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Judgment
The moot point for consideration in the present writ petition is whether ''market fee'' under the charging clause contained in section 17(iii)(b) of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 (for short ''the Act'') is leviable on the specified ''agricultural produce'' even though it was not produced, introduced, moved or transported in and from the ''market area''. This controversy has come up in the backdrop of the following profile of the facts.
The petitioner M/S. Metal Craft is a partnership firm having its registered office at 14, Navyug Market, Ghaziabad which primarily carries on business of export of rice. The methodology adopted by the petitioner to export the rice is, as disclosed in the petition, that on enquiry/requirement of importing country for a particular quality of rice, the petitioner firm finds out the availability of the said quality of rice in the neighboring states of Madhya Pradesh, Punjab and Haryana from where the required quality of rice could be despatched to the ports, namely, Mumbai, Kandla or Delhi on reasonable price; after ascertaining the availability on the acceptable price, the rates are quoted to the importing country and after negotiations the deal becomes final. It is only thereafter that the orders are placed to the Rice Millers outside the state of Uttar Pradesh for sending consignments to the aforesaid ports of lading; the Rice Millers on receipt of advice from the petitionerFirm, despatch the required quantity of specified quality to the clearing and forwarding agents of the petitioner at the ports and on receipt of the goods, the clearing and forwarding agents of the petitioner keep on storing the goods in the nominated warehouses for the particular shipment and when the consignments in full as per the deal/invoice reach the concerned port, the Customs Department completes all the required formalities and issues copy of the shipping bill and E.P. Certificate, then only the goods are ready for loading into the ship; when the goods are loaded into the ship, a bill of lading is prepared and signed by the master of the ship in the capacity of carrier; acknowledging the receipt of goods; and when the goods are laden in the ship, and a bill of lading is given to clearing and forwarding agents of the petitionerfirm, the property in the goods is transferred to the ship and on receipt of bill of lading by buyer country through the petitioner''s bankers, the goods are retired.
According to the petitionerfirm, sale is effected at the port only when the goods are laden in the ship and the bill of lading is handed over to the petitioner''s clearing and forwarding agents and, therefore, the ''place of sale is port of loading and not Ghaziabad where the petitionerfirm has its registered office only. It is pleaded that the petitionerfirm has never made any business transaction of purchase or sale of rice notified as agriculture produce within the State of Uttar Pradesh during the years 199596; 199697 and thereafter. On 12.10.1997 the Krishi Utpadan Mandi Samiti, Ghaziabad, through its secretaryrespondent No. 2 sprang a surprise by sending an order (Annexure 3 to the petition) to the petitionerfirm whereby the respondent No. 2 imposed the market fee at the rate of 2 percent amounting to Rs. 12,94,860 on the total amount of Rs. 6,47,42,994 towards price of rice exported by it. The petitioner submitted a reply dated 28.10.1997 (Annexure 4 to the petition) refuting the liability to pay the ''market feel as the petitionerfirm had never made any business nor transaction of sale and purchase of rice had taken place within the State of Uttar Pradesh. The reply filed by the petitionerfirm did not find favour with the respondent No. 2, instead it initiated recovery proceedings and citation dated 6.12.1997 (Annexure 6 to the petition) was issued. The said recovery certificate was challenged by the petitioner before this court by filing a writ petition No. 43329 of 1997 which was disposed of on 17.12.1997 (vide Annexure 7 to the petition) with the direction to the respondent No. 2 to decide the representation/objection filed by the petitioner within a period of one month and that the recovery proceedings shall remain in abeyance for a period of six weeks. Ultimately, on 25.1.1998, the impugned order (Annexure 13 to the petition) was passed by respondent No. 2 whereby the earlier order dated 12.10.1997 (Annexure 3 to the petition) was upheld. Against the said order the petitioner filed a Revision Application No. 1 of 1998 before the Director of Mandi Parishad. The Joint Director (Administration) exercising the powers of the Director dismissed the Revision Application on 9.3.1998 (Annexure 14 to the petition). The petitioners have challenged the order dated 12.10.1997 (Annexure 3) and 25.1.1998 (Annexure 13) and have prayed that the aforesaid orders as well as the recovery certificate/citation dated 6.12.1997 be quashed, taking the grounds that the entire quantity of rice exported by the petitioner was purchased from the Rice Millers in Punjab, Haryana and Madhya Pradesh and that it is directly exported outside India through the petitioner''s clearing and forwarding agents on ports of loading namely/Delhi, Mumbai and Kandla; that no transaction of purchase, sale or export was ever done from any place within the limits of Mandi Samiti Ghaziabad or anywhere in the State of U.P. and rice was never purchased, brought or sold in the State of U.P. and since in the instant case no sale, purchase, storage or transportation of rice had taken place in any part of State of Uttar Pradesh, levy and collection of the market fee from the petitionerfirm is illegal and unjustified.
A counter affidavit has been filed on behalf of respondent Nos. 1 and 2. It is stated that the petitioner purchased rice within the market area of Ghaziabad and since the petitionerfirm is the licensee of Mandi Samiti Ghaziabad, it is liable to pay the market fee. It is maintained that the transaction of sale and purchase of the rice though meant for export to a foreign country took place within the market area of Ghaziabad and, therefore, the petitioner is liable to pay market fee. According to the respondents, the petitioner is engaged in sale and purchase of fine rice which is subsequently exported outside the market area and even if it may be assumed that rice is purchased from Madhya Pradesh, Punjab and Haryana it is brought within the market area of Ghaziabad where the sale is finalized, money is received and thereafter it is exported to exporthouses in Delhi and other places. These facts, it is alleged constitute sale, It is further alleged that the'' export dealers purchase the rice from within the market area and then consignment is booked from Ghaziabad to the destination of export. It is mentioned that the transaction of sale and purchase, in any case, takes place at Ghaziabad and, therefore, the petitioner cannot evade the payment of market fee. A rejoinder affidavit has been filed by the petitioner repelling the contentions of the respondent and it is reiterated that the rice purchased from the outside States was never brought to Ghaziabad market area nor transported from there to the ports from where the rice purchased from other States had been exported.
Heard S/Sri Ashok Kumar and J.P. Pandey, learned counsel for the petitionerfirm, Sri B.D. Madhyan, learned counsel for the respondent Nos. 1 and 2 as well as learned Standing Counsel on behalf of the respondent Nos. 3 and 4.
At the outset, it would be proper, to put in plain terms the woodcut profile of the admitted facts by removing the cobwebs which have clouded the true facts. In paragraph 6 of the counter affidavit it has been asserted:
�.............Assuming without admitting even if rice is purchased in Madhya Pradesh, Punjab and Haryana and thereafter it is brought within the market area of Ghaziabad and there sale is finalized, money is received and thereafter it is exported to Export houses in Delhi and other places that constitute sale..........The rice export dealers purchase the rice within the market area and then consignments booked from Ghaziabad to the destination of export otherwise what is the logic for bringing the goods from Punjab, Madhya Pradesh and Haryana and then exporting the rice to Delhi and other places as that will entail despatch charges which win make it uncompetitive in the market.�
In reply to contents of para 11 of the writ petition, it has been asserted in paragraph 12 of the counter affidavit that:
�.........................Mandi Samiti rightly held that the sale took place within the market area of Ghaziabad. Besides actual sale, there was also deeming sale there. Therefore, the petitioner has rightly been assessed and asked to deposit the amount of market fee.�
From the above avermentsmade in the counter affidavit there is an echo of the Fact that the rice exported by the petitioner to a foreign country after purchasing the same from the State of Punjab, Haryana and Madhya Pradesh is brought to Shaziabad from where it is despatched for shipment from Mumbai, Kandla ports. Since the fine quality rice is available in the market area of Ghaziabad, there is no occasion for the petitioner to purchase the same in the State of Punjab, Haryana and Madhya Pradesh, A plea that there has taken place a deemed sale in the market area of Ghaziabad is also reflected from the various averments made in he counter affidavit. I am constrained to observe that the various allegations made in the counter affidavit are unsavoury in nature and nebulous in character, n view of the impugned orders passed by respondent Nos. 1 and 2 and the true acts as have been ascertained, Sri B.D. Madhyan, learned counsel for the respondent Nos. 1 and 2, has been frank enough to concede that the petitioner firm has not purchased any rice for export from the market area (Mandi) of Ghaziabad nor it was despatched from there. Now it is common case that on receipt of the orders at Ghaziabad from foreign countries, particularly South Africa, he required quantity and quality of rice was purchased by the petitioner from ''Punjab, Haryana and Madhya Pradesh and got it transported directly to the ports for export. The parties are unanimous on the point that at no point of time the rice which was exported outside the country has found an entry within the market area of Ghaziabad. The rice purchased by the petitioners from Punjab, Haryana and Madhya Pradesh was transported directly to the ports from where it was shipped to the foreign countries. Delhi is one of the dry ports. It is an indubitable fact that no ''sale'' had taken place in the ''Market area'' of Ghaziabad.
Sri B.D. Madhyan, learned counsel for the respondent Nos. 1 and 2 urged that it would be immaterial whether specified agricultural produce exported outside the country was actually brought or passed through or despatched from the ''market area'' of Ghaziabad. According to him, if there has taken place a �transaction of sale and purchase� of rice, which undoubtedly is one of the specified agricultural produce, within the market area of Ghaziabad, the petitioner would be liable to pay the market fee under the provisions of Section 17(iii)(b) of the Act.
For the sake of clarity and ready reference, it would be proper to quote the charging Section which runs as follows:
�17. Powers of the CommitteeA Committee shall, for the purposes of this Act, have the power to
(i)...
(ii)..
(iii)..levy and collect :
(a)...
(b) market fee, which shall be payable to transaction of sale of specified agricultural produce in the market area at such rates, being not less than one percentum and not more than two percentum of price of the agricultural produce so sold, as the State Government may specify by notification, and as such fee shall be realised in the following manner
(1) If the produce is sold through a commission agent, the commission agent may realise the market fee from the purchases and shall be liable to pay the same to the committee;
(2) If the produce is purchased directly by a trader from a producer the trader shall be liable to pay the market fee to the Committee;
(3) If the produce is purchased by a trader from another trader, the , trader, selling the produce may realise it from the purchaser and shall be liable to pay the market fee to the committee; and
(iv) In any other case of sale of such produce, the purchaser shall be liable to pay the market fee to the committee :
Provided that no market fee shall be levied or collected on the retail sale of any specified agricultural produce where such sale is made to the consumer for his domestic consumption only.
(iiia)...
(iv)...
(vi)...
(vii)...
(viii)...
Explanation For the purposes of clause (iii), unless the contrary is proved, any specified agricultural produce taken out or proposed to be taken out of a market area by or on behalf of licensed trader shall be presumed to have been sold within such area and in such case, the price of such produce presumed to be sold shall be deemed to be such reasonable price as may be ascertained in the manner prescribed�.
Section 17(iii)(b) of the Act would indicate that a committee is vested with the power to levy and collect market fee on transaction of sale of specified agricultural produce in the market area on such rates as the State Government may specify by notification and that such fee is liable to be realised from the commission agent if the produce is sold through the commission agent. According to the explanation appended to Section 17 any specified agricultural produce taken out or proposed to be taken out of a market area, by or on behalf of a licensed trader, is presumed to have been sold within such area. The presumption is, however, rebuttable.
The provision of deeming clause contained in explanation to Section 17 (iii)(b) of the Act came to be considered by this court in the case of M/s. Shvamsundar Baldeo Raj v. Director Rajya Krishi Utpadan Mandi Parishad, U.P. and others (1998 All. L.J. 978), in which it was observed that the statutory Presumption under the Explanation pertains to question of fact. The question whether the presumption has or has not been rebutted, depends on the facts and circumstances of each case, and if the authorities order the Act have, on a proper selfdirection to the facts and circumstances of the case, arrived at he conclusion that the statutory presumption has not been rebutted, High Court in exercise of its certiorari jurisdiction, would not interfere with the view taken bythe statutory authorities except where the statutory authority is found to have acted arbitrarily and unreasonably, It is well settled that judicial review under Article 226 of the Constitution cannot be converted into an appeal in that it is directed not against the decisions rendered by the statutory, (authority) but has to be confined to the examination of the decision making process.
In the instant case, reference to the Explanation and the various precedents with regard to the interpretation of the �deeming clause� is otiose for the decision of the present writ petition, for one simple reason that the provisions of Explanation are not attracted in the instant case as has been clarified above. It is not the case either of the parties that rice purchased from the market in the State of Punjab, Haryana and Madhya Pradesh was ever brought in, introduced or transported from the market area of Ghaziabad. On the other hand, it is admitted position that rice which was purchased in the above three States was directly transported to the concerned ports for shipment to a foreign country and it was never brought the market area of Ghaziabad.
Having cleared the decks from the various confusion, subterfuges and mists, the moot question for determination boils down to this :
�WHETHER THE CONSIGNMENTS OF RICE WHICH WERE NEVER BROUGHT OR TRANSPORTED FROM THE �MARKET AREA� OF GHAZIABAD BUT WERE PURCHASED FROM PUNJAB, MADHYA PRADESH AND HARYANA AND DIRECTLY EXPORTED TO A FOREIGN COUNTRY THROUGH THE CONCERNED PORTS OF BOMBAY, KANDHLA AND DELHI (DRY PORT) ARE SUBJECT TO LEVY OR ''MARKET FEE'' ON THE GROUND THAT THE �TRANSACTION OF SALE� OF THE SAID RICE IS ALLEGED TO HAVE TAKEN PLACE IN THE ''MARKET AREA'' OF GHAZIABAD WHERE THE PETITIONER HAS HIS ESTABLISHMENT/OFFICE?�
It is common case of the parties that rice is the specified agricultural produce and is subject to market fee under the provisions of S. 17(iii)(b) of the Act. The thrust of the submission of the learned counsel for the petitioner is that since the specified agricultural produce never entered the limits of the Mandi Samiti of Ghaziabad and had been transported on the orders placed by the petitioner from Punjab, Haryana and Madhya Pradesh directly to the lading ports for shipment to South Africa, the question of levy of market fee did not arise merely because of office of the petitioner is located in the market area in Ghaziabad. In support of this contention, the learned counsel for the petitioner placed reliance on the observations made on point No. 18 in paragraph 29 by the apex court in the case of Ram Chandra Kailash Kumar and Company and others v. State of U.P. and another (1980 Supp. Supreme Court Cases27). In the aforesaid decision the apex court made an endeavour to formulate the various points of law and to decide them as far as practicable so that in future the business of market committees may be conducted in the light of the said judgment leaving no scope for unnecessary litigation. As many as 24 points were formulated. Point No. 18 runs as follows.
�(18). No market fee can be charged if only goods are brought in a market area and despatched outside it without there taking place any transaction of purchase and sale in respect of these goods.�
The answer to this point has been given in paragraph 29 at page 49. For the sake of clarity, it is extracted as below:
�29. This point urged on behalf of the appellants is well founded and must be accepted as correct. On the very wordings of clause (b) of Section 17(iii) market fee is payable on transactions of sale of specified agricultural produce in the market area and if no transaction of sale takes place in a particular market area no fee can be charged, by the market committee of that area. If goods are merely brought in any market area and are despatched outside it without any transaction of sale taking place therein, then no market fee can be charged. If the bringing of the goods in a particular market area and their despatch there from are as a result of transactions of purchase and sale taking place outside the market area, it is plain that no fee can be levied.�
It was also urged that for levying the market fee, it was necessary that there should be a physical entry of the specified agricultural produce and if it has never entered or passed through the market area and its sale has not been effected in the market area in that event no fee is leviable. A number of decisions pertaining to the law of sales tax were cited to indicate that it is a case in which no sale can be said to have taken place in the market area of Ghaziabad. To fortify this submission a number of assessment orders passed by the Sales Tax authorities in the case of the petitioner have been brought on record to indicate that no sales tax was found chargeable on the transactions of export of rice by the petitioner to other States.
Sri B.D. Madhyan, learned counsel for the respondents advanced full throated arguments to repel the various submissions of the petitioners. It was urged that the provisions of S. 17(iii)(b) of the Act are clear, unambiguous and admit of no doubt that the market fee is payable not only on actual sate but also on the transactions of sale of specified agricultural produces in the market area. According to Sri Madhyan it was not necessary that the specified agricultural produce should be physically present in the market area. He has also relied upon the decision in the case of Ram Chandra Kailash Kumar''s case (supra), Emphatic reliance was placed on point No. 9 formulated by the apex court in the said decision which runs as follows:
�9. No market fee could be levied on goods not produced within the limits of a particular market area and if produced outside and brought in such area.�
Answer to which is to be found in paragraph 19 at page 45 of the decision. The answer may profitably be quoted as below:
�19. We have already alluded to this aspect of the matter earlier in our judgment and taken the view that market fee could be levied on transactions of goods not produced within the limits of a particular market area by the market committee of that area even though the goods are produced outside the State of Uttar Pradesh or outside the market area of that particular market committee provided that transactions take place within the limits of that market area. On the other hand we find no provision in the Act or the Rules to limit the operation of the law in a particular market area only in respect of the agricultural produce produced in that area.�
Sri B.D. Madhyan urged that the expression ''transaction or sale'' and ''sale'' are not synonymous. His contention is that under the Act, ''market fee'' is levied on transactions of sale and not on sale only. He has pointed out that under the UP. Sales Tax Act, tax is imposed on sales and that the said Act does not use the term ''transactions of sale''. The emphasis of the learned counsel was that the Mandi Samiti levies market fee on transactions of sale while under the U.P. Sales Tax Act, the tax is imposed on sales as such. He has also relied on the fact that in the original Hindi text of Section 17 of the Act, the language in which the law is made. The corresponding words in Section 17p)(b) were � @ Hindi. His contention is that it makes out the distinction between levy or market fee on transactions of sale or purchase of goods and the imposition of tax on actual sale which took place only when the property in goods was transferred. He has futher argued that the sale tax could be imposed upon the ''goods'' when goods are transferred by seller to buyer but the market fee becomes leviable as soon as the transaction takes place in the specified market area irrespective of whether delivery of goods or price is made immediately or is postponed. It is also claimed that the use of term ''transaction of sale'' in plural in section 17(iii)(b) in compendious sense has been made in the Act to include the events of :
(i) agreement of sale or purchase, or
(ii) event of delivery of goods under the said agreement, or
(iii) payment of price whether the price is paid at the time of transaction or is postponed to be paid subsequently after delivery.
A reference was also made to the provisions of Sections 4 and 5 of the Sales of Goods Act, 1930 which are quoted below:
�4. Sale and agreement to sell:
(1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one partowner and another.
(2) A contract of sale may be absolute or conditional.
(3) Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell.
(4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred.
Contract of sale how made :
(1) A contract of sale is made by an offer to buy or sell goods for a price and the acceptance of such offer. The Contract may provide for the immediate delivery of the goods or immediate payment of the price or both, or for the delivery of payment by instalments, or that the delivery or payment or both shall be postponed.
(2) Subject to the provisions of any law for the time being in force, a contract of sale may be made in writing or by word of mouth, or partly in writing and partly by word of mouth or may be implied from the conduct of the parties.�
The provisions of section 32 of the Sales of Goods Act, 1930 were also referred to. They are reproduced as below:
�32 Payment and delivery are concurrent conditions: Unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions, that is to say, the seller shall be ready, and willing to give possession of the goods to the buyer in exchange for the price and the buyer shall be ready and willing to pay the price in exchange for possession of the goods.�
In nutshell the contention of the learned counsel for the Mandi Samiti comes to this : that the market fee becomes due as soon as the agreement to sell takes place whether or not the sale took place at the time which has the twin elements of delivery of possession of the property to the purchaser and the payment of the price by the purchaser to the seller.
There may be a case where the agreement, the delivery of the goods and the payment there for take place simultaneously. In the case there is no problem because the transaction of sale is complete and the sale is also complete. The problem arises only in those cases in which the delivery of goods and the payment of consideration, both or one of these two, is postponed for a future date. One further element of sale is the passing of the property in the goods.
In State of Madras v. Gannan Dunkerley and Co. (Madras) Ltd. Sales Tax Cases. Vol. IX, 1958 Page 353) the apex court observed thus:
�In order to constitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods, which presupposes capacity to contract, that it must be supported by money consideration, and that as a result of the transaction property must actually pass in the goods, unless all these elements are present, there can be no sale........�
�And if under the contract of sale, title to the goods has not passed, then there is an agreement to sell and not a completed sale.....�
In the case of Instalment Supply Ltd. v. S.T.O. AhmedabadI and others (1974) 4 SCC739, following observations of the apex court are pertinent :
� The essence of sale is the transfer of the property in a thing from one person to another for a price. The term ''contract of sale'' includes an agreement to sell. An agreement to sell is known as an executory contract of sale, while a sale known as a sale is known as executed contract of sale. The term ''contract of sale'' thus includes both actual sales and agreement for sale. It is important to distinguish clearly between the two classes of contract. An agreement to sell is a contract pure and simple whereas a sale is a contract plus a conveyance. By an agreement to sell a jus in personal is created, by a sale a jus in rem also is transferred. Where goods have been sold and buyer makes default, the seller may sue for the contract price on the count of ''goods bargained and sold'' but where an agreement to buy is broken; the seller''s normal remedy is an action for unliquidated damages. If an agreement to sell is broken by the seller, the buyer has only a personal remedy against the seller. The goods are still the property of the seller, and he can dispose of them as he likes. But if there has been a sale, and the seller breaks his engagement to deliver the goods, the buyer has not only a personal remedy against the seller, but also the usual proprietary remedies in respect of the goods themselves in many cases too, he can follow the goods into the hands of third parties.�
Here, it would not be out of place to refer another authority of the apex court in the case of R.C. Jal and another v. Union of India(1972) 3 SCC470, wherein the transaction of sale has been defined in the following words:
�The transaction of sale is a composite transaction consisting of agreement of sale, passing of title, delivery of goods and payment of price and costs and charges of transportation...�
The learned counsel for the Mandi Samiti has relied on definition of sale in Balbhagas Husas Chand v. State of Orissa (AIR 1976 SC1016) wherein it was held that in order to constitute a sale there must be
(i) an agreement to sell by which alone the property does not pass; and
(ii) an actual sale by which the property passes.�
The term �transaction of sale� is a correct transaction of the term� @ Hindi � used in the original Hindi Text. Both terms include an agreement or contract to sell goods where the seller transfers property in goods for a price straightaway i.e., a concluded sale straightaway and also an agreement to sell which contemplates a transfer of property in goods at a future time or subject to some and the agreement becomes a sale as contemplated in sub sections (1)(3) and (4) of Section 4 of the Sales of Goods Act.
In the first case, it is simply called sale. In the second case all the facts, namely, the agreement to sell and the actual sale constituting of the delivery of goods and the passing of the title taken together constitute the transaction of sale. The actual sale is the last step which completes the transaction. The material question, however, is as to at what stage the liability to pay the market fee should be attracted, whether it would arise immediately as soon as the agreement to sell is entered into or only when the property in the goods passes. The delivery of property and the payment of consideration are two external manifestations of the intention of the parties.
The rules regarding the transfer of property in the goods between the seller and buyer are contained in Sections 18 to 23 of the Sales of Goods Act, 1930. For the sake of clarity, Sections 18 to 30 are being reproduced hereinbelow:
�18. Goods must be ascertainedWhere there is a contract for the sale of unascertained goods, no property in the goods in transferred to the buyer unless and until the goods are ascertained.
Property passes when intended to pass(1) there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred.
(5) For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract, the conduct of the parties and the circumstances of the case.
(6) Unless a different intention appears, the rules contained in Sections 20 to 24 are rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer.
Specific goods in a deliverable state : Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made and it is immaterial whether the time of payment of the price or the time of delivery of goods or both is postponed.
Specific goods to be put into a deliverable state : Where there is a contract for the sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them into a deliverable state, the property does not pass until such thing is done and the buyer has notice thereof.
Specific goods in a deliverable state: Where the seller has to do anything thereto in order to ascertain price Where there is a contract for the sale of specific goods in a deliverable state, but the seller is bound to weigh, measure, test or do some other act or thing with reference to the goods for the purpose of ascertaining the price, the property does not pass until such act or thing is done and the buyer has notice thereof.
Sale of unascertained goods and appropriation : unascertained or future goods by description and goods of that description and in a deliverable state and unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer, such assent may be express or implied, and may be given either before or after the appropriation is made. (2) Deliver to carrierWhere in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal he is deemed to have unconditionally appropriated the goods to the contract.�
It will be seen that in the case of unascertained goods, the law is to be found by reading Sections 18 to 23 of the Sale of Goods Act together. In each transaction, the question as to when the property passes would depend upon the intention of the parties which intention is to be gathered from the terms of contract, the conduct of the parties and the circumstances of the case, for ascertaining the intention of the parties regarding the time when the property in the goods will pass rules have been put on the statute book in Sections 20 to 24 of the Sales of Goods Act of guidence. However, if a different intention appears from the terms of the contract, the conduct of the parties and the circumstance of the case, the rules contained in Section 20 to 24 would stand superseded.
According to Sri Madhyan, learned counsel for the respondentMandi Samiti, it is difficult to accept the petitioner''s contention that passing of the property in the goods is further postponed till the actual shipment for, if the title has already passed it cannot pass again. Once the property is passed there would be no question of reserving any right of disposal. On the strength of the above facts and the legal position, Sri Madhyan urged that'' transactions of sale'' have materialized at Ghaziabad itself. It was urged that on the basis of the following facts, it can easily be inferred that the transactions of sale had taken placed at Ghaziabad:
(1) petitioner has his head office/business establishment at Ghaziabad and has obtained a licence issued by Mandi Samiti, Ghaziabad.
(2) orders for exporting the rice to South Africa are received by the petitioner at Ghaziabad ;
(3) pursuant to the orders received from the foreign countries the petitioner issued orders from Ghaziabad to the various rice millers in Punjab, Haryana and Madhya Pradesh for transporting the requisite quantity of the specified quality of rice to the dry port at Delhi and ports of Mumbai and Khandala from where transshipment of the consignment was made to the foreign countries.
(4) consignment of the rice despatched by rice miilers/dealers are received by the clearing and forwarding agents of the petitionerfirm ;
(5) the transportation charges for the rice from Punjab, Haryana and Madhya Pradesh are debited to the account of the petitioner;
(6) the bill of lading/invoice/shipment bills and E.P. Certificates are all made and issued in the name of the petitionerfirm and
(7) there are entries of each and every transactions in the account books of the petitioner firm maintained at Ghaziabad and the payments are received by the petitioner firm in the form of dollers through the Oriental Bank of Commerce, Foreign Exchange branch, Nehru Place, New Delhi.
The above facts, according to Sri Madhyan are sufficient enough to conclude that the� transaction of sale� take place at Ghaziabad as contemplated by the provisions of section 17(iii)(b) of the Act and market fee has rightly been levied.
A capsulated presentation of the conspectus of the facts and the rival submissions made on behalf of the petitioner firm on the one hand, and the Mandi Samiti, on the other, are not free from legal difficulties, ft is sometimes more important to emphasize the obvious than to elucidate the obscure. The matter involves a substantial question of law about the levy of the market fee on such agricultural produces, which never entered or has been in physical existence at any point of time in the market area. Apart from the above, the interpretation of the expression '' transaction of sale'' used in Section 17(iii)(b) of the act with reference to the various provisions contained in the Sales of Goods Act, 1930, referred to above, is involved. Realization of market fee in such matters runs in crores of rupees and the decision in this case in one way or the other is likely to affect the State exchequer. There has been a protracted litigation on the point in different Benches and, more often than not, the crucial points as have been mentioned above, are raised in a number of petitions. The substantial question of law of wide importance with which this court is confronted, time and again, requires an authoritative pronouncement on merits by a larger Bench constituted for the purpose with a view to settle the law and to cut short the litigation on the point.
There is yet another aspect of the matter. Whichever way this petition is decided by this court, there is bound to be a Special Appeal against it and it would be heard by a Division Bench but at a later date and that decision too is likely to be taken to the apex court for the stakes are very high. Enormous time, money and energy would be lost in the process. However, if the matter is considered by a larger Bench, there will be no appeal there from before this court. Of course, order of larger Bench may be challenged before the apex court. Similar cases pending in this court would not have to wait indefinitely and after the decision of the larger Bench, they can be disposed of in the light of the decision of the larger Bench.
In view of the above, I think it would be proper that this case is decided by a larger Bench as it involves determination of substantial question of law of great importance to the litigation of the State dealing with agricultural produce having their offices in Mandi areas, as well as the State. The papers of this case be placed before Hon''ble the Chief Justice for constituting a larger Bench, at an early date. Till the mater is finally decided by the larger Bench, the interim order dated 1.4.1998 shall remain operative.