into the contract, hisact had been subsequently ratified by the competent authority and that thereforethe ratification related back to the date of the contract and had the sameeffect as if the Divisional Forest Officer had performed the act by theauthority of the Chief Conservator of Forests. With respect, we do not considerthis approach to be correct. The Divisional Forest Officer had authority underthe statutory rules for holding the auction and for provisionally accepting thebid. All that he did was within his authority. He did not actually enter intothe contract with respondent No. 2. He simply signed the standard form of thecontract for the satisfaction of the competent authority to the effect that itsaccepting the bid and entering into the contract would be correct as is theusual official procedure where subordinates have to put up or forward papers tothe superior officers for approval, sanction or orders. The right view of theentire procedure adopted in the case has been already stated by us above.
37. The other point urged by Mr. Agarwala, for the appellant, is that inview of r. 8 of the Forest Contract Rules which empowered the Divisional ForestOfficer to stop the removal of forest produce sold on his finding that thevalue of the forest produce already removed by the contractor exceeded theamount of the instalments already paid by him, the seller in this case hadreserved the right of disposal of the forest produce until certain conditionswere fulfilled and that therefore s. 25(1) of the Indian Sale of Goods Act,1930 (Act III of 1930) applies to the facts of the case and that therefore,notwithstanding delivery of the forest produce to respondent No. 2 in February1957, the property in it did not pass to respondent No. 2 until the conditions imposedby the seller were fulfilled. There is nothing in the deed of contract or inthe Forest Contract Rules which reserved such a right of disposal in the State.Right given to the Government under r. 8 is the right to stop the removal offorest produce when the value of the forest produce already removed exceededthe amount of the instalments paid. This is to regulate the compliance with theconditions of the auction one of which was that ordinary forest produce was tobe sold on payment in full at the time of delivery. The contractor hadtherefore to pay full price he had bid at the date of the sale or any day priorto the delivery of the goods to him in February 1957. The provision forallowing payment by instalments is a concession for the convenience of thecontractor and it is provided in the rule that payment in instalments mayhowever be considered as payment in full at the time of delivery provided therebe a clause in the agreement in accordance with the provisions of r. 8 of theForest Contract Rules.
38. Reference may here be made to the provisions of s. 83 of the IndianForest Act, 1927 (Act XVI of 1927). Subsection (1) provides that when any moneyis payable for or in respect of any forest produce, the amount thereof shall bedeemed to be a first charge on such produce, and such produce may be takenpossession of by a Forest Officer until such amount has been paid. Rule 8 ofthe Forest Contract Rules is therefore in pursuance of the statutory provisionsof s. 83 of the forest Act which creates a lien on forest produce for the moneypayable to Government. Action which the Divisional Forest Officer can take forstopping the removal of the forest produce sold is in pursuance of thestatutory authority conferred on him and not in pursuance of any terms of thecontract between respondent No. 2 and the Government.
39. When a contractor is deemed to have paid in full the price there couldbe no occasion for the Government to reserve a right of disposal of theproperty even when its delivery had been made to the purchaser. As alreadystated, it is s. 20 of the Sale of Goods Act which will apply to this case.This section provides that where there is an unconditional contract for thesale of specific goods in a deliverable state, the property in the goods passesto the buyer when the contract is made and it is immaterial whether the time ofpayment of price or the time of delivery of the goods or both is postponed. Thecontract was unconditional, the goods sold were specific. They were in adeliverable state and therefore the property in the goods did pass at the timewhen the contract was made. This section would have applied even if the time ofpayment of price had been postponed. In the present case, as already stated,the payment allowed by instalments is to be deemed payment in full at the timeof the delivery of the goods sold.
40. The last contention raised for the appellant is that as the contract wassigned by the Chief Conservator about a week after the goods laying in sectionsB, C and D had been burnt by fire, the contract must be deemed to have been notmade at all by the Chief Conservator who could not have contracted to sell godswhich did not exist. The contention really is that there could be noratification of the act of Divisional Forest Officer, who had no authority toenter into the contract, after the goods had ceased to exist and reliance isplaced in support of this contention on what is stated at para 415 at p. 177 ofHalsbury's Laws of England, Vol. I, III Edn. It is stated there :
'As to the time within which ratification may takeplace, the rule is that it must be either within a period fixed by the natureof the particular case, or within a reasonable time, after which an act cannotbe ratified to the prejudice of a third person'.
41. This is general proposition and will not be applicable to this case asno third person is being prejudiced on account of the signing of the contractby the Chief Conservator on May 3, 1957, a were after the fire had destroyedcertain goods purchased. Further, it is stated in the same paragraph :
'But by an anomalous rule limited to marineinsurance a contact of marine insurance made by an agent of the principal'sproperty may be ratified by the principal after notice of loss'.
42. This proposition is well-settled in England. In Williams v. North ChinaInsurance Co. L.R. 1876. I.C.P.D. 757 this proposition was sought to bereviewed. Cockburn C.J. said at p. 764 :
'The existing authorities certainly show that whenan insurance is effected without authority by one person on another's behalf,the principal may ratify the insurance even after the loss is known. Mr.Benjamin asked us, as a Court of Appeal, to review those authorities.......Where an agent effected an insurance subject to ratification, the loss insuredagainst is very likely to happen before ratification, and it must be taken thatthe insurance so effected involves that possibility as the basis of thecontract. It seems to me that, both according to authority and the principlesof justice, a ratification may be made in such a cases'.
43. These observations would fully apply to the facts of the present cases,even if we were of the view that the Chief Conservator ratified theunauthorised act of the Divisional Forest Officer on May 3, 1957, after thefire had taken place. The provisional acceptance of the bid and the signing ofthe deed by the Divisional Forest Officer must, in the circumstances, be heldto be subject to ratification. It was within the realm of possibility that theforest produce might be lost on account of fire or any other risk mentioned inr. 32 of the Forest Contract Rules before the deed of contract was formallysigned by the Chief Conservator. The contract entered into therefore involvedthe possibility the loss of goods by fire as the basis of the contract.
44. Lastly, reference may be made to r. 32 of the Forest Contract Ruleswhich provides that a forest contractor shall not be entitled to anycompensation whatever for any loss that may be sustained by reason of fire etc.This is not a suit for compensation by the contractor respondent No. 2, but inessence the basis of the suit is that the forest contractor did not getpossession of the forest produce in sections B, C and D, that such produce waslost by fire and that therefore he was not to pay the second, third and fourthinstalments and cannot be said to be in default in payment of thoseinstalments. The loss of such goods by reason of fire therefore does not in anyway give support to the claim of the appellant.
45. We are therefore of opinion that the appellant's suit has been rightlydismissed by the High Court. We accordingly dismiss the appeal. There will beno order as to costs.
46. Appeal dismissed.