1980 Supreme(SC) 207

SUPREME COURT OF INDIA
D. TULZAPURKAR, D.A. DESAI AND A.P. SEN, JJ.
Consolidated Coffee Ltd. etc. etc., Petitioners
Versus
 Board, Bangalore etc. etc., Respondents.
Writ Petns. Nos. 3130, 4238-4239 of 1978, 8 and 1458 of 1979
Decided on 10-3-80.
WITH
M. S. P. Exports (P.) Ltd. and others, Petitioners
Versus
The Coffee Board and others, Respondents.
AND
T. G. M. Assadi and Sons and another, Petitioners
Versus
State of Karnataka and others, Respondents.
Advocates appeared
Mr. F. S. Nariman, Sr. Advocate (M/s. C. N. Murthy, K. P. Kumar, H. K. Dutt and T. Subba Rao and D. N. Gupta, Advocates with him), for Petitioners in W. P. No. 3130 of 1978.
Mr. A. K. Sen & Dr. Y. S. Chitale, Sr. Advocates (M/s. K. P. Kumar, R. Vasudevan, C. N. Murthy, Ajay Mehta and T. Subba Rao, Advocates with them), for Petitioners in W. P. Nos, 4238-4239 of 1978.
Mr. F. S. Nariman, Sr. Advocate (M/s K. P. Kumar, R. Vasudevan, C. N., Murthy, Ajay Mehta and T. Subba Rao, Advocates with him), for Petitioners in W. P. No. 8 of 1979.
Dr. Y. S. Chitale, Sr. Advocate (M/s. K. P. Kumar, R. Vasudevanan, C. N. Murthy, Ajay Mehta and T. Subba Rao, Advocates with him), for Petitioners in W. P. No. 1458 of 1979.
Mr. L. M. Sinha, Att. Genl. (M/s K. J. Chandran, J. B. Dadachanji, K. J. John and Sri Narain, Advocates with him), for Respondents in W. P. No. 3130 of 1978.
Mr. P. G. Nair, Sr. Advocate (M/s K. J. Chandran, J. B. Dadachanji, K. J. John and Sri. Narain, Advocates with him), for RR. 1 in W. P. Nos. 4238-4239.
Mr. N. Nettar, Advocate, for Respondent No. 2. in W. P. Nos. 4238-39 of 1978.
Mr. S. T. Desai, Sr. Advocate (Mr. A. V. Rangam, Advocate with him), for Respondent No. 3 in W. P. Nos. 4238-39 of 1978.
Mr. P. A. Francis, Sr. Advocate (M/s. V. J. Francis with him), for Respondent No. 4 in W. P. Nos. 4238-39 of 1978.
Mr. K. K. Venugopal, Addl. Sol. Genl. (Mr. N. Nettar, Advocate with him), for Respondent No. 1 in W. P. No. 8 of 1979.
Mr. S. T. Desai, Sr. Advocate (Mr. A. V. Rangam, Advocate with him), for Respondent No. 2 in W. P. No. 8 of 1979.
Mr. V. J. Francis, Advocate, for Respondent No. 3 in W. P. No. 8 of 1979.
M/s K. J. Chandran, J. B. Dadachanji, K. J. Johan and Sri Narain, Advocates, for Respondent No. 4 in W. P. No. 8 of 1979.
Mr. N. Nettar, Advocate, for RR. in W. P. No. 1458 of 1979.
Mr. V. J. Francis, Advocate, for RR. in W . P. No. 1458 of 1979.
M/s K. J. Chandran, J. B. Dadachanji and K. J. Johan and Sri Narain Advocates, for RR. in W. P. No. 1458 of 1979.

Headnote:COFFEE BOARD - Whether provisions of Section 64(2) apply to passing of the property at an auction sale - Application of English corresponding statutory provisions - Validity of conditions of auction - The provisions of this section are subject to contract to contrary - Auction sale — imposition of conditions of bid - Validity of conditions of auction

       – as held in the case of Consolidated Coffee v. Coffee Board, AIR 1980 SC 1468, the provision of sub–section (2) Section 64, does not deal with question of the passing of the property in the goods sold at auction sale but instead it deals with the completion of the contract of sale. It is true that sub–section (2) of Section 64 says the ‘that sale is complete’ when the auctioner announces its completion by the fall of the hammer of in other customary manner, but, the next following provision which says: ‘and until such announcement is made any bidder may retract his bid’ suggests that what is complete at the fall of the hammer or the announcement of closure in other customary manner is that the contract is complete. Two things are clear, one that at an auction sale all that happens at the fall of the hammer or at the announcement of the closure of the sale in other customary manner is that a contract of sale comes into existence and parties get into the relationship of a promisor and 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 the hammer by reason for the concerned provision relating to the passing of the property. Section 64(2) being in pari materia with Section 58(2) of the English Sale of Goods Act, 1893, it would have to be interpreted in the same manner and the Supreme Court was, 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 commencement 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 Section 64(2) but because of Section 20 and such would not be the case if the goods sold there are non–specific or unascertained goods or the auction sale is conditional. Thus held that Section 64(2) has nothing to do with the aspect of the passing of the property at an auction sale and it is by virtue of goods being specific and in a deliverable state that under the Section 20 the property in such goods passes to the buyer at he completion of the contract at the fall of the hammer at such sale. As held in the Case of AIR 1964 SC 569, if the goods are specified goods, in title thereof passes to the buyer as soon as the offer, on the walty?

       

       – it is well known that our Sales of Goods Act, 1930 is based upon and is largely a reproduction of the English Sales of Goods Act, 1893 and in principle as well as in most details the law of sale of goods in both the countries is now the same and, therefore, English authorities on interpretation of different sections, although not technically binding in India, would have great persuasive value. It will be pertinent to observe that Section 64 of the Indian Act is based upon Section 58 of the English Act, though it is somewhat differently arranged; but sub–section 58(2) of the English Act — see the decision in Consolidated Coffee Ltd. v. Coffee Board, AIR 1980 SC 1468.

       

       – Section 64 occurs in Chapter VII which contains ‘miscellaneous’ provisions and Section 62 which occurs in the same Chapter clearly 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 such usage is such as to bind both the parties to the contract. Ordinarily, the rights, duties and liabilities arising under a contract of sale by implication of law spoken of in Section 62 refers to the rights, duties and obligations referred to in Chapter III containing provisions which lay down rules as to transfer of property as between seller and buyer and transfer of title but there is no reason why Section 62 should not apply to rights, duties and obligations arising under Section 64 in regard to auction sales. In other words Section 64 would be subject to Section 62. Moreover, there is intrinsic material in Section 64 itself which shows that the provisions there of could be subject to a contract to the contrary, as held in the case of Consolidated Coffee Ltd. v. Coffee Board, AIR 1980 SC 1468.

       

       – once it is accepted that auction sales to which Section 64 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 the property in the goods sold there at would be governed by those terms and conditions, as held in Consolidated Coffee Ltd. v. Coffee Board, AIR 1980 SC 1468.