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1965 Supreme(SC) 86
SUPREME COURT OF INDIA
P.B. GAJENDRAGADKAR, C.J.I., RAGHUBAR DAYAL AND V. RAMASWAMI, JJ.
Badriprasad, Appellant
Versus
The State of M.P. and another, Respondents.
Civil Appeal No. 672 of 1964.
Advocates appeared
Mr. C. B. Agarwala and Dr. W. S. Barlingay, Senior Advocates, (Mr. A. G. Ratnaparkhi, Advocate, with them), for Appellant; Mr. M. Adhikari, Advocate General for the State of Madhya Pradesh and Mr. B. Sen, Senior Advocate (M/s. M. S. K. Sastri and M. N. Shroff, Advocates and Mr. B. P. Kapur, Advocate for Mr. I. N. Shroff, Advocate, with them), for Respondent No. 1
Headnote:(1) Contract-ratification-contract by agent-ratification by the principal-possibility of loss on basis of the Contract-Contract may be ratified by the principal even after the goods are lost-lost of goods before ratification does not discharge obligation under the Contract-Forest Contract Rules (M.P.)-R.32.
At an auction of forest produce, the contractor and the Sub-Divisional Officer signed the contract of auction as required by the M. P. Forest Contract Rules. Later on the Chief Conservator of Forests formally signed the contract. Between these two dates, the cut timber sold to the contractor was burnt by fire. The contractor contested the liability to pay the contract amount on the ground that as the goods auctioned ceased to exist before the ratification by the Chief Conservator of Forests, here could be no ratification after the goods had ceased to exist.
Held: The liability under the contract could not be avoided in the ground that the timber was burnt before the Chief Conservator of Forests signed the contract. It was within the realm or possibility that the forest produce might be lost on account of fire or other risks mentioned in rule 32 of the M. P. Forest Contract Rules before the date on which the contract was formally signed by the Chief Conservator. [Paras 29 & 33]
The ratification by the chief Conservator relates back to the date on which the Sub-Divisional Officer and the contractor signed the contract [Para 29]
(2) Sales of Goods Act, 1930-Ss. 20 & 25-M. P. Forest Contract Rules-R. 8-payment in instalments by the contractor deemed payment in full-properly in goods auctioned pass to the contractor on delivery of the forest produce-section 20 applies to such case.
Where the payment by instalment is deemed to be payment in full, the property in the forest produce auctioned vests in the contractor when its possession is given to the contractor. The right of the Government to stop the removal of forests produce under Rule 8 does not change the position. In such a case section 20 of the Indian sales of Goods Act, 1930, shall apply and not section 25 (1) of that Act. [Paras 30 & 32]
Judgment
RAGHUBAR DAYAL J.: This appeal, by special leave, arises out of a suit instituted by the appellant for a declaration that he was not liable to pay a certain amount originally due from defendant-respondent No. 2 and for the issue of a permanent injunction restraining the State Government, Madhya Pradesh, defendant-respondent No.1 from continuing the proceedings for the recovery of the amount or for starting any fresh proceedings. The suit was decreed by the Trial Court but, on appeal, the High Court reversed the decree and dismissed the appellant s suit.
2. The admitted facts of the case are that on December 24, 1956, respondent No. 2 purchased at the public auction sale held by the Divisional Forest Officer, Harda, the cut timber and arkat trees of coupe No. 9 Eastern, East Kalibhit Range, in Harda Forest Division, for Rupees 70,200. The appellant stood surety for the purchaser, viz., respondent No. 2. The purchase price was to be paid in four instalments, according to para 4 of the deed of contract. Rupees 17,600 were to be paid at more and were so paid. The other instalments were due on March 1, May 15 and December 15, 1957. These instalments were not paid by respondent No. 2 and hence respondent No. 1 took proceedings against the appellant for the recovery of the amount.
3. According to the terms of the contract, the contractor, respondent No. 2, was to commence his work of collecting and removing the cut timber within 1 month after furnishing a copy of the boundary certificate. This certificate, Exhibit D-1, was furnished on February 5, 1957 and stated that the respondent No. 2 had clearly understood the boundaries of the areas covered by the lease and that he had taken possession of the standing/felled/collected material in the aforesaid coupe as announced at the auction and described in the said lease and that he was satisfied that the quantity delivered to him agreed substantially with that announced at the auction.
4. The appellant Badri Prasad signed this certificate as a witness. The work could continue upto June 30, 1958.
5. Interest was to be charged at 6-1/4 per cent per annum in respect of the instalments not paid on the due dates. The removal of the forest produce purchased from the contract areas was to be according to specified routes and, after they had been examined at the depots specified in clause 5 of the contract deed. Clauses 5A and 5B of the contract made it incumbent on the forest contractor respondent No. 2 to set apart certain timber for certain purposes to the agriculturists and the residents of the villages till three months before the expiry of the contract. The Forest Contract Rules were deemed to be part of the contract entered into between respondent No. 2 and the State, by clause 6 of the contract.
6. The formal deed of contract was signed by the Chief Conservator of Forests on May 3, 1957 and the preamble of the deed gives the date of the making of the contract to be May 3, 1957.
7. The First Schedule to the Contract states:
"The forest produce sold and purchased consists of: All standing trees bearing hammer mark of marginally shown device at base and breast height. All felled trees marked at the butt end and stumps with the device shown in the margin."
This is signed by the contractor, respondent No. 2 and by the Divisional Forest Officer, Harda Division, dated December 24, 1956. The trace of the coupe sold was signed by respondent No. 2 and the Divisional Forest Officer on November 29, 1956, prior to the actual auction sale. The Third Schedule relating to the out-turn register was also signed by respondent No. 2 and by the appellant who stood surety and the Divisional Forest Officer, on December 24, 1956.
8. The security bond was signed by the appellant on December 29, 1956 and by the Divisional Officer on March 30, 1957 and was countersigned by the Chief Conservator on May 3, 1957.
9. The entire coupe whose cut timber was sold to the respondent was divided into four sections A, B, C and D.
