JUDGMENT

P.K. GOSWAMI, J. :—These two appeals are on certificate by the Calcutta High Court from its common judgment of 6-4-1967, in Appeal Nos. 175 and 177 of 1963.

2. Respondent No. 1 prior to its liquidation was a private limited company carrying on business as an importer and dealer in sewing machines. On or about April 16, 1958, the respondent was granted an import licence by the Joint Chief Controller of Imports and Exports, Bombay by which it was authorised to import industrial sewing machines together with spare parts to the extent of 5 per cent, of the total value of the goods to be imported. The total value of the imports authorised was Rs. 47,406/-. The respondent could under the licence import the goods through any port in India. Out of the permitted value under the licence, goods worth about Rs. 9,919/- were imported by the respondent through the Bombay port. The respondent then wanted to arrange the rest of the import through the Calcutta port. At the request of the respondent the Customs authorities of Bombay gave a release order in respect of the remaining goods to be imported in terms of the aforesaid licence through the Calcutta port.

3. By an indent of November 11, 1958, the respondent placed orders with M/s. Fuji Trading Company Limited, Osaka, Japan for supply of 162 pieces of industrial sewing machine head "Raruna Brand" and 208 dozen of oscillating rock shafts. By two other indents of December 3, 1958, the respondent sent orders to M/s. Alickson & Company, Osaka, for the supply of 59 sets of industrial sewing machine head "Prosper Brand" and certain industrial sewing machine parts. All these three indents were accepted by the two Japanese Companies in due course. M/s. Fuji Trading Company Limited shipped the goods against orders placed with them on January 30, 1959, by s. s. Sydney Maru. M/s. Alickson & Company also shipped the goods covered by the indents placed with them on January 28, 1959, by s. s. State of Andhra. 1410

4. The respondent apparently had some financial difficulties for releasing the goods at Bombay, as according to it, it did not have sufficient credit with the Bombay Bank "to open the letter of credit with payment of a nominal margin only." The respondent, therefore, approached the Bombay and Calcutta Cycle Co. (briefly the Cycle Company, a partnership firm, which also used to carry on business as dealers in sewing machines and had previous dealings with the respondent. The Cycle Company agreed to guarantee the letter of credit if it were opened through their Bankers at Delhi. The respondent agreed to do so and thereupon at the request of the Cycle Company the Merchantile Bank Limited of Delhi agreed to act as the respondent s Bankers and also to allow the respondent to open the letter of credit. Thereafter on or about December 29/30 1958, the respondent opened with the Marcantile Bank Limited Delhi, a letter of credit being L.C. No. 101/1085. The respondent advanced a sum of Rs. 2894.80 np by way of marginal deposit to the extent of 10 per cent of the value of the letter of credit and the necessary Bank charges.

5. On February 20, 1959, while the said goods were on the high seas there was an agreement between the respondent and the Cycle Company by which the respondent agreed to sell and the Cycle Company agreed to buy at a future date certain quantities of industrial sewing machine heads and oscillating rock shafts. The contract of sale may be quoted in extenso.

"Sale Contract

We Messrs. Padnekar and Co. Private Ltd., 172, Girgaon Road, Bombay 4, hereby agree to sell in forward sale Industrial Sewing Machine Heads and parts thereof to Messrs. Bombay & Calcutta Cycle Co. of 48, Popatwadi, Kalbadevi Road, Bombay on the following terms and conditions :

Items and quantity : 221, pos. Industrial Sewing Machine Heads, TA. 1 Model complete with knee Lifter, accessories box Robbin winder made in Japan.

200 dozen Oscillating Rock Shaft "Cote" brand made in Japan.

Rates and value : 221 pcs. Industr