LL.B. IV Term Paper : LB - 4035 – Commercial Transactions
(Sale
PART - A : SALE
Prescribed Legislations:
1. The Sale
2. The Hire-Purchase Act,
1972
Prescribed Readings
1. K. Ramamoorthy, Pollock
& Mulla The Sale
2. V. Krishnamachari and
Surender K. Gogia, T.S. Venkatesa Iyer’s Sale
Goods Act, 1930 (8th ed.,
2002)
Topic 1 - General : Formation of Contracts of Sale
The Sale
Chapter 1 Preliminary
S1 Short Title, Extent and
Commencement
S2 Definitions
In this Act, unless there is
anything repugnant in the subject of content-
(1) ‘buyer" means a person who buys or
agrees to buy goods,
(2) "delivery" means voluntary
transfer of possession from one person to another.
S3 Application of provisions
of Act 9 of 1872
Chapter 2 Formation of the
Contract
S4 Sale
(1) A contract of sale of
goods is a contract whereby the seller transfers or agrees to transfer the property
in goods to the buyer for a price.
There may be a contract of sale between one part-owner and another.
(2) A contract
of sale may be absolute or conditional
(3) Where under a contract of sale the
property in the goods in transferred from the seller to the buyer, the contract
is called a sale, but where the transfer of the property in the goods is to
take place at a future time or subject to some condition thereafter to be
fulfilled, the contract is called an agreement to sell.
(4) An agreement to sell becomes a sale when
the time elapses or the conditions are fulfilled subject to which the property
in the goods is to be transferred.
S5 Contract of sale how made
(1) A contract of sale is
made by an offer to buy or sell goods for a price and the acceptance of such
offer. The contract may provide for the immediate delivery of the goods or
immediate payment of the price or both, or for the delivery or payment by instalments,
or that the delivery or payment or both shall be postponed.
(2) Subject to the provisions of any law for
the time being in force, a contract of sale may be made in writing or by word
of mouth, or partly in writing and partly by word of mouth or may be implied
from the conduct of the parties.
S6 Existing or future goods
(1) The goods which form the
subject of a contract of sale may be either existing goods, owned or possessed
by the seller, or future goods.
(2) There may be a contract for the sale of
goods the acquisition of which by the seller depends upon a contingency which
may or may not happen.
(3) Where by a contract of sale the seller
purports to effect a present sale of future goods, the contract operates as an
agreement to sell the goods.
S7 Goods perishing before
making of contract
Where there is a contract for
the sale of specific goods, the contract is void if the goods without the
knowledge of the seller have, at the time when the contract was made, perished
or become so damaged as no longer to answer to their description in the
contract.
S8 Goods perishing before sale but after agreement to
sell
Where there is an agreement
to sell specific goods, and subsequently the goods without any fault on the
part of the seller or buyer perish or become so damaged as no longer to answer
to their description in the agreement before the risk passes to the buyer, the
agreement is thereby avoided.
S9 Ascertainment of price
(1) The price in a contract
of sale may be fixed by the contract or may be left to be fixed in manner
thereby agreed or may be determined by the course of dealing between the
parties.
(2) Where the price is not determined in
accordance with the foregoing provisions, the buyer shall pay the seller a
reasonable price. What is a reasonable price is a question of fact dependent on
the circumstances of each particular case.
S10 Agreement to sell at valuation
(1) Where there is an
agreement to sell goods on the terms that the price is to be fixed by the
valuation of a third party and such third party cannot or does not make such
valuation, the agreement is thereby avoided.
Provided that, if the goods or any part
thereof have been delivered to, and appropriated by, the buyer, he shall pay a
reasonable price therefor.
(2) Where such third party is prevented from
making the valuation by the fault of the seller or buyer, the party not in
fault may maintain a suit for damages against the party in fault.
The Hire-Purchase Act, 1972 (sections 3-5)
Chapter II Form and Contents of Hire-Purchase
Agreements
S3 Hire-Purchase agreements to be in writing and
signed by parties thereto.
(1) Every hire-purchase
agreement shall be -
(a) in writing, and
(b) signed by all the parties thereto
(2) A hire-purchase agreement shall be void if
in respect thereof any of the requirements specified in sub-section (1) has not
been complied with
(3) Where there is a contract of guarantee,
the hire-purchase agreement shall be signed by the surety also, and if the
hire-purchase agreement is not so signed, the hire-purchase agreement shall be
voidable at the option of the owner.
Comments
Every hire-purchase agreement
is to be in writing and signed by all the parties of the agreement, where there
is contract of guarantee, the agreement is to be signed by the surety also.
S4 Contents of hire purchase agreement.
(1) Every hire-purchase
agreement shall state-
(a) The hire-purchase price of the goods to
which the agreement relates,
(b) The cash price of the goods, that is to
say, the price at which the goods may be purchased by the hirer for cash,
(c) The date on which the agreement shall be
deemed to have commenced.
(d) the number of installments by which the
hire-purchase price is to be paid, the amount of each of those installments,
and the date, or the mode of determining the date, upon which it is payable,
and the person to whom and the place where it is payable and
(e) the goods to which the agreement relates,
in a manner sufficient to identity them.
(2) Where any part of the hire-purchase price
is, or is to be, paid otherwise than in cash or by cheque, the hire-purchase
agreement shall contain a description of the part of the hire-purchase price.
(3) Where any of the requirements specified in
sub-section (1) or sub-section 92) has not been complied with, the hirer may
institute a suit for getting the hire-purchase agreement rescinded, and the
court may, if it is satisfied that the failure to comply with any such
requirement has prejudiced the hirer, rescind the agreement on such term as it
thinks just, or pas such other order as it thinks fit in the circumstances of the
case.
Comments
In every hire-purchase
agreement (i) the hire-purchase price of the goods, (ii) the cash price of the
goods, (iii) the date on which the agreement is deemed to have commenced, (iv)
the number of instalments by which the hire-purchase price is to be paid, (v)
the amount of each instalments and the date on which it is payable, (vi) the
person to whom and the place where it is payable, (vii) the goods to which the
agreement relates, are to be stated. If any part of the hire-purchase price is,
or is to be, paid otherwise than in cash or by cheque than the description of
that part of the hire-purchase price is also to be stated. If any of the above
said requirements have not been complied with, the hirer can institute a suit
for getting the hire-purchase agreement rescinded.
S5 Two or more agreements when treated as a single
hire-purchase agreement.
Where by virtue of two or
more agreements in writing, none of which by itself constitutes a hire-purchase
agreement, there is a bailment of goods and the bailee has an option to
purchase the goods and the requirements of section 3 and section 4 are
satisfied in relation to such agreements, the agreements shall be treated for
the purposes of this Act as a single hire-purchase agreement made at the time
when the last of the agreements was made.
(a) Concept of ‘Goods’
1. Mahadeo v. State of Bombay
Some of the proprietors of
the former State of Madhya Pradesh
The petitioners filed petitions
under Art. 32 of the Constitution of India challenging the legality of the
action taken. by the Government on the ground that it was an invasion of their
fundamental rights. They contended (1) that the Government stepped into the
shoes of the quondam proprietors and was bound by the agreements into which the
latter had entered, before their proprietary rights were taken over by the
Government, (2) that the petitioners were not proprietors as defined in the Act
and therefore ss. 3 and 4 of the Act did
not apply to them, (3) that the agreements were in essence and effect licenses granted to them to cut, gather and
carry away the produce in the shape of
tendu leaves, or lac, or timber or wood, (4) that the agreements granted
no 'interest in land ' or 'benefit to arise out of land' and that object of the
agreements could only be described as sale of goods as defined in the Indian
Sale of Goods Act, and (5) that the interest of the petitioners was not
proprietary right but only a right to get goods in the shape of leaves, etc The
petitioners relied on the decision in Firm Chhotabhai jethabai Patel and Co. v.
The State of Madhya Pradesh
Held : (1) that the
agreements required registration and in the absence of it the rights could not
be entertained. Srimathi Shantabai v. State of Bombay, [1959] S.C.R. 265,
followed.
(2) That in cases where the period
stipulated in the agreement had expired, the only remedy, if any, was to sue for
breach of contract and no writ to enforce expired agreements could issue. ,
(3) That on their true
construction the agreements in question were not contracts of sale of goods.
(4) That both under the Act
in question and the Central Provinces Land Revenue Act, 1917, the forests and
trees in the Zamindari area belonged to the proprietors and they were items of
proprietary rights. Consequently, the rights conveyed to the petitioners under
the agreements were proprietary rights, which under ss. 3 and 4 of the Act,
became vested in the State.
(5) That assuming that the agreements -did not amount to
grant of any proprietary right by the proprietors to the petitioners, the
latter could have only the benefit of their respective contracts or licenses.
In either case, the State had not, by the Act, acquired or taken possession of such
contracts or licenses and, consequently, there had been no infringement of the
petitioners' fundamental rights which alone could support a petition under Art.
32 of the Constitution.
Chhotabai jethabai Patel and
Co. v. The State of Madhya Pradesh
--
2. R.D. Saxena v. Balaram Prasad Sharma, AIR 2000 SC 2912
SC held that files containing
copies of the records cannot be held as goods – Observed that to become “goods”
an article must be something which can ordinarily come to the markets to be
bought & sold. Case papers entrusted by the clients to his counsel are not
goods u/s 171 of Indian Contract Act, 1872 & it cannot by any imagination
u/s 171 be stretched to mean case papers, entitling their relation by the
lawyer as his lien for the purposes of realising his fee. To fall within
purview of S171 ICA 1872, “goods” should have marketability & the person to
whom they are bailed should be in position to dispose of them in consideration
of money. – In other words, the goods referred to in S171 of ICA, 1872 are
saleable goods. No scope for converting case files into money, nor can they be
sold to any 3rd party. Court held that even under common law no such
lien can be claimed with respect to the case file & such documents which
are necessary for the further progress of the case is filed in the court.
3. Commr. of Sales Tax, M.P. v M.P. Electricity Board, Jabalpur
SC observed – merely because
electric energy is not tangible or cannot be moved or touched by a piece of
wood or a book it cannot be considered immovable property as it has all the
attributes of movable property. It is needless to repeat that, this is capable
of abstraction, consumption & use.
It can be transmitted, transferred, delivered, stored, possessed etc in
the same way as any other movable property.
(b) ‘Sale
8. State of Madras v.
Gannon Dunkerley & Co. (Madras
Facts: - Respondents à Pvt Ltd Co doing business in construction of
buildings, roads, etc for sale of sanitary wares & other goods. Appeal
arises out of proceedings for assessment of sales tax payable by respondent.
Issue:- Whether provisions of
Madras General Sales Tax Act are ultra vires, in so far as they seek to impose
a tax on the supply of materials in execution of works contract treating it as
a sale of goods by the contractor & the answer to it must depend on the
meaning to be given to words “sale of goods” in entry 48 List II Schedule VII
to the GoI Act 1935.
Court observed that to
constitute a valid sale, there must be concurrence of the following elements.
Viz. (a) parties competent to contract (b) mutual consent (c) a thing, the
absolute or general property in which is transferred from the seller to the
buyer (d) a price in money paid or promised.
Definition of Sale in Benjamin’s Chalmer’s and in Halsbury’s law of England
Both agreement & sale
should relate to the same subject matter – where goods delivered not the goods
constructed for the purchase – buyer right to reject or accept & claim
damages for breach of warranty.
In a building contract, the
agreement between parties is that contractor should construct a building
according to specifications contained in the agreement, & in consideration
there for receive payment as provided there in and as will presently be shown
there is in such an agreement neither contract to sell the materials used in
construction, nor does property pass there in
as movables. It is impossible to maintain that there is implicit in a
building contract a sale of materials as understood in law.
The expression “Sale of Goods”
in Entry 48 is a Nomen Juris, its essential ingredients being an agreement to
sell movable for a price & property passing there in pursuant to that
agreement. In a building contract which is, as in present case, one entire
& indivisible - & it is not within the competence of the provincial
legislature u/ Entry 48 to impose a tax on supply of materials used in such a
contract treating it as a sale.
(c) Statutory Transactions
11. Vishnu Agencies (P) Ltd. v. Commercial Tax Officer, AIR 1978 SC 449 : (1978)
1 SCC 520
SC overruled earlier decision
in New India Sugar Mills case – expressed its agreement with dissenting
judgement of Hidayatullah J. in that case – Held that the transaction of supply
of cement by a distributor to a permit holder in terms of the provisions of WB
Cement Control Act & the WB Cement Control Order amounts to sale and the
same is eligible to Sales Tax.
(d) Contract for ‘Works’/ ‘Labour’
15. Sentinel Rolling Shutters & Engg. Co.
(P) Ltd. v. CST, AIR 1978 SC 545 : (1978) 4 SCC 260
Appellant company entered
into a contract for the fabrication, supply & erection & installation
of rolling shutters in a sugar factory. It was held the shutters came into
existence as a unit when the components parts are fixed in position on the premises
& it becomes the property of the customer as soon as it comes into being,
& there was no transfer of property in the rolling shutter by the
manufacturer to the customer as a chattel. The contract therefore was held to
be one of work & labour & not a contract of sale.
16. Ram Singh & Sons Engineering Works v. CST, AIR 1979 SC 545 : (1979)
1 SCC 487
There was a contract for
fabrication & erection of 3 motion electrical overhead travelling cranes.
The fabrication & erection was one single indivisible process & such a
crane came into existence only when the erection was complete. The erection was
a fundamental & integral part of the contract, & the crane came into
existence as a unit only when the component parts were fixed in position &
erected at the site. At that stage it became the property of the customer
because it was embedded on his land. In such a case there was no transfer of
property to the customer in the crane, as a chattel. It was held that the
contract was in no way different from one for fabrication and erection of an
open godown or shed with asbestos or tin sheets fixed on columns. It was
therefore a contract for work & labour & not a contract for sale.
18. Northern India Caterers (India )
Ltd. v. Lt. Governor of Delhi
It was initially held that
not only the service of meals to the visitors in the hotel on an all inclusive
basis but also service of meals in a restaurant to the casual visitors was in
the nature of a service provided to the customers & the same could not be
considered to be a transaction of sale & therefore the transactions were
not subject to the imposition of sales tax.
SC reviewed its own decision in the above case and Held that where
food is supplied in an eating house or restaurant & it is established upon
the facts that the substance of the transaction evidenced by its dominant
object is a sale of food & the rendering of services is merely incidental,
the transaction would undoubtedly be eligible to sales tax. In every case it
will be for the taxing authority to ascertain the facts of the case when making
an assessment under the relevant sales tax law & to determine upon those
facts whether a sale of food supplied is intended.
(e) Hire-Purchase Agreement
20. K.L. Johar & Co. v. Dy., C.T.O., AIR 1965 SC 1082 : (1965) 2 SCR
112
Facts: The
appellant is a financing company & its main business is to advance money to
persons who purchase motor vehicles. The course of business followed by the
appellant to enter into hire purchase agreement with those who want to purchase
motor vehicles. CTO imposed tax on such transaction treating them to be sales,
the appellant objected to the levying of such tax.
Issue:
Whether the hire-purchase agreement constitutes sale or not?
Court observed that in
hire-purchase agreement, the hirer enjoys two types of rights:
(a) A right to use the goods
hired and (b) an option to purchase the goods in accordance with the terms of
the agreement. It also has two aspects (a) Effect of bailment (b) element of
sale, in the sense that it contemplates an eventual sale. The element of sale
fructifies when the option is exercised by the intending purchaser after
fulfilling the terms of the agreement.
When the hirer ‘does not have
the option to return’ it will be an agreement to buy and not Hire-Purchase,
even if the price payable in instalments and the seller has the power to seize
the goods on the default. The intention of the parties is crucial.
Court observed that taxable
event under the act is the sale of goods and until that event takes place there
can be no liability to pay tax. (only when option is exercised after fulfilling
all terms of the H-P agreement). Wanchoo
J, agreeing with Lord Herschell, L.C. à Immaterial whether price is paid at once or in
instalments. H-P Agreement partakes of
the nature of bailment with an element of sale added to it. – A hirer may not
be bound to purchase the thing hired but where there is an obligation or an
option to buy on the terms that the hirer on payment of a premium as also the
number of instalments shall enjoy the goods which ultimately may become his
property, the transaction amounts to one of H-P, though the title to the goods
would remain with the owner till all the instalments are paid or the hirer has
exercised his option to finalize the purchase. Nature of payment – part hire –
part sale – sale tax authority to determine in an appropriate way the price of
the vehicle on the date the hirer exercises his option & becomes owner.
Finally SC held that
Legislature has no power to alter the definition of the term sale under the
sale of goods act & a transaction under a H-P agreement could not become
sale until the intending buyer had actually exercised his option of purchasing
the goods and that the transaction amounted to a H-P & would amount to sale
only when the option is exercised.
Topic 2 : Conditions and Warranties
Stipulations as to time;
Implied Conditions and Warranties – as to title, quality, fitness, etc., Sale
Description and by Sample;
Treating conditions as warranties
The Sale
S11. Stipulations as to time.- Unless a
different intention appears from the terms of the contract, stipulations as to
time of payment are not deemed to be of the essence of a contract of sale.
Whether any other stipulation as to time is of the essence of the contract or
not depends on the terms of the contract.
S12. Condition and warranty.-
(1) A stipulation in a
contract of sale with reference to goods which are the subject thereof may be a
condition or a warranty.
(2) A condition is a
stipulation essential to the main purpose of the contract, the breach of which
gives rise to a right to treat the contract as repudiated.
(3) A warranty is a
stipulation collateral to the main purpose of the contract, the breach of which
gives rise to a claim for damages but not to a right to reject the goods and
treat the contract as repudiated.
(4) Whether a stipulation in
a contract of sale is a condition or a warranty depends in each case on the
construction of the contract. A stipulation may be a condition, though called a
warranty in the contract.
S13. When condition to be treated as warranty.-
(1) Where a contract of sale
is subject to any condition to be fulfilled by the seller, the buyer may waive
the condition or elect to treat the breach of the condition as a breach of
warranty and not as a ground for treating the contract as repudiated.
(2) Where a contract of sale
is not severable and the buyer has accepted the goods or part thereof, 1[ the
breach of any condition to be fulfilled by the seller can only be treated as a
breach of warranty and not as a ground for rejecting the goods and treating the
contract as repudiated, unless there is a term of the contract, express or
implied, to that effect.
(3) Nothing in this section
shall affect the case of any condition or warranty fulfilment of which is
excused by law by reason of impossibility or otherwise.
S14. Implied undertaking as to title, etc.-
In a contract of sale, unless the circumstances of the contract are such as to
show a different intention, there is-
(a) an implied condition on
the part of the seller that, in the case of a sale, he has a right to sell the
goods and that, in the case of an agreement to sell, he will have a right to
sell the goods at the time when the property is to pass;
(b) an implied warranty that
the buyer shall have and enjoy quiet possession of the goods;
(c) an implied warranty that
the goods shall be free from any charge or encumbrance in favour of any third
party not declared or known to the buyer before or at the time when the
contract is made.
S15. Sale by description.- Where there is a contract for the sale of goods by
description, there is an implied condition that the goods shall correspond with
the description; and, if the sale is by sample as well as by description, it is
not sufficient that the bulk of the goods corresponds with the sample if the
goods do not also correspond with the description.
S16. Implied conditions as to quality or fitness.- Subject to the provisions of this Act and of any
other law for the time being in force, there is no implied warranty or
condition as to the quality or fitness for any particular purpose of goods
supplied under a contract of sale, except as follows:-
(1) Where the buyer,
expressly or by implication, makes known to the seller the particular purpose
for which the goods are required, so as to show that the buyer relies on the
seller' s skill or judgment, and the goods are of a
1. Certain words omitted by
Act 33 of 1963, s. 3.
description which it is in
the course of the seller' s business to supply (whether he is the manufacturer
or producer or not), there is an implied condition that the goods shall be
reasonably fit for such purpose: Provided that, in the case of a contract for
the sale of a specified article under its patent or other trade name, there is
no implied condition as to its fitness for any particular purpose.
(2) Where goods are bought by
description from a seller who deals in goods of that description (whether he is
the manufacturer or producer or not), there is an implied condition that the
goods shall be of merchantable quality: Provided that, if the buyer has
examined the goods, there shall be no implied condition as regards defects
which such examination ought to have revealed.
(3) An implied warranty or
condition as to quality or fitness for a particular purpose may be annexed by
the usage of trade.
(4) An express warranty or
condition does not negative a warranty or condition implied by this Act unless
inconsistent therewith.
S17. Sale
(1) A contract of sale is a
contract for sale by Sample where there is a term in the contract, express or
implied, to that effect.
(2) In the case of a contract
for sale by sample there is an implied condition-
(a) that the bulk shall
correspond with the sample in quality;
(b) that the buyer shall have
a reasonable opportunity of comparing the bulk with the sample;
(c) that the goods shall be
free from any defect, rendering them unmerchantable, which would not be
apparent on reasonable examination of the sample.
S62. Exchange of implied terms and conditions.- Where any right, duty or liability would arise
under a contract of sale by implication of law, it may be negatived or varied
by express agreement or by the course of dealing between the parties, or by
usage, if the usage is such as to bind both parties to the contract.
S63. Reasonable time a question of fact.- Where in this Act any reference is made to a
reasonable time, the question what is a reasonable time is a question of fact.
The Hire-Purchase Act, 1972 (sections 6-7)
S6. Warranties and conditions to be implied in hire-
purchase agreements.
(1) Notwithstanding anything
contained in any contract, in every hire- purchase agreement there shall be an
implied warranty
(a) that the hirer shall have
and enjoy quiet possession of the goods; and
(b) that the goods shall be
free from any charge or encumbrance in favour of any third party at the time
when the property is to pass.
(2) Notwithstanding anything
contained in any contract, in every hire- purchase agreement there shall be-
(a) an implied condition on
the part of the owner that he has a right to sell the goods at the time when
the property is to pass;
(b) an implied condition that
the goods shall. be of merchantable quality, but no such condition shall be
implied by virtue of this clause-
(i) as regards defects of
which the owner could not reasonably have been aware at the time when the
agreement was made, or
(ii) as regards defects
specified in the agreement (whether referred to in the agreement as defects or
by any other description to the like effect), or
(iii) where the hirer has
examined the goods, or a sample thereof, as regards defects which the
examination ought to have revealed, or
(iv) if the goods are second-
hand goods and the agree- ment contains a statement to that effect.
(3) Where the hirer, whether
expressly or by implication,-
(a) has made known to the
owner the particular purpose for which the goods are required, or
(b) in the course of any
antecedent negotiations, has made that purpose known to any other person by
whom those negotiations were conducted, there shall be an implied condition
that the goods shall be reasonably fit, for such purpose.
(4) Where the goods are let
under a hire- purchase agreement by reference to a sample there shall be-
(a) an implied condition on
the part of the owner that the bulk will correspond with the sample in quality,
and
(b) an implied condition on
the part of the owner that the hirer will have a reasonable opportunity of
comparing the. bulk with the sample.
(5) Where the goods are let
under a hire- purchase agreement by description there shall be an implied
condition that the goods will correspond with the description; and if the goods
are let under the agreement by reference to a sample as well as by description,
it shall not be sufficient that the bulk of the goods correspond with the
sample if the goods do not also correspond with the description.
(6) An owner shall not be
entitled to rely on any provision in a hire- purchase agreement excluding or
modifying the condition set out in subsection (3) unless he proves that before
the agreement was made the provision was brought to the notice of the hirer and
its effect made clear to him.
(7) Nothing in this section
shall prejudice the- operation of any other enactment or rule of law whereby
any condition or warranty is to be implied in any hire- purchase agreement.
S7. Limitation on hire- purchase charges.
(1) In this section,-
(a) " cash price
instalment", in relation to a hire- purchase instalment, means an amount
which bears to the net cash price the same proportion as the amount of the
hire- purchase instalment bears to the total amount of hire- purchase price;
(b) " deposit"
means any sum payable by the hirer under the hire- purchase agreement by way of
deposit or other initial payment or credited or to be credited to him under the
agreement on account of any such deposit or payment, whether that sum is to be
or has been discharged by payment of money or by transfer or delivery of goods
or by any other means; (c)" net cash price", in relation to goods
comprised in a hire- purchase agreement, means the cash price of such goods as
required to be specified in the hire- purchase agreement under clause (b) of
sub- section (1) of section 4, less any deposit as defined in clause (b);
(d) " net hire- purchase
charges", in relation to a hire- purchase agreement for any goods, means
the difference between the net hire- purchase price and the net cash price of
such goods;
(e) " net hire- purchase
price", in relation to goods comprised in a hire- purchase agreement,
means the total amount of hire- purchase price of such goods as required to be
specified in the hire- purchase agreement under clause (a) of sub- section
(1) of section 4 less,-
(i) any amount which is
payable to, cover the expenses of deliver in the goods or any of them to or to
the order of the
hirer and which is specified
in the agreement as included in the hire- purchase price;
(ii) any amount which is
payable to cover registration or other fees under any law in respect of the
goods or the agreement or both and which is specified in the agreement as
included in the, hire- purchase price; and
(iii) any amount which is
payable for insurance (other than third party insurance) in respect of the
goods and which is specified in the agreement as included in the hire- purchase
price;
(f) " statutory
charges", in relation to a hire- purchase agreement, means the aggregate
of the amounts calculated in accordance with the provisions of sub- section (2)
as statutory charges in respect of each, of the cash price instalments
corresponding to each of the hire- purchase instalments under the agreement.
(2) The statutory charges, in
respect of a cash price instalment, shall be an amount calculated at the rate
of thirty per centum per annum or, if a lower rate is specified under sub-
section (3), at such, lower rate, in accordance with the following formula: SC
CIxRxT 100 where,- SC,- represents the statutory charges; CI,- represents the
amount of cash price instalment ex- pressed in rupees or fractions of rupees;
R,- represents the rate; and T,- represents the time, expressed in years and
fractions of years, that elapses between the date of the agreement and the date
on which the hire- purchase instalment corresponding to the cash, price
instalment is payable under the agreement.
(3) The Central Government
may, by notification in the Official Gazette, and after consultation with the
Reserve Bank of India, specify the rate per centum per annum, being a rate
which shall not be, less than ten per centum per annum, at which statutory
charges may be calculated under sub- section (2) and different rates may be so
specified in respect of hire- purchase agreements relating to different classes
or sub- clauses of goods.
(4) Where the net hire-
purchase charges in relation to a hire- purchase agreement exceed the statutory
charges in relation to such agreement calculated in accordance with the
provisions of sub- section (2), the hirer may, by notice in writing to the
owner, either elect to treat the agreement as void or to have his liability
reduced by the amount by which the net hire- purchase charges exceed the
statutory charges aforesaid.
(L) Where a hirer elects, in
accordance with the provisions of subsection (4), to treat the hire- purchase
agreement as void, the agreement shall be void, and the amount paid or provided
whether by cash, cheque or other consideration, by or on behalf of the hirer in
relation to the agreement shall be recoverable by the hirer as a debt due to
him by the owner.
(6) Where the hirer elects to
have his liability reduced by the amount referred to in sub- section (4), his
liability shall be reduced by that amount and that amount may be set off by the
hirer against the amount that would otherwise be due under the agreement and,
to, the extent to which it is not so set off, may be recovered by the hirer as
a debt due to him by the owner.
24. Priest v. Last (1903) 2 KB 148
Plaintiff went to defendant
(chemist) to purchase a hot water bottle – def sold him an American rubber
bottle saying it would stand hot but not boiling water – Plaintiff purchased
the bottle for his wife and while she was using the same it burst & injured
her. Since the bottle was not fit for being used as a hot water bottle the
particular purpose for which the buyer had purchased it, the defendant was held
liable to pay compensation for the breach of the implied condition.
25. British Paints (India )
Ltd. v. Union of India , AIR
1971 Cal.
UoI invited tenders for the
supply of paints of reqd specifications – plaintiff offered a tender & the
same was accepted – Govt placed the order with provision that the goods were to
be inspected by the inspector at Calcutta & he was satisfied that goods
were up to the mark. The same could be dispatched by the plaintiff on receipt
of the inspection notes. The original date of delivery was extended from time
to time & finally extended up to 30th April 1953. Plaintiff
failed to supply in time as a result of which GoI cancelled the contract.
Plaintiff’s contention was
that time was not the essence of the contract in as much as the time had been
extended from time to time, it would appear therefrom that UoI did not consider
the fixed time to be a condition precedent & at the most it was a warranty,
& the action of UoI in cancelling the contract was anticipatory breach
& would entitle them to damage.
Court held that time was the
essence of the contract & that time was extended upto 30th April
1953 by the mutual consent of the parties & that the goods had not been
offered or delivered in time & were also not of requisite quality. The
defendant therefore have the right to repudiate the contract for the remaining
portion of the goods.
Accordingly time is
considered to be the essence in the following cases:-
(1) Where the parties have
expressly agreed to treat it as of the essence
(2) Where delay operates as
an injury
(3) Where the nature &
necessity of the contract require it to be so constructed.
27. Niblett v. Confectioners Material Co. Ltd. (1921) 3 KB 387
Tins of Condensed milk – From
NY to London
28. Wallis v. Patt (1911)AC 394
Contract to supply “English
sainfoin seeds” but seller supplied an inferior variety known as Giant Sainfoin
seeds. In an action by the buyer, the seller relied on an exemption clause in
the agreement stipulating that “The seller gives no warranty, express or
implied as to growth, description or any other matters.”. It was held that the
exemption of liability could only be in respect of a warranty, but in this case
there was a breach of implied condition as the goods were not of the
description given in the contract. The seller was, therefore, held liable for
the breach of the condition.
29. Baldry v. Marshall
Car fit for touring purpose –
8 Cylinder Bugatti car – uncomfortable & unsuitable for touring purposes –
Held plaintiff entitled to recover money as while ordering car by its trade
name was still relying on the recommendation of the seller as regards the
suitability of the car for the specific purpose.
30. Godley v. Parry (1969) 1 All ER 36
Retailer purchased from
wholesaler – Toy Catapults in a sale of sample – retailer sold one of those
catapults to a boy which broke into pieces because of manufacturing defect
therein and the boy injured – Retailer was held bound to pay compensation to
the boy and in his turn sued the wholesaler to claim indemnity from him – It
was found that retailer had examined the sample and a reasonable examination on
his part could not reveal this defect. It was held that under this
circumstances, the wholesaler was bound to indemnify the retailer for the loss
suffered by the latter.
Doctrine of Caveat Emptor
31. Jones v. Just (1868) 3
Q.B. 197 (Self Study)
32. Richard Thorold Grant v. Australian Knitting Mill, Ltd. AIR 1936 PC
34
Plaintiff purchases two
underwears from defendant – underwears consisted chemicals & he contracted
dermatitis on wearing them – buyer had TB previously – oversensitive – court
held that the underwear was not of merchantable quality – Privy Council held
defendants were liable – caveat emptor not applicable as defect was a latent
defect – Implied condition discussed above is that the goods shall be suitable
to the normal buyer, if generally suitable to the normal buyer but caused harm
to a particular buyer’s over-sensitiveness then seller not liable – In this
case the garments were found not to have gone through an essential wash used to
remove sulphite during the manufacturing process
33. Crowther v. Shannon Motor
Co. (A Firm) (1975) 1 All ER 139 (Self Study)
Second hand car – engine
replacement reqd after 3 weeks – court held that incase of 2nd hand
car – minor repair – but incase engine replacement required after 3 weeks – the
car was not reasonably fit for the purpose of being driven on the road – the
seller was held for the breach of the condition of fitness for liable purpose.
38. Bristal Tramways v. Fiat Motors Ltd. (1910) 2 KB 831
A contracted to buy from Fiat
Motors a Fiat Motor Omni Bus which he had inspected and thereafter order the
chasis of six more. A explained orally to the company that the same were
required for heavy traffic on hilly roads –When cars were delivered to A, they
broke down & were found unfit for traffic specified. It was held there was
a breach of warranty of fitness. A could therefore successfully sue Fiat Motors
for damages
Topic 3 : Effects of the Contract
Transfer of property;
Doctrine of Nemo dat quod non habet – sale by a person other than the owner,
sale by joint owner, sale by mercantile agent, sale under voidable contract,
sale by seller or buyer in possession after sale; sale in Market Overt
The Sale
S18. Goods must be ascertained.- Where there is a contract for the sale of
unascertained goods, no property in the goods is transferred to the buyer
unless and until the goods are ascertained.
S19. Property passes when intended to pass.-
(1) Where there is a contract
for the sale of specific or ascertained goods the property in them is
transferred to the buyer at such time as the parties to the contract intend it
to be transferred.
(2) For the purpose of
ascertaining the intention of the parties regard shall be had to the terms of
the contract, the conduct of the parties and the circumstances of the case.
(3) Unless a different intention
appears, the rules contained in sections 20 to 24 are rules for ascertaining
the intention of the parties as to the time at which the property in the goods
is to pass to the buyer.
S20. Specific goods in a deliverable state.- Where there is an unconditional contract for the
sale of specific goods in a deliverable state, the property in the goods passes
to the buyer when the contract is made, and it is immaterial whether the time
of payment of the price or the time of delivery of the goods, or both, is
postponed.
S21. Specific goods to be put into a deliverable state.- Where there is a contract for the sale of specific
goods and the seller is bound to do something to the goods for the purpose of
putting them into a deliverable state, the property does not pass until such
thing is done and the buyer has notice thereof.
S22. Specific goods in a deliverable state, when the
seller has to do anything thereto in order to ascertain price.- Where there is a contract for the sale of specific
goods in a deliverable state, but the seller is bound to weigh, measure, test
or do some other act or thing with reference to the goods for the purpose of
ascertaining the price, the property does not pass until such act or thing is
done and the buyer has notice thereof.
S23. Sale
(1) Where there is a contract
for the sale of unascertained or future goods by description and goods of that
description and in a deliverable state are unconditionally appropriated to the
contract, either by the seller with the assent of the buyer or by the buyer
with the assent of the seller, the property in the goods thereupon passes to
the buyer. Such assent may be express or implied, and may be given either
before or after the appropriation is made.
(2) Delivery to carrier.
Where, in pursuance of the contract, the seller delivers the goods to the buyer
or to a carrier or other bailee (whether named by the buyer or not) for the
Purpose of transmission to the buyer, and does not reserve the right of disposal,
he is deemed to have unconditionally appropriated the goods to the contract.
S24. Goods sent on approval or" on sale or
return".- When goods are
delivered to the buyer on approval or" on sale or return" or other
similar terms, the property therein passes to the buyer-
(a) when he signifies his
approval or acceptance to the seller or does any other act adopting the
transaction;
(b) if he does not signify
his approval or acceptance to the seller but retains the goods without giving
notice of re- jection, then, if a time has been fixed for the return of the
goods, on the expiration of such time, and, if no time has been fixed, on the
expiration of a reasonable time.
S25. Reservation of right of disposal.-
(1) Where there is a contract
for the sale of specific goods or where goods are subsequently appropriated to
the contract, the seller may, by the terms of the contract or appropriation,
reserve the right of disposal of the goods until certain conditions are
fulfilled. In such case, notwithstanding the delivery of the goods to a buyer
or to a carrier or other bailee for the purpose of transmission to the buyer,
the property in the goods does not pass to the buyer until the conditions
imposed by the seller are fulfilled.
(2) 1[ Where goods are
shipped or delivered to a railway adminis- tration for carriage by railway and
by the bill of lading or railway receipt, as the case may be, the goods are
deliverable to the order of the seller or his agent, the seller is prima facie
deemed to reserve the right of disposal.
(3) Where the seller of goods
draws on the buyer for the price and transmits to the buyer the bill of
exchange together with the bill of lading or, as the case may be, the railway
receipt, to secure acceptance or payment of the bill of exchange, the buyer is
bound to return the bill of lading or the railway receipt if he does not honour
the bill of exchange; and, if he wrongfully retains the bill of lading or the
railway receipt, the property in the goods does not pass to him. Explanation.-
In this section, the expressions" railway" and" railway
administration" shall have the meanings respectively assigned to them
under the Indian Railways Act, 1890 .] (9 of 1890 .)
S26. Risk prima facie passes with property.- Unless otherwise agreed, the goods remain at the
seller' s risk until the property therein is transferred to the buyer, but when
the
1. Subs. by Act 33 of 1963,
s. 4, for sub- sections (2) and (3).
property therein is
transferred to the buyer, the goods are at the buyer' s risk whether delivery
has been made or not: provided that, where delivery has been delayed through
the fault of either buyer or seller, the goods are at the risk of the party in
fault as regards any loss which might not have occurred but for such fault:
Provided also that nothing in this section shall affect the duties or
liabilities of either seller or buyer as a bailee of the goods of the other
party.
Transfer of title
S27. Sale by person not the owner.- Subject to the provisions of this Act and of any
other law for the time being in force, where goods are sold by a person who is
not the owner thereof and who does not sell them under the authority or with
the consent of the owner, the buyer acquires no better title to the goods than
the seller had, unless the owner of the goods is by his conduct precluded from
denying the seller' s authority to sell: Provided that, where a mercantile
agent is, with the consent of the owner, in possession of the goods or of a
document of title to the goods, any sale made by him, when acting in the
ordinary course of business of a mercantile agent, shall be as valid as if he
were expressly authorised by the owner of the goods to make the same; Provided
that the buyer acts in good faith and has not at the time of the contract of
sale notice that the seller has not authority to sell.
S28. Sale by one of joint owners.- If one of several joint owners of goods has the sole
possession of them by permission of the co- owners, the property in the goods
is transferred to any person who buys them of such joint owner in good faith
and has not at the time of the contract of sale notice that the seller has not
authority to sell.
S29. Sale by person in possession under voidable
contract.- When the seller of goods
has obtained possession thereof under a contract voidable under section 19 or
section 19A of the Indian Contract Act, 1872 (9 of 1972 ), but the contract has
not been rescinded at the time of the sale, the buyer acquires a good title to
the goods, provided he buys them in good faith and without notice of the
seller' s defect of title.
S30. Seller or buyer in possession after sale.-
(1) Where a person, having
sold goods, continues or is in possession of the goods or of the documents of
title to the goods, the delivery or transfer by that person or by a mercantile
agent acting for him, of the goods or documents of title under any sale, pledge
or other disposition thereof to any person receiving the same in good faith and
without notice of the previous sale shall have the same effect as if the person
making the delivery or transfer were expressly authorised by the owner of the
goods to make the same.
(2) Where a person, having
bought or agreed to buy goods, obtains, with the consent of the seller,
possession of the goods or the documents of title to the goods, the delivery or
transfer by that person or by a mercantile agent acting for him, of the goods
or documents of title under any sale, pledge or other disposition thereof to
any person receiving the same in good faith and without notice of any lien or other
right of the original seller in respect of the goods shall have effect as if
such lien or right did not exist.
The Hire-Purchase Act, 1972 (section 8)
S8. Passing of property. Subject to the provisions of this Act, the property
in the goods to which a hire- purchase agreement relates shall pass to the
hirer only on the completion of the purchase in the manner provided in the
agreement.
43. P.S.N.S. Ambalavana Chettiar v. Express Newspapers Ltd. (1968) 2 SCR
239 : AIR 1968 SC 741
Respondent(Express Newspaper)
agreed to sell to the appellant the stock of 415 tonnes of newsprint which were
lying in the respondent’s godown. There was an unconditional contract for sale
of the specific goods in a deliverable state, & the property in goods then
passed to appellants. Later on the contract was varied and the parties agreed
that appellants would buy 300 tons of stock out of 415 tons of newsprint. Thus
a contract for sale of specific goods substituted by a contract for sale of
unascertained goods. The appellant took delivery of some stock, but refused
later to take delivery of balance & repudiated the contract. The respondent
after, giving notice to appellants resold the balance goods to 3rd
party & sought to recover by way of damages the difference between the contract
price & the resale price of the goods.
Issue was whether the resale
is not properly made until the property in the goods passes to the original
buyer?
Court observed that in this
case the contract was for the sale of unascertained goods & therefore, the
property in the goods had not passed to the buyer the seller did not have a
right to resale u/S 54(2) & the measure of damages in this case was
available under Indian Contract Act, i.e. the difference between the contract
price & the market price on the date of breach of contract.
Court further held that
unless the portion is identified & appropriated to the contract, no
property can pass to the buyer. And for the purpose of measure damages if the
sale is not properly made then the damages are not awarded according to sale of
goods but they are awarded according to Indian Contract Act which is difference
between the contract price & the market price on the date of breach not as
per the resale price under the sales of goods act. Here in the present case no
property was unconditionally appropriated by respondent in favour of appellant
with the consent of appellant. Hence no property passed in goods to buyer
before sale. (Section 23).
51. Pearson v. Rose & Young, Ltd. (1950) 2 Ch.
Plaintiff gave possession of
car to Hunt(mercantile agent) to know if it could be sold – Did not authorize
to make the sale – Hunt took the registration book from plaintiff by trick then
sold the car without the plaintiff’s authority or knowledge. Hunt sold the car
to X who sold the car to Y and Y sold the same to the defendants – Plaintiff
sued the defendants to claim damages for conversion on the ground that Hunt had
no authority to sell and therefore no good title could be passed to any
subsequent transferee. – It was observed that though Hunt had possession of the
car but not the registration book. The sale of a second hand car without the
registration book could not be considered to be ‘in the ordinary course of
business’ – held that for passing a good title Hunt should have obtained the
possession of the car as well as registration book with the consent of the
owner, in the absence of which Hunt was not able to pass a good title to his
transferee or the subsequent buyers. It is also important that the Mercantile
agent should have obtained the possession of the goods in his capacity as a
Mercantile agent and not in any other capacity. If he is in possession in any
other capacity, he cannot convey a good title.
52. Morvi Mercantile Bank Ltd. v. Union of India
Firm entrusted 4 boxes
containing “menthol crystal” to the then GIP Railway for carriage from Thana
Issue was whether the pledge
of the railway receipts was a pledge of the goods represented by them or merely
a pledge of actual documents.
Court observed that the owner
of the goods can make a valid pledge of them by transferring the railway
receipt representing the said goods. The general rule is expressed by the maxim
‘nemo dal quod non habet’ i.e. “no
one can convey a better title than what he had”. To this maxim, to facilitate
mercantile transactions, the Indian law has grafted some exceptions, in favour
of bonafide pledges by transfer of documents of title from persons, whether
owner of goods or their mercantile agents who do not possess the full bundle of
rights of ownership at the time the pledges are made. To confer a right to
effect a valid pledge by transfer of documents of title relating to goods on
owners of goods with defects in title & mercantile agents, & to deny it
to the full owners thereof is to introduce an incongruity into the Act by
construction. On the other hand, the real intention of the the legislature will
be carried out if the said right is conceded to the full owner of goods &
extended by construction to owners with defects in title or their mercantile
agents.
Referred to cases Ramdas
Vithaldas Durbar v S Amerchand & Co,
Official assignee of Madras
Topic 4 : Performance of the Contract
Duties of seller and buyer;
Rules relating to delivery of goods
The Sale
S31. Duties of seller and buyer.- It is the duty of the seller to deliver the goods
and of the buyer to accept and pay for them, in accordance with the terms of
the contract of sale.
S32. Payment and delivery are concurrent conditions.- Unless otherwise agreed, delivery of the goods and
payment of the price are concurrent conditions, that is to say, the seller
shall be ready and willing to give possession of the goods to the buyer in
exchange for the price, and the buyer shall be ready and willing to pay the
price in exchange for possession of the goods.
S33. Delivery.-
Delivery of goods sold may be made by doing anything which the parties agree
shall be treated as delivery or which has the effect of putting the goods in
the possession of the buyer or of any person authorised to hold them on his
behalf.
S34. Effect of part delivery.- A delivery of part of goods, in progress of the
delivery of the whole, has the same effect, for the purpose of passing the
property in such goods, as a delivery of the whole; but a delivery of part of
the goods, with an intention of severing it from the whole, does not operate as
a delivery of the remainder.
S35. Buyer to apply for delivery.- Apart from any express contract, the seller of
goods is not bound to deliver them until the buyer applies for delivery.
S36. Rules as to delivery.-
(1) Whether it is for the
buyer to take possession of the goods or for the seller to send them to the
buyer is a question depending in each case on the contract, express or implied,
between the parties. Apart from any such contract, goods sold are to be
delivered at the place at which they are at the time of the sale, and goods
agreed to be sold are to be delivered at the place at which they are at the
time of the agreement to sell, or, if not then in existence, at the place at
which they are manufactured or produced.
(2) Where under the contract
of sale the seller is bound to send the goods to the buyer, but no time for
sending them is fixed, the seller is bound to send them within a reasonable
time.
(3) Where the goods at the
time of sale are in the possession of a third person, there is no delivery by
seller to buyer unless and until such third person acknowledges to the buyer
that he holds the goods on his behalf: Provided that nothing in this section
shall affect the operation of the issue or transfer of any document of title to
goods.
(4) Demand or tender of
delivery may be treated as ineffectual unless made at a reasonable hour. What
is a reasonable hour is a question of fact.
(5) Unless otherwise agreed,
the expenses of and incidental to putting the goods into a deliverable state
shall be borne by the seller.
S37. Delivery of wrong quantity.-
(1) Where the seller delivers
to the buyer a quantity of goods less than he contracted to sell, the buyer may
reject them, but if the buyer accepts the goods so delivered he shall pay for
them at the contract rate.
(2) Where the seller delivers
to the buyer a quantity of goods larger than he contracted to sell, the buyer
may accept the goods included in the contract and reject the rest, or he may
reject the whole. If the buyer accepts the whole of the goods so delivered, he
shall pay for them at the contract rate.
(3) Where the seller delivers
to the buyer the goods he contracted to sell mixed with goods of a different
description not included in the contract, the buyer may accept the goods which
are in accordance with the contract and reject the rest, or may reject the
whole.
(4) The provisions of this
section are subject to any usage of trade, special agreement or course of
dealing between the parties.
S38. Instalments deliveries.-
(1) Unless otherwise agreed,
the buyer of goods is not bound to accept delivery thereof by instalments.
(2) Where there is a contract
for the sale of goods to be delivered by stated instalments which are to be
separately paid for, and the seller makes no delivery or defective delivery in
respect of one or more instalments, or the buyer neglects or refuses to take delivery
of or pay for one or more instalments, it is a question in each case depending
on the terms of the contract and the circumstances of the case, whether the
breach of contract is a repudiation of the whole contract, or whether it is a
severable breach giving rise to a claim for compensation, but not to a right to
treat the whole contract as repudiated.
S39. Delivery to carrier or wharfinger.-
(1) Where, in pursuance of a
contract of sale, the seller is authorised or required to send the goods to the
buyer, delivery of the goods to a carrier, whether named by the buyer or not,
for the purpose of transmission to the buyer, or delivery of the goods to a
wharfinger for safe custody, is prima facie deemed to be a delivery of the
goods to the buyer.
(2) Unless otherwise
authorised by the buyer, the seller shall make such contract with the carrier
or wharfinger on behalf of the buyer as may be reasonable having regard to the
nature of the goods and the other circumstances of the case. If the seller
omits so to do, and the goods are lost or damaged in course of transit or
whilst in the custody of the wharfinger, the buyer may decline to treat the
delivery to the carrier or wharfinger as a delivery to himself, or may hold the
seller responsible in damages.
(3) Unless otherwise agreed,
where goods are sent by the seller to the buyer by a route involving sea
transit, in circumstances in which it is usual to insure, the seller shall give
such notice to the buyer as may enable him to insure them during their sea transit,
and if the seller fails so to do, the goods shall be deemed to be at his risk
during such sea transit.
S40. Risk where goods are delivered at distance place.- Where the seller of goods agrees to deliver them at
his own risk at a place other than that where they are when sold, the buyer
shall, nevertheless, unless otherwise agreed, take any risk of deterioration in
the goods necessarily incident to the course of transit.
S41. Buyer' s right of examining the goods.-
(1) Where goods are delivered
to the buyer which he has not previously examined, he is not deemed to have
accepted them unless and until he has had a reasonable opportunity of examining
them for the purpose of ascertaining whether they are in conformity with the
contract.
(2) Unless otherwise agreed,
when the seller tenders delivery of goods to the buyer, he is bound, on
request, to afford the buyer a reasonable opportunity of examining the goods
for the purpose of ascertaining whether they are in conformity with the
contract.
S42. Acceptance.- The buyer is deemed to have accepted the goods when he intimates to
the seller that he has accepted them, or when the goods have been delivered to
him and he does any act in relation to them which is inconsistent with the
ownership of the seller, or when, after the lapse of a reasonable time, he
retains the goods without intimating to the seller that he has rejected them.
S43. Buyer not bound to return rejected goods.- Unless otherwise agreed, where goods are delivered to the buyer and he refuses to accept them, having the right so to do, he is not bound to return them to the seller, but it is sufficient if he intimates to the seller that he refuses to accept them.
S44. Liability of buyer for neglecting or refusing
delivery of goods.- When the seller
is ready and willing to deliver the goods and requests the buyer to take
delivery, and the buyer does not within a reasonable time after such request
take delivery of the goods, he is liable to the seller for any loss occasioned
by his neglect or refusal to take delivery, and also for a reasonable charge
for the care and custody of the goods: Provided that nothing in this section
shall affect the rights of the seller where the neglect or refusal of the buyer
to take delivery amounts to a repudiation of the contract.
Topic 5 : Rights of Unpaid Seller
Who is an un-paid seller?
Un-paid Seller’s Rights – Right of lien, Right of stoppage in transit; Transfer
of goods by buyer and seller
The Sale
S45. " Unpaid seller" defined.-
(1) The seller of goods is
deemed to be an" unpaid seller" within the meaning of this Act-
(a) when the whole of the
price has not been paid or tendered;
(b) when a bill of exchange
or other negotiable instrument has been received as conditional payment, and
the condition on which it was received has not been fulfilled by reason of the
dishonour of the instrument or otherwise.
(2) In this Chapter, the
term" seller" includes any person who is in the position of a seller,
as, for instance, an agent of the seller to whom the bill of lading has been
indorsed, or a consignor or agent who has himself paid, or is directly
responsible for, the price.
S46. Unpaid seller' s rights.-
(1) Subject to the provisions
of this Act and of any law for the time being in force, notwithstanding that
the property in the goods may have passed to the buyer, the unpaid seller of
goods, as such, has by implication of law-
(a) a lien on the goods for
the price while he is in possession of them;
(b) in case of the insolvency
of the buyer a right of stopping the goods in transit after he has parted with
the possession of them;
(c) a right of re- sale as
limited by this Act.
(2) Where the property in
goods has not passed to the buyer, the unpaid seller has, in addition to his
other remedies, a right of with- holding delivery similar to and co- extensive
with his rights of lien and stoppage in transit where the property has passed
to the buyer.
Seller' s lien.
S47. Seller' s lien.-
(1) Subject. to the
provisions of this Act, the unpaid seller of goods who is in possession of them
is entitled to retain possession of them until payment or tender of the price
in the following cases, namely:-
(a) where the goods have been
sold without any stipulation as to credit;
(b) where the goods have been
sold on credit, but the term of credit has expired;
(c) where the buyer becomes
insolvent.
(2) The seller may exercise
his right of lien notwithstanding that he is in possession of the goods as
agent or bailee for the buyer.
S48. Part delivery.- Where an unpaid seller has made part delivery of the goods, he may
exercise his right of lien on the remainder, unless such part delivery has been
made under such circumstances as to show an agreement to waive the lien.
S49. Termination of lien.-
(1) The unpaid seller of
goods loses his lien thereon-
(a) when he delivers the
goods to a carrier or other bailee for the purpose of transmission to the buyer
without reserving the right of disposal of the goods;
(b) when the buyer or his
agent lawfully obtains possession of the goods;
(c) by waiver thereof.
(2) The unpaid seller of
goods, having a lien thereon, does not lose his lien by reason only that he has
obtained a decree for the price of the goods. Stoppage in transit
S50. Right of stoppage in transit.- Subject to the provisions of this Act, when the
buyer of goods becomes insolvent, the unpaid seller who has parted with the
possession of the goods has the right of stopping them in transit, that is to
say, he may resume possession of the goods as long as they are in the course of
transit, and may retain them until payment or tender of the price.
S51. Duration of transit.-
(1) Goods are deemed to be in
course of transit from the time when they are delivered to a carrier or other
bailee for the purpose of
transmission to the buyer,
until the buyer or his agent in that behalf takes delivery of them from such
carrier or other bailee.
(2) If the buyer or his agent
in that behalf obtains delivery of the goods before their arrival at the
appointed destination, the transit is at an end.
(3) If, after the arrival of
the goods at the appointed destination, the carrier or other bailee
acknowledges to the buyer or his agent that he holds the goods on his behalf
and continues in possession of them as bailee for the buyer or his agent, the
transit is at an end and it is immaterial that a further destination for the
goods may have been indicated by the buyer.
(4) If the goods are rejected
by the buyer and the carrier or other bailee continues in possession of them,
the transit is not deemed to be at an end, even if the seller has refused to
receive them back.
(5) When goods are delivered
to a ship chartered by the buyer, it is a question depending on the
circumstances of the particular case, Whether they are in the possession of the
master as a carrier or as agent of the buyer.
(6) Where the carrier or
other bailee wrongfully refuses to deliver the goods to the buyer or his agent
in that behalf, the transit is deemed to be at an end.
(7) Where part delivery of
the goods has been made to the buyer or his agent in that behalf, the remainder
of the goods may be stopped in transit, unless such part delivery has been
given in such circum- stances as to show an agreement to give up possession of
the whole of the goods.
S52. How stoppage in transit is effected.-
(1) The unpaid seller may
exercise his right of stoppage in transit either by taking actual possession of
the goods, or by giving notice of his claim to the carrier or other bailee in
whose possession the goods are. Such notice may be given either to the person
in actual possession of the goods or to his principal. In the latter case the
notice, to be effectual, shall be given at such time and in such circumstances
that the principal, by the exercise of reasonable diligence, may communicate it
to his servant or agent in time to prevent a delivery to the buyer.
(2) When notice of stoppage
in transit is given by the seller to the carrier or other bailee in possession
of the goods, he shall redeliver the goods to, or according to the directions
of, the seller. The expenses of such re- delivery shall be borne by the seller.
Transfer by buyer and seller
S53. Effect of subsale or pledge by buyer.-
(1) Subject to the provisions
of this Act, the unpaid seller' s right of lien or stoppage in transit is not
affected by any sale or other disposition of the goods which the buyer may have
made, unless the seller has assented thereto: Provided that where a document of
title to goods has been issued or lawfully transferred to any person as buyer
or owner of the goods, and that person transfers the document to a person who
takes the document in good faith and for consideration, then, if such last men-
tioned transfer was by way of sale, the unpaid seller' s right of lien or
stoppage in transit is defeated, and, if such last mentioned transfer was by
way of pledge or other disposition for value, the unpaid seller' s right of
lien or stoppage in transit can only be exercised subject to the rights of the
transferee.
(2) Where the transfer is by
way of pledge, the unpaid seller may require the pledgee to have the amount
secured by the pledge satisfied in the first instance, as far as possible, out
of any other goods or securities of the buyer in the hands of the pledgee and
available against the buyer.
S54. Sale
(1) Subject to the provisions
of this section, a contract of sale is not rescinded by the mere exercise by an
unpaid seller of his right of lien or stoppage in transit.
(2) Where the goods are of a
perishable nature, or where the un- paid seller who has exercised his right of
lien or stoppage in transit gives notice to the buyer of his intention to re-
sell, the unpaid seller may, if the buyer does not within a reasonable time pay
or tender the price, re- sell the goods within a reasonable time and recover
from the original buyer damages for any loss occasioned by his breach of
contract, but the buyer shall not be entitled to any profit which may occur on
the re- sale, If such notice is not given, the unpaid seller shall not be
entitled to recover such damages and the buyer shall be entitled to the profit,
if any, on the re- sale.
(3) Where an unpaid seller
who has exercised his right of lien or stoppage in transit re- sells the goods,
the buyer acquires a good title thereto as against the original buyer,
notwithstanding that no notice of the re- sale has been given to the original
buyer.
(4) Where the seller
expressly reserves a right of re- sale in case the buyer should make default,
and, on the buyer making default, re- sell, s the goods, the original contract
of sale is thereby rescinded, but without prejudice to any claim which the
seller may have for damages.
56. Mysore Sugar Co. Ltd., Bangalore
Plaintiff advertised for sale
certain articles like copper ingots & copper scraps & tender given by
the buyer was accepted & he lifted a part of the goods & sought time to
lift the other goods. Buyer having made a default in taking the goods, the
seller sent him a notice with a 3 day deadline to pick up the goods.
(cancellation of contract) – Buyer did not pick up the goods – Seller sought to
recover the loss arising on resale. Seller made a resale after 3 months. Sued
buyer for damages arising out of delay of selling of goods.
Court held that there was
inordinate delay of 3 months in making the resale after notice to the buyer
& due to such delay particularly in a falling market, the value realized
did not afford a good ground to fix the damages. If the resale had been
properly made in Sep 1966, the seller would have suffered no loss &
therefore the seller’s claim for compensation was rejected.
Decision referred to Sheo
Narain v New Seven Sugar & Gur
Refining Co AIR 1938 All 272 where it was held that if the delay arising in
reselling the goods is not due to fault on the part of the seller e.g. the
buyer from time to time requested for the extension of time for making the
payment, and ultimately did not pay & thus there was some delay in reselling
the goods, the delay in making the resale is not unreasonable
57. Gopalakrishna Pillai v. K.M. Mani (1984) 2 SCC 83
: AIR 1984 SC 216
Respondent sold a cow and
calf to appellant and that the cow did not yield quantity of milk which the
respondent had stated it would yield and was suffering from an incurable
disease which was concealed from the appellant by the respondent. For this
reason, the appellant asked the respondent to buy back the said cow and the
calf for the same price & thereupon the respondent agreed to buy back the
said cow and the calf. Inspite of this agreement the cow-calf returned to the
respondent but he failed to and neglected to pay.
Issue was whether the amount
claimed by respondent was a debt and was therefore deemed to be discharged.
Court observed that the debt
means any liability in cash or kind whether secured or unsecured, due from or
incurred by a debtor whether payable under a contract, or under a decree or
order of court but does not include any debt which represents the price of
goods purchase.
The case of appellant was a
resale by the buyer to the seller. A resale of goods is also a sale of goods
and the money consideration for such resale is the price payable in respect of
such re-sale. When a person purchases goods he may sell them in his turn. Such
a second sale is generally referred to as a resale. A re-sale may be to a third
person or to the original seller. In either case, the money consideration for
such second sale would be the price of goods resold.
Court held that S61 provides
for interest by way of damages & special damages where goods are resold by
the buyer to the original seller, the monetary consideration for such re-sale
is the price of the goods and such buyer would be entitled to claim interest by
way of damages, u/S61(2). Finally court held that the amount due from the
respondent to the appellant was a debt which represented the price of goods
purchased by the respondent from the appellant.
Topic 6 : Suit for Breach of Contract
Suit for price; non-delivery,
non-acceptance, damages for breach of conditions and warranties; Repudiation of
contract; Payment of damages and special damages
The Sale
S55. Suit for price.-
(1) Where under a contract of
sale the property in the goods has passed to the buyer and the buyer wrongfully
neglects or refuses to pay for the goods according to the terms of the
contract, the seller may sue him for the price of the goods.
(2) Where under a contract of
sale the price is payable on a day certain irrespective of delivery and the
buyer wrongfully neglects or refuses to pay such price, the seller may sue him
for the price although the property in the goods has not passed and the goods
have not been appropriated to the contract.
S56. Damages for non- acceptance.- Where the buyer wrongfully neglects or refuses to
accept and pay for the goods, the seller may sue him for damages for non-
acceptance.
57. Damages for non-
delivery.- Where the seller wrongfully neglects or refuses to deliver the goods
to the buyer, the buyer may sue the seller for damages for non- delivery.
S58. Specific performance.- Subject to the provisions of Chapter 11 of the
Specific Relief Act, 1877 (1 of 1877 ), in any suit for breach of contract to
deliver specific or ascertained goods, the Court may, if it thinks fit, on the
application of the plaintiff, by its decree direct that the contract shall be
performed specifically, without giving the defendant the option of retaining
the goods on payment of damages. The decree may be unconditional, or upon such
terms and conditions as to damages, payment of the price or otherwise, as the
Court may deem just, and the application of the plaintiff may be made at any
time before the decree.
59. Remedy for breach of
warranty.-
(1) Where there is a breach
of warranty by the seller, or where the buyer elects or is compelled to treat
any breach of a condition on the part of the seller as a breach of warranty,
the buyer is not by reason only of such breach of warranty entitled to reject
the goods; but he may-
(a) set up against the seller
the breach of warranty in diminution or extinction of the price; or
(b) sue the seller for
damages for breach of warranty.
(2) The fact that a buyer has
set up a breach of warranty in diminution or extinction of the price does not
prevent him from suing for the same breach of warranty if he has suffered
further damage.
60. Repudiation of contract
before due date.- Where either party to a contract of sale repudiates the
contract before the date of delivery, the other may either treat the contract
as subsisting and wait till the date of delivery, or he may treat the contract
as rescinded and sue for damages for the breach.
61. Interest by way of
damages and special damages.-
(1) Nothing in this Act shall
affect the right of the seller or the buyer to recover interest or special
damages in any case where by law interest or special damages may be
recoverable, or to recover the money paid where the consideration for the
payment of it has failed.
(2) In the absence of a
contract to the contrary, the Court may award interest at such rate as it
thinks fit on the amount of the price-
(a) to the seller in a suit
by him for the amount of the price from the date of the tender of the goods or
from the date on which the price was payable;
(b) to the buyer in a suit by
him for the refund of the price in a case of a breach of the contract on the
part of the seller from the date on which the payment was made.
Topic 7 : Auction Sale
The Sale of Goods Act, 1930
(section 64)
S64. Auction sale.- In the case of a sale by auction-
(1) where goods are put up
for sale in lots. each lot is prima facie deemed to be the subject of a
separate contract of sale;
(2) the sale is complete when
the auctioneer announces its completion by the fall of the hammer or in other
customary manner; and, until such announcement is made, any bidder may retract
his bid;
(3) a right to bid may be
reserved expressly by or on behalf of the seller and, where such right is
expressly so reserved, but not otherwise, the seller or any one person on his
behalf may, subject to the provisions hereinafter con- tained. bid at the
auction;
(4) where the sale is not
notified to be subject to a right to bid on behalf of the seller, it shall not
be lawful for the seller to bid himself or to employ any person to bid at such
sale, or for the auctioneer knowingly to take any bid from the seller or any
such person; and any sale contravening this rule may be treated as fraudulent
by the buyer;
(5) the sale may be notified
to be subject to a reserved or upset price;
(6) if the seller makes use
of pretended bidding to raise the price, the sale is voidable at the option of
the buyer.
63. Consolidated Coffee Ltd. v. Coffee Board, AIR 1980
SC 1468
Coffee board – statutory
corporation passed to provide for the development of the coffee industry under
control of the Union – The act compels the registration of all owners of coffee
estates & licensing of curers & dealers & it also imposes control
on the sale, export & re-import of coffee into India.
U/S 20 – no coffee can be
exported from India
U/S 21 – no coffee exported
from India shall be
re-imported into India
U/S 47 - all contracts for coffee in variance of this
act shall be void
Coffee board exercises
complete control-almost monopolistic-over the coffee trade in exercises of its
statutory powers.
Issue: At what point of time
does the coffee sold at the export auction conducted by the Coffee Board passes
to the registered exporters.
Decision: The court observed
that in the case of a sale by auction, the sale is complete when the auctioneer
announces its completion by the fall of the hammer or in other customary
manner; since the contract arises only when the auctioneer accepts the offer by
announcing its completion, the bidder may retract his bid until such
announcement is made.
American Jurisprudence –
contract complete only when bid accepted this being ordinarily denoted by fall
of hammer.
Once bid is accepted parties
occupy same relation towards each other as exists between promisor and
promissee in an executory contract of sale conventionally made.
At an auction sale all that
happens at the fall of hammer or at the announcement of the closure of the sale
in other customary manner is that a contract of sale comes into existence andparties get into the relationship of a promisor and
a promisee in an executory contract. Secondly, auction sales could be conditional
or unconditional and if it is latter then by virtue of the goods being specific
and in a deliverable state the property in the goods knocked down passes at the
fall of hammer by reason of the concerned provision relating to the passing of
the property. Section 64(2) of our Sale of Goods Act, being in pari materia
with s. 58(2) of the English Sale of Goods Act 1893, will have to be
interpreted in the same manner and we are therefore, of the view that it does not deal with the question of
passing of the property at auction sale but merely deals with completion of the
contract of sale which takes place at the fall of the hammer or at the
announcement of the close of the sale in other customary manner by the
auctioneer. It would also be correct to say that if the auction sale of
chattels is unconditional and is in respect of specific ascertained goods and
nothing remains to be done to the goods for putting them in a condition ready for
delivery, the property in the goods would pass to the purchaser upon the
acceptance of the bid but that would not be because of s. 64(2) but because of
s. 20 and such would not be the case if the goods sold thereat are non-specific
or unascertained goods or the auction sale is conditional.
S64 is subject to the
contrary where any right, duty or liability would arise under a contract of sale
by implication of law, it may be negatived or varied by express agreement or by
the course of dealing between the parties or by usage, if the usage is such as
to bind both the parties to the contract. But there is no reason why S62 should
not apply to rights, duties and obligations arising u/S 64 in regard to auction
sale. In other words S64 subject to S62.
S62. provides that where any
right, duty or liability would arise under a contract of sale by implication of
law, it may be negatived or varied by express agreement or by the course of
dealing between the parties, or by usage, if the usage is such as to bind both
parties to the contract.
Moreover there is intrinsic
material in S64 itself which shows that the provisions thereof could be subject
to a contract to the contrary.
Finally court held that there
is intrinsic material in S64 itself which shows that the provisions thereof
could be subject to a contract to the contrary. Moreover once it is accepted
that auction sales to which S64 applies could be unconditional or conditional
and that the auctioneer can prescribe his own terms and conditions on the basis
of which the property is exposed to sale by auction, it must be held that the
acceptance of any bid as well as the passing of property would be subject to
terms & conditions.
In this context it will be
useful to refer to a decision of this Court in A.V. Thomas & Co. Ltd. v.
Deputy Commissioner of Agricultural Income Tax where this Court recognised a distinction between
auction sales pertaining to specific or identifiable goods and auction sales in
regard to unascertained goods and held that in regard to the former the
property in the goods passed when the contract was accepted at the fall of
hammer and not in the latter case.
Further observed that where a
reserve price has been fixed, then even if the goods are specific, property
will not pass if the highest bid falls short of reserve price.
Court held that in the
penultimate sales (sales of coffee effected to registered exporters at export
auctions conducted by the Coffee Board) the property in the coffee sold there
at passes to the buyer, not at the fall of the hammer, but immediately upon
payment of full price, weightment and setting apart of delivery.
PART - B : CONSUMER PROTECTION
Prescribed Legislation:
The Consumer Protection Act,
1986 – Definitions of “Consumer”, “Complaint”, “Complainant”, “Service”,
“Defect”, and “Deficiency”
Establishment of Central,
State and District Consumer Protection Councils
Adjudicatory Bodies –
District Consumer Disputes Redressal Forum, State Consumer Disputes Redressal
Commission and National Consumer Disputes Redressal Commission – Constitution,
Powers, Jurisdiction, Procedure, Appeals.
S2(d) "consumer" means any person who-
(i) buys any goods for a consideration
which has been paid or promised or partly paid and partly promised, or under
any system of deferred payment and includes any user of such goods other than
the person who buys such goods for consideration paid or promised or partly
paid or partly promised, or under any system of deferred payment when such use
is made with the approval of such person, but does not include a person who
obtains such goods for resale or for any commercial purpose; or
(ii) 1[hires or avails of]
any services for a consideration which has been paid or promised or partly paid
and partly promised, or under any system of deferred payment and includes any
beneficiary of such services other than the person who 1[hires or avails of]
the services for consideration paid or promised, or partly paid and partly
promised, or under any system of deferred payments, when such services are
availed of with the approval of the first-mentioned person;
2[Explanation: For the
purposes of sub-clause (i), "commercial purpose" does not include use
by a consumer of goods bought and used by him exclusively for the purpose of
earning his livelihood, by means of self-employment;]
S2(c) “complaint” means any allegation in writing made
by a complainant that-
1[(i) an unfair trade
practice or a restrictive trade practice has been adopted by any trader;]
(ii) 1[the goods bought by
him or agreed to be bought by him] suffer from one or more defect;
(iii) 1[the services hired or
availed of or agreed to be hired or availed of by him] suffer from deficiency in
any respect;
(iv) a trader has charged for
the goods mentioned in the complaint a price in excess of the price fixed by or
under any law for the time being in force or displayed on the goods or any
package containing such goods;
2[(v) goods which will be
hazardous to life and safety when used, are being offered for sale to the
public in contravention of the provisions of any law for the time being in
force requiring traders to display information in regard to the contents,
manner and effect of use of such goods. with a view to obtaining any relief
provided by or under this Act;
S2 (b) "complainant" means-
(i) a consumer; or
(ii) any voluntary consumer
association registered under the Companies Act, 1956 (1 of 1956), or under any
other law for the time being in force; or
(iii) the Central Government
or any State Government,
2[(iv) one or more consumers,
where there are numerous consumers having the same interest;] who or which
makes a complaint;
S2(o) “service”
means service of any description which is made available to potential users and
includes the provision of facilities in connection with banking, financing,
insurance, transport, processing, supply of electrical or other energy, board
or lodging or both, 6[housing construction], entertainment, amusement or the
purveying of news or other information, but does not include the rendering of
any service free of charge or under a contract of personal service;
S2(f) “defect”
means any fault, imperfection or shortcoming in the quality, quantity, potency,
purity or standard which is required to be maintained by or under any law for
the time being in force or 2[under any contract, express or] implied, or as is
claimed by the trader in any manner whatsoever in relation to any goods;
S2 (g) “deficiency” means any fault, imperfection, shortcoming or inadequacy in the
quality, nature and manner of performance which is required to be maintained by
or under any law for the time being in force or has been undertaken to be
performed by a person in pursuance of a contract or otherwise in relation to
any service;
S9. Establishment of Consumer Disputes Redressal
Agencies
There shall be established
for the purposes of this Act, the following agencies, namely,-
(a) a Consumer Disputes
Redressal Forum to be known as the "District Forum" established by
the State Government 3[* * *] in each district of the State by notification:
2[PROVIDED that the State
Government may, if it deems fit, establish more than one District Forum in a
district;
(b) a Consumer Disputes
Redressal Commission to be known as the "State Commission"
established by the State Government 3[* * *] in the State by notification; and
(c) a National Consumer
Disputes Redressal Commission established by the Central Government by
notification.
S10. Composition of the District Forum
1[(1) Each District Forum
shall consist of-
(a) a person who is, or has
been, or is qualified to be a District Judge, who shall be its President;
(b) two other members, who
shall be persons of ability, integrity and standing, and have adequate
knowledge or experience of, or have shown capacity in dealing with, problems
relating to economics, law, commerce, accountancy, industry, public affairs or
administration, one of whom shall be a woman.
2[(1A) Every appointment
under sub-section (1) shall be made by the State Government on the
recommendation of a selection committee consisting of the following, namely,-
(i) the President of the
State Commission-Chairman,
(ii) Secretary, Law
Department of the State-Member,
(iii) Secretary in-charge of
the Department dealing with consumer affairs in the State-Member.
(2) Every member of the
District Forum shall hold office for a term of five years or up to the age of
65 years, whichever is
earlier, and shall not be eligible for re-appointment: PROVIDED that a member
may resign his office in writing under his hand addressed to the State
Government and on such
resignation being accepted, his office shall become vacant and may be filled by
the appointment of a person possessing any of the qualifications mentioned in
subsection
(1) in relation to the
category of the member who has resigned.
(3) The salary or honorarium
and other allowances payable to, and the other terms and
conditions of service of the
members of the District Forum shall be such as may be prescribed by the State
Government.
S11. Jurisdiction of the District Forum
(1) Subject to the other
provisions of this Act, the District Forum shall have jurisdiction to entertain
complaints where the value of the goods or services and the compensation, if
any, claimed 1[does not exceed rupees five lakhs].
(2) A complaint shall be
instituted in a District Forum within the local limits of whose jurisdiction-
(a) the opposite party or
each of the opposite parties, where there are more than one, at the time of the
institution of the complaint, actually and voluntarily resides or 1[carries on
business, or has a branch office or] personally works for gain; or
(b) any of the opposite
parties, where there are more than one, at the time of the institution of the
complaint, actually and voluntarily resides, or 1[carries on business or has a
branch office, or personally works for gain: PROVIDED that in such case either
the permission of the District Forum is given, or the opposite parties who do
not reside, or 1[carry on business or have a branch office, or personally work
for gain, as the case may be, acquiesce in such institution; or
(c) the cause of action,
wholly or in part, arises.
1[S12. Manner in which complaint shall be made
A complaint in relation to any
goods sold or delivered or agreed to be sold or delivered or any service
provided or agreed to be provided, may be filed with a District Forum, by-
(a) the consumer to whom such
goods are sold or delivered or agreed to be sold or delivered or such service
provided or agreed to be provided;
(b) any recognised consumers
association whether the consumer to whom the goods sold or delivered or service
provided or agreed to be provided is a member of such association or not; or
(c) one or more consumers,
where there are numerous consumers having the same interest, with the
permission of the District Forum, on behalf of, or for the benefit of, all
consumers so interested; or
(d) the Central or the State
Government.
S13. Procedure on receipt of complaint
(1) The District Forum shall,
on receipt of a complaint, if it relates to any goods-
(a) refer a copy of the
complaint to the opposite party mentioned in the complaint directing him to
give his version of the case within a period of thirty days or such extended
period not exceeding fifteen days as may be granted by the District Forum;
(b) where the opposite party
on receipt of a complaint referred to him under clause (a) denies or disputes
the allegations contained in the complaint, or omits or fails to take any
action to represent his case within the time given by the District Forum, the
District Forum shall proceed to settle the consumer dispute in the manner
specified in clauses (c) to (g);
(c) where the complaint
alleges a defect in the goods which cannot be determined without proper
analysis or test of the goods, the District Forum shall obtain a sample of the
goods from the complainant, seal it and authenticate it in the manner
prescribed and refer the sample so sealed to the appropriate laboratory along with
a direction that such laboratory make an analysis with a view to finding out
whether such goods suffer from any defect alleged in the complaint or suffer
from any other defect and to report its findings thereon to the District Forum
within a period of forty-five days of the receipt of the reference or within
such extended period as may be granted by the District Forum;
(d) before any sample of the
goods is referred to any appropriate laboratory under clause (c), the District
Forum may require the complainant to deposit to the credit of the Forum such
fees as may be specified, for payment to the appropriate laboratory for
carrying out the necessary analysis or test in relation to the goods in
question;
(e) the District Forum shall
remit the amount deposited to its credit under clause (d) to the appropriate
laboratory to enable it to carry out the analysis or test mentioned in clause
(c) and on receipt of the report from the appropriate laboratory, the District
Forum shall forward a copy of the report along with such remarks as the
District Forum may feel appropriate to the opposite party;
(f) if any of the parties
disputes the correctness of the findings of the appropriate laboratory, or
disputes the correctness of the methods of analysis or test adopted by the
appropriate laboratory, the District Forum shall require the opposite party or
the complainant to submit in writing his objections in regard to the report
made by the appropriate laboratory;
(g) the District Forum shall
thereafter give a reasonable opportunity to the complainant as well as the
opposite party of being heard as to the correctness or otherwise of the report
made by the appropriate laboratory and also as to the objection made in
relation thereto under clause (f) and issue an appropriate order under section
14.
(2) The District Forum shall,
if the complaint received by it under section 12 relates to goods in respect of
which the procedure specified in sub-section (1) cannot be followed, or if the
complaint relates to any services,-
(a) refer a copy of such
complaint to the opposite party directing him to give his version of the case
within a period of thirty days or such extended period not exceeding fifteen
days as may be granted by the District Forum;
(b) where the opposite party,
on receipt of a copy of the complaint, referred to him under clause (a) denies
or disputes the allegations contained in the complaint, or omits or fails to
take any action to represent his case within the time given by the District
Forum, the District Forum shall proceed to settle the consumer dispute,-
(i) on the basis of evidence
brought to its notice by the complainant and the opposite party, where the
opposite party denies or disputes the allegation contained in the complaint, or
(ii) on the basis of evidence
brought to its notice by the complainant where the opposite party omits or
fails to take any action to represent his case within the time given by the
Forum.
(3) No proceedings complying
with the procedure laid down in sub-sections (1) and (2) shall be called in
question in any court on the ground that the principles of natural justice have
not been complied with.
(4) For the purposes of this
section, the District Forum shall have the same powers as are vested in a civil
court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit
in respect of the following matters, namely,-
(i) the summoning and
enforcing attendance of any defendant or witness and examining the witness on
oath;
(ii) the discovery and
production of any document or other material object producible as evidence;
(iii) the reception of
evidence on affidavits;
(iv) the requisitioning of
the report of the concerned analysis or test from the appropriate
laboratory or from any other
relevant source;
(v) issuing of any commission
for the examination of any witness; and
(vi) any other matter which
may be prescribed.
(5) Every proceeding before
the District Forum shall be deemed to be a judicial proceeding within the
meaning of sections 193 and 228 of the Indian Penal Code (45 of 1860), and the
District Forum shall be deemed to be a civil court for the purposes of section
195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974).
2[(6) Where the complainant
is a consumer referred to in sub-clause (iv) of clause (b) of subsection (1) of
section 2, the provisions of Rule 8 of Order I of Schedule I to the Code of
Civil Procedure, 1908 (5 of 1908) shall apply subject to the modification that
every reference therein to a suit or decree shall be construed as a reference
to a complaint or the order of the District Forum thereon.
S15. Appeal à DF -> State Comm à 30 days – Proviso sufficient cause
S16. Composition of the State Commission
(1) Each State Commission
shall consist of-
(a) a person who is or has
been a Judge of a High Court, appointed by the State Government, who shall be
its President:
2[PROVIDED that no
appointment under this clause shall be made except after consultation with the
Chief Justice of the High Court.
(b) two other members, who
shall be persons of ability, integrity and standing and have adequate knowledge
or experience of, or have shown capacity in dealing with, problems relating to
economics, law, commerce, accountancy, industry, public affairs or
administration, one of whom shall be a woman:
2[PROVIDED that every
appointment under this clause shall be made by the State Government on the
recommendation of a selection committee consisting of the following, namely,-
(i) President of the State
Commission-Chairman,
(ii) Secretary of the Law
Department of the State-Member
(iii) Secretary in-charge of
the department dealing with consumer affairs in the State-Member.]
(2) The salary or honorarium
and other allowances payable to, and. the other terms and
conditions of service 3[* *
*] of the members of the State Commission shall be such as may be prescribed by
the State Government.
2[(3) Every member of the
State Commission shall hold office for a term of five years or up to the age of
sixty-seven years, whichever is earlier and shall not be eligible for
re-appointment.
(4) Notwithstanding anything
contained in sub-section (3), a person appointed as a President or as a member
before the commencement of the Consumer Protection (Amendment) Act, 1993, shall
continue to hold such office as President or member, as the case may be, till
the completion of his term.
S17. Jurisdiction of the
State Commission
Subject to the other
provisions of this Act, the State Commission shall have jurisdiction-
(a) to entertain-
(i) complaints where the
value of the goods or services and compensation, if any, claimed exceeds rupees
1[five lakhs but does not exceed rupees twenty lakhs;] and
(ii) appeals against the
orders of any District Forum within the State; and
(b) to call for the records
and pass appropriate orders in any consumer dispute which is pending before or
has been decided by any District Forum within the State where it appears to the
State Commission that such District Forum has exercised a jurisdiction not
vested in it by law, or has failed to exercise a jurisdiction so vested or has
acted in exercise on its jurisdiction illegally or with material irreg
S19. Appeals
Any person aggrieved by an
order made by the State Commission in exercise of its powers conferred by
sub-clause (i) of clause (a) of section 17 may prefer an appeal against such
order to the National Commission within a period of thirty days from the date
of the order in such form and manner as may be prescribed:
PROVIDED that the National
Commission may entertain an appeal after the expiry of the said period of
thirty days if it is satisfied that there was sufficient cause for not filing
it within that period.
S 20. Composition of the National Commission
(1) The National Commission
shall consist of-
(a) a person who is or has
been a Judge of the Supreme Court, to be appointed by the Central Government,
who shall be its President:
2[PROVIDED that no
appointment under this clause shall be made except after consultation with the
Chief Justice of India;]
(b) four other members who shall
be persons of ability, integrity and standing and have adequate knowledge or
experience of, or have shown capacity in dealing with, problems relating to
economics, law, commerce, accountancy, industry, public affairs or
administration, one of whom shall be a woman:
2[PROVIDED that every
appointment under this clause shall be made by the Central Government on the
recommendation of a selection committee consisting of the following, namely,-
(a) a person who is a Judge
of the Supreme Court, to be nominated by the Chief Justice of India- Chairman,
(b) the Secretary in the
Department of Legal Affairs in the Government of India-Member.]
(2) The salary or honorarium
and other allowances payable to and the other terms and conditions of service
3[* * *] of the members of the National Commission shall be such as may be
prescribed by the Central Government.
2[(3) Every member of the
National Commission shall hold office for a term of five years or up to the age
of seventy years, whichever is earlier and shall not be eligible for
re-appointment.
(4) Notwithstanding anything
contained in sub-section (3), a person appointed as a President or as a member
before the commencement of the Consumer Protection (Amendment) Act, 1993, shall
continue to hold such office as President or member, as the case may be, till
the completion of his term.]
S21. Jurisdiction of the National Commission
Subject to the other
provisions of this Act, the National Commission shall have jurisdiction-
(a) to entertain
(i) complaints where the
value of the goods or services and cornpensation, if any, claimed exceeds
rupees 1[twenty lakhs]; and
(ii) appeals against the
orders of any State Commission; and
(b) to call for the records
and pass appropriate orders in any consumer dispute which is pending before or
has been decided by any State Commission where it appears to the National
Commission that such State Commission has exercised a jurisdiction not vested
in it by law, or has failed to exercise a jurisdiction so vested, or has acted
in the exercise of its jurisdiction illegally or with material irregularity.
S22. Power of and procedure applicable to the National
Commission
The National Commission
shall, in the disposal of any complaints or of any proceedings before it, have
(a) the powers of a civil
court as specified in sub-sections (4), (5) and (6) of section 13;
(b) the power to issue an
order to the opposite party directing him to do any one or more of the things
referred to in clauses (a) to (i) of sub-section (1) of section 14, and follow
such procedure as may be prescribed by the Central Government.
Great post.
ReplyDeletehttps://note.com/robertothomas