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Maniar Narottamdas Dharamshi Vs. Barjatya Traders - Court Judgment

LegalCrystal Citation
SubjectContract
CourtGujarat High Court
Decided On
Judge
Reported in(1980)2GLR89
AppellantManiar Narottamdas Dharamshi
RespondentBarjatya Traders
Cases ReferredFirm Bachhraj v. Firm Nandlal Sitaram
Excerpt:
- - gandhi it is necessary to keep in view certain admitted facts which are well borne out on the record of the case. it is an admitted position on the record of the case that the railway receipt was not endorsed in favour of the defendant firm nor was the defendant firm a consignee under the said receipt. he would have got possession of the railway receipt duly endorsed in his favour only through the hathras branch of the punjab national bank. in para 10 of the judgment, the division bench observed that it was concerned in that case with four types of categories of contract, namely-(1) where the plaintiff himself was the consigner as well as the consignee; (2) where the plaintiff himself was the consignor and the buyer consignee (3) where the buyer was the consignor as well as the.....s.b. majmudar, j.1. this second appeal is filed by the original whose suit for recovery of rs. 6366.65 p. from the respondent was decreed by the trial court but on appeal to the district court, rajkot came to be dismissed.2. a few facts leading to this second appeal are required to be stated. the appellant-plaintiff is a partnership firm carrying on business at rajkot. the respondent-defendant is also a partnership firm carrying on its business at hathras, u.p. the case of the plaintiff is that the defendant firm made an offer to purchase a saurashtra line bilti of one wagon containing tins of groundnut oil. the plaintiff accepted the said offer at rajkot and accordingly the plaintiff got prepared a railway receipt no. 63696 invoice no. 2 dated 19-7-64 from visavadar to hathras for 528.....
Judgment:

S.B. Majmudar, J.

1. This Second Appeal is filed by the original whose suit for recovery of Rs. 6366.65 P. from the respondent was decreed by the trial Court but on appeal to the District Court, Rajkot came to be dismissed.

2. A few facts leading to this second appeal are required to be stated. The appellant-plaintiff is a partnership firm carrying on business at Rajkot. The respondent-defendant is also a partnership firm carrying on its business at Hathras, U.P. The case of the plaintiff is that the defendant firm made an offer to purchase a Saurashtra line bilti of one wagon containing tins of groundnut oil. The plaintiff accepted the said offer at Rajkot and accordingly the plaintiff got prepared a railway receipt No. 63696 Invoice No. 2 dated 19-7-64 from Visavadar to Hathras for 528 tins of groundnut oil. The plaintiff's case is that it was agreed with the defendant that a Hundi for Rs. 21811.5OP. being the price of the goods aforesaid along with the railway receipt was despatched to the defendant through Punjab National Bank, Rajkot. The aforesaid Hundi was dated 19-7-64 the defendant was bound to honour it. But the defendant did not honour the same and thereby committed a breach of the contract. The plaintiff states that the goods of the railway receipts in respect of which the agreement was made, were already consigned in wagon No. 41963. The State of Gujarat imposed ban on 22-7-64 under the Defence of India Rules, 1962, on the export of groundnut oil outside Gujarat State, and hence the goods of the suit consignment were requisitioned by the State of Gujarat. The suit consignment was sold to the Gujarat State Co-operative Marketing Society Ltd. Ahmedabad for Rs. 16609,87 P. and the said amount was credited to the account of the defendant. Sales tax amount of Rs. 427.68 P. was also credited to the account of the defendant. A sum of Rs. 21811.50P being the amount of Hundi and a sum of Rs. 1592.90 P. being the amount of wharfage in all Rs. 23404.40 P. were due from the defendant and giving credit of Rs. 17037.55 P. a sum of Rs. 6366.65 P. had remained due from the defendant and the defendant was bound to pay the said amount to the plaintiff. On 30-10-1964 the plaintiff gave a notice to the defendant but the defendant did not make the due payment and hence the plaintiff filed the aforesaid suit to recover Rs. 6366.65 P. with future interest thereon and costs of the suit.

3. The defendant resisted the suit by its written statement, Ex. 36. The defendant did not admit that the plaintiff was a partnership firm registered under the Indian Partnership Act. Defendant contends that the Civil Court at Rajkot had no territorial jurisdiction to hear the suit. The defendant denied that it had given an offer to purchase one Saurashtra line bilti of wagon of groundnut oil to Hathras Railway station and the defendant also denied that the plaintiff had accepted any such offer at Rajkot, and that there was any such agreement having been entered into at Rajkot and that it had received a Hundi. The defendant admitted that the State of Gujarat imposed a ban on 2-7-64 under the provisions of the Defence of India Rules, 1962, on the export of groundnut oil outside the limits of Gujarat State. The defendant denied any liability to pay any amount to the plaintiff. It was contended that the Gujarat State and the Gujarat Co-operative Marketing Society were the necessary 'parties to the suit. It was contended that before the goods could be delivered the goods were requisitioned by the State of Gujarat and, therefore, the suit contract had never come into existence. The defendant denied to have committed any breach of the suit agreement as contended by the plaintiff.

4. The learned trial Judge on the aforesaid pleadings framed issues at Ex. 31 and after recording evidence came to the conclusion that the Court at Rajkot had territorial jurisdiction to entertiia the suit. It was further held that once the plaintiff consigned the goods through railway receipt at Visavadar railway station, the property in the goods passed to the defendant and thereafter the goods were requisitioned by the State of Gujarat and consequently the plaintiff was entitled to receive the amount due and on the aforesaid findings the learned trial Judge decreed the plaintiff's suit as prayed for.

5. The dissatisfied defendant carried the matter in appeal to the District Court at Rajkot, being Regular Civil Appeal No. 21 of 1975. The learned Assistant Judge who heard the appeal came to the conclusion that the title to the goods had not passed to the defendant by mere delivery of the contracted goods to the railway at Visavadar by the plaintiff. It was further held that the goods were to be delivered at the Hathras, U.P. on payment of the Hundi which was accompanied by the railway receipt through the Punjab National Bank at Hathras and as the payment was not made of the full amount of the Hundi, the defendant could not obtain the railway receipt and take delivery of the goods. In the meanwhile and as the goods stood requisitioned by the Government the contract got frustrated. The result was that the defendant was not liable to pay the amount as claimed by the plaintiff. The learned appellate Judge of course upheld the finding of the learned trial Judge to the effect that the Court at Rajkot had territorial jurisdiction to entertain the suit. But on account of the main finding reached by the learned appellate Judge against the plaintiff, the learned appellate Judge was pleased to allow the appeal and dismiss the suit of the plaintiff. That has brought the dissatisfied plaintiff by way of the present second appeal to this Court.

6. Mr. H.K. Gandhi, learned advocate appearing for the appellant-plaintiff raised the following points:

1. The learned appellate Judge has committed grave error of law in holding that the property in the goods had not passed to the defendant when the goods were consigned to the railway at Visavadar for onwards transmission to Hathras to the defendant.

2. As a sequal to the aforesaid submission, Mr. Gandhi submitted that as the full property in the goods had already passed to the defendant, subsequent requisition by the State Government under the Defence of India Act and the Rules by the State of Gujarat did not absolve the defendant from his liability to pay the balance of consideration price of the suit goods. Hence the plaintiff was entitled to full decree as prayed for.

3. Mr. Gandhi further submitted that in any case, the learned appellate Judge has committed grave error of law in holding that the suit contract had got frustrated.

4. Without prejudice to his aforesaid contentions, Mr. Gandhi submitted that the defendant would be liable to pay at least the expenses incurred by the plaintiff at Visavadar Station for delivery of goods and as the defendant was not desirous of incurring the aforesaid costs gratis, the plaintiff was entitled to a decree limited to the aforesaid amount of costs.

Mr. S.M. Shah, learned Advocate appearing for the respondent supported the judgment and decree of the learned appellate Judge and contended that the suit was rightly dismissed by the appellate Court. I shall now deal with the aforesaid submissions raised by Mr. Gandhi.

7. The first contention raised by Mr. Gandhi is as to when the property in the suit can be said to have passed to the defendant under the said contract. In order to appreciate the aforesaid contention of Mr. Gandhi it is necessary to keep in view certain admitted facts which are well borne out on the record of the case. The plaintiff firm carries on its business at Rajkot. The defendant is also a partnership firm carrying on business at Hathras in U.P. The defendant made an offer to purchase Saurashtra line bilti of one wagon containing tins of groundnut oil. The plaintiff accepted the said offer at Rajkot and accordingly the plaintiff got prepared the railway receipt No. 63696 from Visavadar to Hathras for 528 tins of groundnut oil; that the railway receipt with the Huadi for the amount of Rs. 21811.50P. was to be discharged through the Punjab National Bank Hathras branch. The transaction in question was a bilti cut transaction and the railway receipt in question covering the said goods was consigned in favour of the plaintiff. It is an admitted position on the record of the case that the railway receipt was not endorsed in favour of the defendant firm nor was the defendant firm a consignee under the said receipt. He would have got possession of the railway receipt duly endorsed in his favour only through the Hathras Branch of the Punjab National Bank. It is also an admitted fact that the goods covered by the railways receipt never reached Hathras but were intercepted at Sabarmati by the State Government. The fact also remains that no payment under the Hundi was made by the defendant and consequently the defendant never got possession of the railway receipt at Hathras.

8. It is in the background of these proved and admitted facts emerging on the record of the case that the question posed by Mr. Gandhi has to be answered. Mr. Gandhi's submission was that in case of a contract of the goods covered by the railway receipt, when the transaction is a bilti cut transaction, the moment the goods are delivered by the seller to a common carrier, the property in the goods would automatically pass to the buyer who would become liable to pay the price of these goods. In that connection Mr. Gandhi drew may attention to a judgment of the Andhra Pradesh High Court in the case of J.S. Basappa v. Provincial Government of Madras : AIR1959AP192 , my attention was drawn to the observations which read as under:

What determines the sites of sale is a place where the property in the goods passes to the buyer. The principles for deciding whether and when the property in the goods is transferred to the buyer are laid down in Sections 19 to 25 of the Sales of Goods Act. it is manifest that prima facie when the goods are delivered to the buyer or to the common carrier to be transmitted to the buyer property in the goods vests in the buyer. But this is subject to the reservation of the right of disposal of the goods made by the seller. This right of the seller can be proved either by the terms of the contract or by appropriation or it can be inferred from the conduct of the parties or from surrounding circumstances. In the absence of any specific agreement or of intention to be gathered in the manner stated above, the buyer becomes the owner of the goods the moment the goods are delivered to him or to the railway which is deemed to be the agent of the buyer for purposes of carrying it to the buyer. The fact that the seller had taken back the railway receipts for the purposes of giving it to their bankers for collection of the price is not decisive of the locus of the sale. This circumstance does not in any way give an indication as to his intention to reserve the jus dexponendi. It might only give him the right of lien over the goods.

In order to appreciate the context in which the aforesaid observations were made by the Andhra Pradesh High Court in the aforesaid case, it is necessary to keep in view the type of case which fell for consideration of the Andhra Pradesh High Court in the aforesaid decision. In para 10 of the judgment, the Division Bench observed that it was concerned in that case with four types of categories of contract, namely-(1) where the plaintiff himself was the consigner as well as the consignee; (2) where the plaintiff himself was the consignor and the buyer consignee (3) where the buyer was the consignor as well as the consignee, and (4) where the third party was shown as the consignor, the consignee being the plaintiff. It was further observed that the trial Court found that in types (1) and (4), the seller remained the owner till payment was made and since the goods were paid for outside the province the sales could not be said to have taken place within the State and, therefore, not assessable by the sales tax authorities of the province. In the present case, admittedly, the goods were consigned to Hathras under a raliway receipt booked from Visavadar but the plaintiff was the consignor as well as the consignee and was shown as such in the railway receipt. This fact showed that the property in the goods did not pass to the buyer at Visavadar as the buyer was neither a consignor of the goods covered by the railway receipt nor was a consignee thereof. In fact, the goods never reached Hathras for being delivered to the defendant firm on payment of the Hundi. The Division Bench also took the view that when a railway receipt is made out in the name of the buyer as a consignee, it becomes a document of title and vests the right of ownership in the goods in the buyer while they are in transit. That was a case covered by category two. The facts of the present case represent a contract falling in category one as indicated by the Andhra Pradesh High Court in Basappa 's case (supra) and consequently the aforesaid decision instead of helping the plaintiff really goes against him. In the case of the State of Madras v. V.P.V, and Sons : AIR1959AP23 , it has been in terms held that the fact that the railway receipt which is a document of title was taken out in the name of the seller manifested his intention to remain the owner and to retain control over the goods till the buyer made the payment through the bank, and it could be deduced from these circumstances that the terms of the contract between the parties was that the buyer would obtain title to the goods only when the full sale price was paid by him to the seller through the bank. By this method, the operation of rule enunciated in Section 23(1) was excluded. It was further held that the fact that the seller debited the buyer with the balance or that the goods were taken out of the stock register did not establish the contrary intention. In the same volume at page 30, there is the case of Magesty Balkrishna Rao v. M.D.O. and Sons : AIR1959AP30 , wherein a learned Single Judge has taken the same view and held that where the seller delivers his goods to the railway company, obtains the railway receipt in respect of the goods in his own name, endorses the railway receipt in favour of the bank and delivers a Hundi with a direction that the railway receipt should be delivered to the buyer only when Hundi is honoured and the price of the goods is paid, the title in the goods does not pass to the buyer. There is no distinction in principle in regard to reservation of title in respect of a bill of lading and a railway receipt. The seller in such a case is not entitled to resell the goods under the terms of Section 54(2) of the Act. The same view is reiterated by a Division Bench of the Andhra Pradesh High Court in the case of Sri Rama Purchase and Sals Society Ltd. v. State of Madras : AIR1959AP36 . The Division Bank of the Andhra Pradesh High Court in the aforesaid case analysed Section 29 Sections 19 and 23(2) of the Sale of Goods Act and held that, it was clear that the property in the goods could not have passed to the buyer at any time, before he paid the money mentioned in the invoice and the circumstance that the plaintiff in his accounts debited the buyer with the amount due in the Hundi had no real bearing upon the question as to the intention of the parties in regard to the passing of title to the goods. In the back-ground of the aforesaid facts it was held that the property in the goods could not have passed to the buyer at any time before he paid the money mentioned in the invoice. The question posed for consideration in the present case is no longer res Integra as it is settled by the highest authority of the Supreme Court in the case of Income-tax Commissioner v. P.M. Rathod and Co. : [1959]37ITR145(SC) , it was observed as under:

The assessee were a firm of manufacturers of perfumery and hair oils at Ratlam, in Madhya Bharat and their goods were sold throughout India. At the relevant time Madhya Bharat was a Part B State. The assessee sent out agents to various parts of India to canvass orders. The goods ordered were sent to the customers either by V.P.P. or by rail. In the latter case the Railway Receipt in favour of self were sent through a Bank deliverable against payment of the demand draft drawn upon the buyers and sent by the Bank by means of bank draft to the assessee at Ratlam who sent them for being cashed and credited to their amount at Bombay. The sole question for determination was where were the income profits and gains received or were deemed to be received.

In this regard Their Lordships of the Supreme Court held as under:

That a payment to the post office by the buyer was payment to the seller and at the place where the goods were delivered and payment was made. The Post Office was not an agent of the buyer. Whatever be the jural relationship between the seller and the post office in respect of carriage of goods sent by the seller under the V.P.P. system it became an agent of the seller for the recovery of the price and if it failed to recover the price and delivered the goods it was liable in damages to the sellers. Under the V.P.P. system the seller retained control over the goods right upto the time the goods were delivered to the buyer against payment of price and therefore the contract would fall under Section 25 of the Sale of goods Act. The property in the goods passed at the place where the price which included profits was paid, i.e. which in the present case was in part A or C state. This the price was received by the seller in Part A or C State.

It was further observed in the said decision by the Supreme Court as under:

In the case of goods sent by railway as in the case of goods sent by V.P.P; the railway receipts in favour of self could not be delivered to the buyer till the money is paid and although the goods had been handed over to a common carrier the appropriation to the contract as in the case of the goods sent by V.P.P. was only conditional and the performance was completed only when the monies were paid and the railway receipts delivered. These contracts also must be taken to have been performed in Part A or C State and the price paid to the bank as agent of the seller at the place of payment and delivery of railway receipts. The income-profits and gains were therefore received in those States and not at Ratlam where the seller carried his business.

The aforesaid decision of the Supreme Court squarely applies to the facts of the present case.

9. In Shamji Bhanjl and Co. v. North Western Rly Co. : AIR1947Bom169 Bhagwati, J. (as he then was) also took similar view and held that even though a railway receipt was a document of title to goods a mere endorsement of a railway receipt was not by itself enough to transfer the property in the goods represented by the receipt to the endorsee thereof. Without anything more, the endorsement of the railway receipt only constituted the endorsee the agent of the consignee for the purpose of taking delivery of the goods, represented by the receipt, from the railway company. It was further held in the aforesaid decision that P did not unconditionally appropriate the goods to the contract for sale but reserved the right of disposal, in so far as he obtained the railway receipt in respect of the goods in his own favour as consignee, until certain conditions were fulfilled, namely, the price of the goods was paid by S as against the receipt of the goods by him from the railway at Peshawar. Therefore, notwithstanding the delivery of the goods to the railway for transmission to S the property in the goods could not pass to S untii the conditions imposed by P were fulfilled. As the price was not paid by S the property in the goods never passed to him under Section 25 of the Sale of Goods Act. Bhagwati L had also relied upon the judgment of the Bombay High Court in Ford Automobiles v. Delhi Motor and fihgvneeung Co. A.I.R. 1923 Bom. 125. A Division Bench of this Court in Ibrahim v. Union of India 5 G.L.R. 879, has also taken the same view. It has been observed that if the consignor himself is the consignee and therefore he reserves the right of a disposal of goods to himself, the transaction does not fall within the purview of Section 23(2) of the Sale of Goods Act. The aforesaid decision in Shamji Bhanji & Co. was also relied upon by the learned Judges of the Division Bench. It was also observed that a mere endorsement of a railway receipt in favour of an endorsee does not give him a right to sue the railway administration to enforce its liability imposed by Section 72 of the Indian Railway Act, unless the transaction between the consignor or any of his successor and the final endorse institutes the suit has resulted in the transfer of the property in the or any interest therein. It was further observed that in the case of movable property the question as to whether the whole or partial property in goods has or has not passed must necessarily be governed by the provisions contained in the Sale of Goods Act. This would be subject to a consideration of further two points whether a railway receipt is or is not a negotiable instrument or whether it does or does not represent an actionable claim. But if a railway receipt does not embody any of these two transactions, then the matter must be governed by the provisions contained in the Sale of Goods Act. For the purpose of ascertaining as to whether the property or any interest in the goods has or has not been passed, the material question to be considered in each case, as provided in Sections 19, 19(2) and 19(3) of the Sale of Goods Act is whether the parties did or did not intend at the time when the endorsement was made and the railway receipt was delivered that the property or interest in the goods should pass and this has got to be ascertained with reference to the terms of the contract by which the sale of goods took place, the conduct of the parties and the circumstances of the case. It was further observed that a railway receipt is not a negotiable instrument in the same sense in which a promissory note, a cheque or a bill of exchange is so regarded under the law relating to negotiable instrument. In the present case, it has been clearly found from the record of the case that the railway receipt in respect of the suit consignment was never endorsed in favour of the defendant. It is further found that it was the intention of the parties to transfer the property in the said goods only on payment of its price. Further, the plaintiff drew a Hundi for the price of the goods on 24-7-1964 and transmitted it to the defendant together with the railway receipt to secure the payment of the Hundi at Hathras but defendant did not honour the said Hundi. Again, it cannot be said that the suit goods were in a deliverable state in view of the provisions of the Gujarat Groundnut (Transport Control) Order, 1964, which came into force on 22-7-1964. Further, the bill in respect of the suit goods Ex. 11 was prepared and the Hundi for the price of the suit goods Ex. 12 was drawn after the aforesaid Gujarat Groundnut Order came into force. It has been found by the learned appellate Judge that the plaintiff failed to show that it had endorsed the railway receipt in favour of the defendant and passed it on to the defendant. But the plaintiff admitted at Ex. 8 that it had delivered the railway receipt and the Hundi to its bankers, viz. Punjab National Bank, Therefore, the plaintiff intended that railway receipt should be obtained by the defendant from the Punjab National Bank's branch at Hathras on payment of the full price of the suit goods by honouring the Hundi, Ex. 12. The learned appellate Judge therefore held that only on payment of full price of the suit goods, the defendant could obtain the railway receipt and take delivery of the goods. Till then, they must be deemed to be in the custody and under the control of the vendor plaintiff. The aforesaid findings of the learned appellate Judge could not be assailed by Mr. Gandhi. But his only submission was that because the goods were delivered to the railway, a common carrier at Visavadar, it amounted to the passing of the property in the goods to the defendant. In view of the aforesaid settled legal position, this submission of Mr. Gandhi cannot stand and has got to be repelled.

10. Mr. Gandhi next submitted that the suit contract was a bilti-cut contract and consequently once the goods were handed over to the railway for onwards transmission to the buyer, the property in the goods passed to the buyer. Now so far as this aspect of the matter is concerned, it is necessary to have a look at the nature of a bilti cut contract. It is now well settled that bilti is the Hindi word for a railway receipt. A bilti cut rate includes the cost of bagging, weighing, transport to the railway station, loading in wagons, and other charges till the bilti is issued. The well known and usual practice of the trade is to consign the goods to self, to endorse the railway receipt in favour of a bank at the place of the buyer of the goods and to present it through the bank to the buyer. The buyer makes payment to the bank which endorses the railway receipt in his favour and delivers it to him. The property in the goods does not pass to the buyer upon the delivery of goods to the railway under Section 39 of the Sale of Goods Act as the goods are not delivered for transmission to the buyer within the meaning of that section, for the goods are consigned to self so far as the railway is concerned. Section 25(1) of the Sale of Goods Act becomes applicable in such a case. The seller reserves the right of disposal of goods until delivery of the railway receipt is taken on payment. It is only when the buyer makes the payment and takes delivery of the railway receipt that the property in the goods passes on to him. The place of payment in transaction of this nature is the place where the buyer resides, for payment is to be made by him at that place on presentation of the railway receipt. The aforesaid principle is well laid down in the case of Firm Shah Chandanmal v. Hazarimal . The learned Judge in that case has taken the view that in case of a bilti cut transaction delivery of the railway receipt to the buyer after endorsing it in his favour is necessary to give him title to the goods. In Bilti cut transactions, on payment of the price the property in the goods would pass to the buyer. The question will still remain of the transport and other carriage charges etc. till the Bilti is issued. The only effect of a bilti cut transaction is that all these incidental charges for the goods transported till the Bilti is issued have to be borne by the buyer. Thus the bilti cut rates include the burden of transport charges and all other carriage charges which the buyer has to bear. But such Bilti cut rate has nothing to do with the question as to when the property in the goods passes to the buyer in such a bilti cut contract. That has to be decided according to the provisions of the Sale of Goods Act. The aforesaid settled legal position leaves no room for doubt that even in a bilti cut contract where the buyer is liable to pay all the incidental costs till the bilti is issued along with the price of the goods, the property in the goods passes only when he makes payment at his end when the collecting bank receives the amount as an agent of the seller. The same question was also examined by the Division Bench of the Madhya Pradesh High Court infirm Bachhraj Amolakchand v. Firm Nandlal Sitaram : AIR1966MP145 . In the aforesaid decision, the division Bench of the Madhya Pradesh High Court observed that the distinction between a station delivery contract and a bilti cut contract is that in the case of a station delivery contract the rate includes the expenses of sending the goods upto the station and duty to get the railway receipt prepared is not on the seller; while in the later case, it is the duty of the seller to get the railway receipt prepared for fulfilling his obligation under the contract and the railway freight is to be paid by the buyer who undertakes the risk of transit, price being payable against the railway receipt at the place of the buyer. Thus under the bilti cut contract, the buyer is liable to pay the charges for carriage and transport of the goods from the end of the seller to the end of the buyer and even though the buyer undertakes the risk so far as the property in the goods is concerned, it passes to the buyer when all this payment is made at his end. Consequently, it cannot be held as Mr. Gandhi would like to have it that as the goods under (he present bilti cut contract were sent under the railway receipt from Visavadar the property in the goods passed immediately to the buyer once the goods were handed over to the railway for being transmitted to the defendant at Hathras especially when the defendant was nowhere in the picture either as endorsee of railway receipt or consignee of goods and was to come into possession of the railway receipt only when he retired the Hundi at Hathras by paying the full amount of the contract price of the goods along with the carriage charges etc. reflected by the bilti or the railway receipt. It is further interesting to note that even though in the suit, the plaintiff tried to make out a case that the price of the goods was to be paid at Rajkot, the plaintiff's witness had to admit that the price of the goods was to be paid at Hathras and only then the railway receipt was to be delivered to the defendant at Hathras: and not before it. The plaintiff's telegram to the defendant Ex. 16 clearly shows that the defendant had to retire the Hundi at Hathras and only then he was to get the railway receipt accompanying the said Hundi. In the said telegram, the plaintiff made a grievance that even though the plaintiff had fulfilled his part of the contract by sending the Hundi through the bank, the defendant had not retired the Hundi, at his end and he, therefore, requested him to honour the Hundi immediately. The plaintiff had also addressed a lawyer's notice to the defendant, Ex. 25, This notice addressed to the defendant by the plaintiff clearly shows that the defendant was to retire the Hundi at Hathras on payment of price. Thus, by plaintiff's own evidence it is well established that the railway receipt of which the plaintiff was the consignee and which was not endorsed to the defendant could not have passed title in the goods to the defendant till he retired the Hundi at Hathras. It is an admitted fact that the defendant could not retire the Hundi at Hathras because the goods never reached Hathras and on way they were intercepted by the officers of the State of Gujarat and they were requisitioned. In that view of the matter, it must be held that the property in the goods never passed to the defendant and at the time they were requisitioned by the State Government under the Defence of India Act, they were the property of the plaintiff. The first submission of Mr. Gandhi, therefore, has got to be repelled. Accordingly, I concur with the finding of the learned appellate Judge when he held that the property in the suit goods did not pass to the defendant when the goods were banded over to the railway at Visavadar railway station for being transmitted to Hathras. Mr. Gandhi in passing made a submission that there was no clear issue as to whether the plaintiff had reserved his right of disposal of suit goods under Section 25(1) of the Sale of Goods Act and consequently Section 23(2) of the said Act comes into pay and applies to the fads of the case. It is difficult to accept this submission of Mr. Gandhi in the tight of the aforesaid proved and admitted facts. When judged in the context of the settled legal position. Hence it is clear that once the plaintiff as consignee did not endorse the railway receipt in favour of the defendant, and once it is established that the railway receipt was to be handed over to the defendant at Hathras only on his payment of contract alongwith the charges etc. though the Branch of Punjab National Hathras for onwards remission to the plaintiff, the conclusion is that the property in the goods did not pass to the buyer at all as the aforesaid conditions were never satisfied. It is pertinent to note that the learned trial Judge has framed issue Nos. 3 and 4 as under:

3. Whether the plaint shows the cause of action for suit either wholly or in part accrued within the jurisdiction of this Court.

4. Whether the plaintiff proves that as soon as on 19-7-1964 the goods were delivered to the railway Visavadar, the properly therein was transferred to the defendant and the goods were since then with the railway on the defendant's risk.

The said issues were answered in the affirmative by the learned trial Judge in the light of the relevant provisions of the Sale of Goods Act. Issue No. 4 clearly covers the relevant aspect pertaining to the passing of title to the said goods from the seller to the buyer as per the provisions of the Sale of Goods Act. it is a pure issue of law. If Mr. Gandhi can reply upon Section 23(2) of the said Act for pressing the said issue, it necessarily follows that the other side can equally rely upon Section 25(1) of the Act to counter the plaintiff's submission. In fact, all these aspects have already been argued in both the courts and decided by the courts. The learned appellate Judge on a consideration of the relevant facts in the light of the statutory provisions has taken the view that Section 25(1) would apply to the facts of the case. Consequently it cannot be said that nonframing of a separate issue on the question has caused any prejudice to the plaintiff. The plaintiff well knew the requirements of issue No. 4 and the matter was fully thrashed out before the trial Court on evidence and the learned trial Judge held in favour of the plaintiff. It is only the appellate court that has taken the contrary view. It is further interesting to note that no complaint was made before the appellate Court that a specific issue under Section 25(1) of the Act was required to be framed by the trial Court arid the non-framing of such an issue had caused prejudice to the plaintiff. It is now too late in the day for Mr. Gandhi for the plaintiff to make any complaint about the non-framing of an issue regarding the applicability of Section 25(1) for the first time in the second appeal, I find that no prejudice has been caused to the plaintiff by non-framing of such an issue as Mr. Gandhi would like me to believe specially when the trial Court on a consideration on all aspects did hold in favour of the plaintiff. It is only the appellate Court that has taken the contrary view. The said view of the appellate court is well borne out from the record of the case and in the light of the well established position of law. The first submission of Mr. Gandhi, therefore, fails.

11. So far as the second submission of the Mr. Gandhi is concerned, it is a corollary of the first submission. Mr. Gandhi contended that if the property in the suit goods had passed to the buyer prior to the requisition of the said goods, then the plaintiff would be entitled to difference between the contract price and the price offered by the Government. But once it is held repelling the first submission, that the property in the suit goods had not passed to the buyer at the time when there was interception during the transit from Visavadar railway station to Hathras and when the goods were requisitioned by the State Government, it must necessarily follow that the suit goods of the plaintiff had never belonged to the defendant and consequently no question of the plaintiff being entitled to the difference between the contract price and the realised price, to be recovered from the defendant could ever survive for consideration. The second submission of Mr. Gandhi is, therefore, liable to fail as a logical consequence of the rejection of the first submission.

12. That takes me to the next submission of Mr. Gandhi. It was contended by him that the learned appellate Judge has committed a patent error of law in holding that the suit contract got frustrated. In order to appreciate the aforesaid submission of Mr. Gandhi, it is necessary to recall the fact that the suit goods which were the property of the seller were being transmitted through the railway from Visavadar to Hathras. In the meanwhile the Gujarat Groundnut (Transport Control) Order, 1964 duly framed under the Defence of India Act and the Rules came into force from 22-1-1962 and exercising power under the said order the competent authority requisitioned these goods and intercepted the goods which were then taken over by the State Government and therefore there remained no possibility of the suit goods being transmitted outside the Gujarat State upto Hathras. It. is pertinent to note that it is an admitted position that before the goods could be taken outside the Gujarat State, the aforesaid order came into force and hence it became illegal to send the goods beyond the State of Gujarat to Hathras in U.P. The goods could never reach their destination because of the supervening event of the control order. It is further pertinent to note that the plaintiff had to take a permit from the competent authority. He did not do so and by the notice of the Collector, Junagadh, dated 4-10-1964, the goods were requisitioned under the Defence of India Rules, 1962, in exercise of his powers under the said Rules read with the Government Notification, Home and Civil Supplies Department, dated 11-9-1964, Thus, the very subject matter of the contract was withdrawn from its operation and it became absolutely impossible for either side to insist upon the performance of the contract. The moment this supervening event occurred, the very substratum of the contract got destroyed and hence the provisions of Section 56 of the Contract Act came into operation. As per the said provisions, the agreement to do an act which became impossible in itself was void. A contract to do an act which after the contract is made became impossible or by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. Under these circumstances, the learned appellate Judge was quite justified in holding that the suit contract became impossible of performance as per Section 56 of the Contract Act. I do not find any error of law committed by the learned appellate Judge when he came to the aforesaid finding on the basis of these well established facts on the record In the case of Boothalinga Agencies v. V.T.C. Poriaswami Nadar : [1969]1SCR65 , the Supreme Court had an occasion to analyse the provisions of Section 56 of the Contract Act. It has been in terms laid down in the aforesaid decision that the doctrine of frustration of contract is really an aspect or part of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and hence comes within the purview of Section 56 of the Contract Act. It has been observed by the Supreme Court in the aforesaid decision that in English law the question of frustration of contract has been treated by Courts as a question of construction depending upon the true intention of the parties. In contrast, the statutory provisions contained in Section 56 of the Contract Act lay down a positive rule of law and English authorities cannot therefore be of direct assistance though they have persuasive value in showing how English Courts have approached and decided cases under similar circumstances. The Supreme Court of course clarified that the provisions of Section 56 cannot apply to a case of 'self-induced frustration'. In other words, the doctrine of frustration of contract cannot apply where the event which is alleged to have frustrated the contract arises from the act or election 6f a party. The facts before the Supreme Court case were that the parties to the contract had entered into a contract to dispose of imported chickory which arrived at Madras port on December 13,1955. The said import was governed by the provisions of the Import (Control) Order, 1955, which came into force on December 7, 1955. Clause 5(4) of the 1955 order expressly provided that the licensee shall comply with all the conditions imposed or deemed to be imposed under the clause one of which was that the goods will not be sold. Therefore the sale of imported goods would be a direct contravention of Clause 5(4) and under Section 5 of the Imports and Exports (Control) Act, 1947 any contravention of the Actor any other made or deemed to have been made under the Act was punishable with imprisonment upto one year or with fine or both. In the aforesaid facts, the Supreme Court found that even though the contract was enforceable on November 26, 1965 when it was entered into, the performance of the contract became impossible or unlawful after December 7. 1955 and so the contract became void under Section 56 of the Contract Act after the coming into force of the Imports Control Order, 1955 during the performance of that contract and this was not a case of self-induced frustration. There was no choice or election left to the party to supply chickory other than under the terms of the contract. On the other hand, there was positive prohibition imposed by the licencee upon the party not to sell the imported chickory to any other party but he was permitted to utilise it only for consumption as raw material in his own factory. Thus in the aforesaid case the Supreme Court found that Section 56 directly applied in the contract was a completely frustrated. In the case of Firm Bachhraj v. Firm Nandlal Sitaram : AIR1966MP145 (supra) to which I made a reference earlier the question of frustration of contract was also on the anvil. In this case before the Division Bench of Madhya Pradesh High Court, the facts were that on 2-12-1957 and 16-12-1957 the defendant firm entered into contract with the plaintiff for the purchase of 220 bags of rice and 480 bags of rice at specified rates. The contracts were reduced to writing. The transactions were bilti cut under which the goods were to be sent by rail from Bilaspur to three different places in the Bihar State. The plaintiff firm indented for the requisite number of wagons for despatching the goods a day after making the above contracts, that it so say, on 3-12-1957 and 17-12-1957. However before the wagons could be allotted to the plaintiff firm, the Central Government, in exercise of the power conferred under Section 3 of the Essential Commodities Act passed an order on 20-12-1957 banning the export of rice from the State of Madhya Pradesh to any other State in the Union of India for an indefinite period. After the imposition of this ban, all the station Masters in Madhya Pradesh were instructed by the South East Railway to stop booking of rice to any station outside Madhya Pradesh. The plaintiff, therefore, admittedly did not book the goods by rail and did not send the railway receipt to the defendant firm asking the latter to take delivery. In the background of the aforesaid facts the question that cropped up for consideration of the Madhya Pradesh High Court was whether the doctrine of frustration comes into play when a contract becomes impossible of performance, after it is made, due to circumstances beyond the control of the parties. It is a special case of discharge of the contract. When persons enter into a contract the performance of which is dependent on the continued availability of a specific thing and by reason of circumstances beyond the control of the parties, that availability comes into an end, the contract stands dissolved. It was held that the commercial or practical purpose of the instant contract was defeated or overthrown by the restrictions and embargoes on export outside the State put by the Government. It was further observed that the foundation of the instant bilti-cut contract was and must be taken to have been the availability of the wagons. But the non-availability of the wagons in the instant case prevented the performance of the contract. The parties had not contemplated the non-availability of the wagons when the contract was entered into. The uncertainties of the future, no doubt, were there when the contract was made, but when those uncertainties became realities, the commercial venture frustrated and excused the performance of the contract for both the parties. The Division Bench of the Madhya Pradesh High Court came to the aforesaid conclusion relying upon a series of judgment of the different High Courts including the Bombay High Court. Applying the aforesaid principles to the facts of the present case no doubt is left in my mind that the suit contract got frustrated by reason of an unforeseen event, after the said goods were delivered to the common carrier for onwards journey to Hathras. They did not reach Hathras but were seized on account of the Groundnut Control Order and therefore, they were prevented from being carried to Hathras outside the State of Gujarat. Thus, the very foundation of the contract was knocked down by this supervening overriding event because the delivery of the suit goods was the essence of the contract. In fact, the entire contract fall through, once the State Government prohibited carnage of these goods outside the State of Gujarat and it made it an offence to do so. Thus, the commercial viability of the contract completely fell through and the substratum of the contract was gone, for no fault of the plaintiff, The defendant, therefore, was ready and willing to receive the goods at Hathras, could not get them as the goods could not arrive at that end and he went on waiting. The State of Gujarat requisitioned the said goods before they could be taken out of the limits of the Gujarat State, under the provisions of the Defence of India Rules and the result was that both the sides were absolved of their corresponding rights and liabilities under the contract which became completely impossible of performance. Under the circumstances, it cannot be said that Section 56 was wrongly applied by the learned appellate Judge to the facts of the present case. The third submission of Mr. Gandhi, therefore, fails.

13. That takes me to the last submission of Mr. Gandhi. It was contended that even assuming that the suit contract got frustrated and the goods could not be delivered because of the supervening event of the goods being requisitioned by the State of Gujarat, even then under the bilti cut transaction once the goods were handed over to the common carrier for onwards journey, and the plaintiff did so on behalf of the defendant, the freight charges and other consequential charges which the plaintiff had to bear till the goods were loaded in the railway wagons at Visavadar must be borne by the defendant and he should be made liable at least to pay the same. This was an attempt on the part of Mr. Gandhi to make the best of a bad bargain. This claim centres round a sum of Rs. 1592/-. It is necessary to note that such a contention was not specifically put forward before the lower appellate court when the appellate court took the view that the property in the goods had not passed to the buyer at the time when they were requisitioned by the State Government and that the contract thus got frustrated. At that time, the plaintiff could have argued before the appellate court that instead of dismissing the whole suit, it should have been decreed to the extent of freight and other incidental charges which the plaintiff had to bear on behalf of the defendant under the bilti cut transaction. But apart from this fact, the further fact which clearly emerges from the record of the case is that as at the time of the requisitioning of the suit goods, the property in the goods had not passed to the buyer as already held by me while answering the 1st submission of Mr. Gandhi. It must therefore be held that the requisitioned goods belonged to the plaintiff and not to the defendant. Hence whatever carriage charges or freight charges the plaintiff must have borne on these goods when they were carried to the Visavadar station within the limits of the State of Gajarat remained the liability of the plaintiff as the goods all throughout remained the property of the plaintiff and the carriage charges which were incurred were necessarily for his own purpose and for which he cannot make the defendant liable., Mr. Gandhi's submission that he had never acted free for the defendant and he made the goods available to the railway for being carried from Visavadar to Hathras under the bilti cut contract and hence the defendant would be liable to pay the entire carriage charges cannot be accepted. To an extent Mr. Gandhi is right. The plaintiff never intended to do anything free of charge for the defendant. He incurred all carriages charges for the defendant. But the question is whether the defendant could be made liable for the same. If the goods had reached Hathras, the defendant would surely have been liable to pay all the charges which the plaintiff had incidentally incurred and they would have been added to the price of the suit goods. But once the suit contract itself is held to have been frustrated on the way, both the parties were absolved from their respective rights and liabilities under the contract which became non est. If the defendant is not held liable to pay the main contract price of the goods, it would be impossible to hold that still he would be liable under the very same contract to pay carriage charges and freight charges for those very goods which never became the property of the defendant. That would really create inconsistent and contradictory situations. Therefore, it is not possible to accept the submission of Mr. Gandhi that in any case the plaintiff would be entitled to a decree to the extent of freight and other charges which he had to bear. Mr. S.M. Shah, learned Advocate appearing for the defendant in this connection pointed out that the plaintiff had not established that he had really borne these freight and other incidental charges for and on behalf of the defendant. In that connection, he invited my attention to the admissions of the plaintiff's partner Ratilal, Ex. 8. In his cross-examination, he stated that at the time when the R.R. was obtained the plaintiff had not paid railway carriage charges. Now such a sentence in cross-examination of the plaintiff's witness cannot be taken in isolation. In his examination-in-chief, he had clearly stated that he had to pay railway freight and other charges to the tune of Rs. 1952/-. It is true that the defendant was not the consignor. Under the bilti cut contract he may not have acted directly and loaded goods in the railway. But ultimately, the burden of payment of the railway freight and other charges was to fall upon the defendant as can be seen clearly from Exs. 21, 22, 23. To that extent, Mr. Shah is not right when he contended that the plaintiff had not paid these charges. It appears clear that the plaintiff must have paid these charges as held by the trial Court. But the question is whether the defendant has anything to do with the said charges once the contract get frustrated and when the defendant was absolved from its liability for the suit goods. As the defendant cannot be saddled with any liability for the suit goods, the payment of any incidental charges consequent upon the delivery of the goods to the railway, by way of freight and other charges, also can not be demanded from it. As the properly in the goods had remained with the plaintiff, when plaintiff's goods travelled from Visavadar to Sabarmati the plaintiff had to pay the railway charges up to Sabarmati and not the defendant. All these charges could have been validly passed on to the defendant if the suit goods had reached their destination i.e. Hathras and in that eventuality, the defendant would have been liable for payment of the contract price of goods alongwith all the carriage charges as it was ability cut contract. But on the facts of the present case, once it is held that the defendant was absolved of all its liability under the contract on account of the application of the doctrine of frustration, no liability could be fastened upon the defendant for the payment of carriage charges when these goods never reached their destination and got intercepted midway between Visavadar and Hathras as Sabarmati within the limits of the Gujarat State itself. The last submission of Mr. Gandhi, therefore, fails. These were the four contentions raised by Mr. Gandhi in support of this second appeal and as all of them fail, the result is that this second appeal fails and is liable to be dismissed. However in view of the facts and circumstances of the case, there should be no order as to costs althroughout especially when plaintiff suffered for no fault of its even though it was desirous to see that its goods reached Hathras but because of the interception by the State authorities, the contract came to an end.

14. Therefore, the only proper order as to costs is that there will be no order as to costs althroughout. To this limited extent of costs, this second appeal shall stand allowed. Save and except to the extent as stated above, the second appeal is dismissed on merits and the decree of the lower appellate Court is confirmed. Orders accordingly.


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