A non-transferable specific delivery contract is exempt from the operation of the Forward Contracts (Regulation) Act, 1952.

Headnote:
FORWARD CONTRACTS (REGULATION) ACT, 1952 - SECTION 2(F), 2(N), 15(1), 17(1), 18(1) - NON-TRANSFERABLE SPECIFIC DELIVERY CONTRACT - CONSTRUCTION OF CONTRACT - IMPLIED AGREEMENT - NOTIFICATION UNDER SECTION 15(1) - VALIDITY.
Fact of the Case:

The appellant and the respondent entered into a contract for the sale and purchase of jute bags. The appellant later claimed that the contract was void and illegal as it violated the provisions of the Forward Contracts (Regulation) Act, 1952. The respondent contended that the contract was a non-transferable specific delivery contract and was therefore exempt from the operation of the Act.
Finding of the Court:

The Court held that the contract was a non-transferable specific delivery contract and was therefore not hit by the notification issued by the Central Government under Section 15(1) of the Act. The Court found that the parties had an implied agreement that the rights and liabilities under the contract were not to be transferred and that the Bill of Lading relating to the contract was also not to be transferred.
Issues: Whether the contract in question was a transferable or non-transferable specific delivery contract within the meaning of the Forward Contracts (Regulation) Act, 1952.
Ratio Decidendi: The Court held that the contract was a non-transferable specific delivery contract based on the following factors: * The contract contained a clause prohibiting the seller from subletting, transferring, or assigning the contract without the written permission of the purchaser. * The jute bags were intended for packing foodgrains which were arriving in bulk at an Indian port, indicating that the goods were not intended to be transferred. * The contract required the goods to be inspected prior to shipment and shipped in accordance with the instructions contained in the contract, further indicating that the goods were not intended to be transferred. * The name of the consignee was specified in the contract, and payment was to be made according to a specific procedure, indicating that the parties did not intend for the rights under the contract to be transferred.
Final Decision: The Court dismissed the appeal and held that the decision of the Calcutta High Court was correct.

Judgement

RAMASWAMI, J.: This appeal is brought, by special leave, from the judgment of the Calcutta High Court dated September 18, 1963 dismissing an application under Section 33 of the Arbitration Act.

2. By its letter dated September 14, 1960, the appellant made an offer for sale to the respondent of 500 Bales (1,50,000 bags) B Twills on the terms and conditions mentioned in the said letter. The offer was accepted by the Director General Supplies and Disposals on behalf of the respondent by his letter No. CAL/DL-1/5750-L/II/Modi/158 dated September 18, 1960. The appellant deposited with the Reserve Bank of India the sum of Rs, 20,182.50 P. towards security deposit on September 22, 1960 as required by the acceptance letter. The date of delivery fixed under the contract was November 30, 1960 and the respondent sent the appellant despatch instructions dated November 21, 1960, through the Director of Supplies and Disposals. On November 30,1960 the appellant, however intimated to the respondent that the contract was void and illegal and requested that the security deposit should be refunded. The case of the appellant was that the contract was in violation of the provisions of the Forward Contracts (Regulation) Act, 1952 (Act 74 of 1952), hereinafter called the Act . By his letter dated December 1, 1960 the Director of Supplies wrote on behalf of the respondent that the contract was legal and binding and as the appellant had failed to deliver the goods as provided in the agreement the respondent would purchase the goods at the risk of the appellant. The respondent incurred extra expenditure amounting to about Rs. 76,410 and after giving credit to the appellant for the amount of Security Deposit, a sum of Rs. 56,000 still remained due to be paid by the appellant to the respondent. As the appellant failed to pay, the respondent took recourse to the arbitration Clause 21 of the contract and appointed an Arbitrator to determine the dispute between the parties regarding the agreement. Before the Arbitrator could give his award, the appellant filed an application before the High Court under Section 33 of the Arbitration Act praying for a declaration that the arbitration clause was illegal and void and for an injunction restraining the respondent from prosecuting the arbitration proceedings. By its judgment dated November 19, 1963 the High Court held that the contract was a "non-transferable specific delivery contract" and was not hit by the provisions of the Act and accordingly dismissed the application of the appellant.

3. The question presented for determination in this appeal is whether the contract in question is a transferable ornon-transferable specific delivery contract within the meaning of the Act.

4. Section 2 (i) of the Act defines a "ready delivery contract" as meaning "a contract which provides for the delivery of goods and the payment of a price therefore, either immediately or within such period not exceeding eleven days after the date of the contract. . . . . . .." A "forward contract" is defined under S. 2(c) as meaning "a contract for the delivery of goods at a future date and which is not a ready delivery contract". S. 2 (m) defines a "specific delivery contract" as meaning "a forward contract which provides for the actual delivery of specific qualities or types of goods during a specified future period at a price fixed thereby or to be fixed in the manner thereby agreed and in which the names of both the buyer and the seller are mentioned". Section 2 (f) defines a "nontransferable specific delivery contract" as meaning "a specific delivery contract, the rights or liabilities under which or under any delivery order, railway receipt, bill of lading, warehouse receipt or any other document of title relating thereto are not transferable". Finally S. 2 (n) defines a "transferable specific delivery, contract" as meaning "a specific delivery contract which is not a non-transferable specific delivery contract".

5. Chapter IV

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