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Judgment
Horwill, J.—These three appeals arise out of three suits that were tried together in the Court of the Subordinate Judge of Cuddalore
because they gave rise to identical questions of fact and law. In each suit, the plaintiff was a company purchasing groundnuts and exporting them
from Cuddalore in the South Arcot district. The common defendant in the three suits was ""The South Arcot Groundnut Market Committee"" by its
President. That Committee was established u/s 5 of the Madras Commercial Crops Act of 1933; and in exercise of the powers conferred upon it
by the Act, it claimed fees on sales of groundnuts to the three plaintiff firms. The plaintiffs paid what was demanded of them and filed these three
suits for the return of the sums paid by them.
Two questions have been argued in these appeals : one is whether the sales and purchases in question were within the South Arcot district, and
the other is whether the defendant committee had power to levy these fees, in view of the feet that the plaintiffs sold the property, they say, outside
the district The learned Subordinate Judge decided these and other questions against the plaintiffs, who have appealed to this Court.
For the purpose of argument two contracts entered into with Louis Dreyfus & Co., Ltd., the plaintiff in O.S. No. 38 of 1942, have been
referred to. The contracts entered into with the other companies are of a similar nature; and it is conceded that if it is found, on a perusal of the
documents relating to the Louis Dreyfus & Co., Ltd., that the sale and purchase took place within the South Arcot district, the sales and purchases
in the other suits also took place within the South Arcot district.
Ex. P-4 is the contract discussed by the learned advocate for Louis Dreyfus & Co,. It has 18 clauses. In general, the procedure to be adopted
was that the seller, who was apparently a resident of Sendurai situated outside the South Arcot district, was to send the nuts by rail to Cuddalore.
The contract contains specifications of the bags in which the nuts are to be packed. The buyers agreed to pay advances up to 90 per cent of the
value of all goods sent upon obtaining the railway receipt. The bags were to be taken to the godowris of the buyers, who inspected the goods and
reserved the right, if not satisfied with the weight, quality and conditions of the goods, to reject them. If they accepted the goods, then they paid1
the sellers whatever was due to them after deducting the advances. If they rejected the goods, they demanded whatever had been paid by way of
advances. This general description of the nature of the contract makes it clear that the final contract of sale was completed only in Cuddalore, after
an inspection had been made. There are many passages in the contract which make this very clear. Clause 3, for example, says :
Should the whole or any portion of the goods to be delivered under this contract be in any respect not in accordance with the stipulations of
Clauses 1 and 2, buyers shall have the option of rejecting such goods or of accepting the same with an allowance to be fixed by them.
Clause 5(d) contains a similar clause with regard to the bags. Clause 6 says :
Delivery is to be completed at Cuddalore.......
Clause 7(a) says that the balance due to the sellers is to be paid on the final completion of the contract, which proves that the contract cannot be
deemed to have been completed as soon as the goods were handed over to the railway authorities, as the learned advocate for the appellants
argues. Sub-clause (b) of the same clause is very important. After saying that the buyers may, in their discretion, make advances to the sellers on
presentation of unqualified railway receipts, the contract says:
The balance to be paid on the final completion of the contract and on receipt of advance of correct delivery of weight, quality and conditions at
buyers'' godowns at Cuddalore.
This makes it clear that not only is the purchase money to be paid at Cuddalore, but that the contract of sale itself is completed only at the buyers''
godowns at Cuddalore. Then Clause 11 says that:
In the event of the failure to deliver, or of short delivery, or of the rejection of any goods in exercise of any right or option arising under or
conferred by this contract.. the buyers may cancel the undelivered portion of the contract and claim from the sellers the difference between the
contract rate and the market rate.
Under Clause 13, the sellers agree to abide by the results found by the buyers'' Cuddalore agency, in every respect as to quality, condition, weight
and rejection.
The learned advocate for the appellants stresses the provision of Section 23 of the Sale of Goods Act. Sub-section (1) reads thus :
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 the property in the goods thereupon passes to the buyer.
It is argued that the goods were unconditionally appropriated to the contract when the sellers placed the goods in the bags according to the
specification and committed them to the charge of the railway. The goods were not then, however, unconditionally appropriated to the contract;
because they were still subject to the approval of the buyers in their Cuddalore godowns. We are therefore satisfied, on a reading of Ex. P-4 that
the purchase and sale was concluded in Cuddalore.
Ex. P-10, a contract with the same company, contains expressions which are even clearer. It says that the purchase price is fixed by the
prevailing rates in Cuddalore at the time of delivery of the goods in the buyers'' godowns. Clause 8 of the contract says:
The property in the goods shall pass to the buyers on delivery and after inspection at the buyer''s godown aforesaid.
The object of the Madras Commercial Crops Markets Act of 1933 is seen from the heading to be:
To provide for the better regulation of the buying and selling of commercial crops in the Presidency of Madras and the establishment of markets for
commercial crops.
Under Section 3, the Provincial Government may by notification, declare their intention of exercising control over the purchase and sale of such
commercial crop or crops in a particular area. u/s 4, the Government may notify such an area; and from the date of such notification or from such
later date as may be specified therein, ""no person shall within the notified area set up, establish, or continue or allow to be continued any place for
the purchase, sale, storage, weigh-ment, pressing or processing of the commercial crop or crops, so notified, except under a licence"" and except in
accordance with the provisions of the Act and such rules and by-laws as may be framed thereunder. Section 5 relates to the powers of the
Provincial Government to establish a market committee for such an area whose duty it is to enforce the provisions of the Act. Such a committee is,
by Section 7, a body corporate, with powers of sale, lease, etc. u/s 11, the section with which we are chiefly concerned, the market committee is
bound, subject to such rules as may be made in this behalf, to levy fees on the commercial crop or crops, bought and sold in the notified area.
Section 18 enables the Provincial Government to frame rules, consistent with the Act, for carrying out all or any of the purposes thereof. The only
sub-section with which we are concerned is Sub-section (2)(iv) whereby the Provincial Government may fix the maximum annual fees which may
be levied by the market committee in respect of the licence granted u/s 4 and on the commercial crop or crops,bought and sold in the notified area
and the recovery of such fees. Section 19 makes provision for the framing of by-laws. By-laws have been framed by the committee; and in those
bye-laws are found rules with regard to the levying of fees, the maximum being fixed therein.
One of the arguments of the learned advocate for the appellants is based on the use of the word ""and"" between the words ""bought"" and ""sold"" in
Section 11 It is argued that Section 11 only applies where a person purchases a crop within the notified area and sells it again within the same area.
The actual wording of the section is:
The market committee shall, subject to such rules as may be made in this behalf, levy fees on the commercial crop or crops bought and sold in the
notified area.
It seems to us that this means, especially having regard to the use of the word ""shall"" that the market committee is bound to levy fees on all crops
bought and on all crops sold. Even if it be considered that there must be a purchase and a sale, then there was a purchase in this case and there
was also a sale. The plaintiffs bought the groundnuts and their vendors sold the nuts to them within the notified area. The purchase and sale were
within the notified area. We find no reason to limit the application of this section only to those cases where the merchants who purchase the crops
subsequently sell them within the same notified area.
u/s 18(2)(iv) as already pointed out, the Government may frame rules ""fixing the maximum annual fees which may be levied.. on the commercial
crop or crops bought and sold in the notified area."" It is argued that as the Government has not fixed any such maximum fees, the committee is not
empowered to levy any fees at all. It seems to us a strange argument that although the statute expressly requires the committee to levy fees on
commercial crops bought and sold yet they cannot do so because no maximum fee has been fixed. The committee must levy fees u/s 11 unless
there is something in the rules which qualifies or takes away that power. If the Government had fixed the maximum annual fee, then the committee
would have to levy fees on crops bought and sold subject to that maximum. In the absence of a maximum, the committee can levy whatever fees
they consider to be proper.
In its earlier by-laws, the committee did fix a maximum, and it is argued that Section 19, which empowers the committee to frame by-laws,
restricts them to the regulation of the business and the conditions of trading and does not permit them by their by-laws to fix fees; for that neither
regulated business nor has it anything to do with the conditions of trading. It was convenient for the committee to give the scale of fees in the by-
laws; so that everybody reading the by-laws could see ""what the fees were; but it is unnecessary for us to say whether Section 19 empowers the
committee to frame by-laws fixing the fees, because the committee has clearly power to do so u/s 11.
The appeals fail and are dismissed with costs--one advocate''s fee--calculated on the value of A.S. No. 491 of 1943 which amount should be
proportionately divided between the three appellants.