TMI Blog2017 (6) TMI 1390X X X X Extracts X X X X X X X X Extracts X X X X ..... view the terms and conditions on which the goods are sold. The very distinction between the sale and agreement to sell enumerated in the aforesaid provision points out that a sale takes place when the property in goods is transferred from the seller to the buyer. If transfer of property in the case is to take place at a future time or subject to conditions that are stipulated in the contract of sale of goods, then the contract is merely an agreement to sell. Section 19 is contained in Chapter-Ill of the Sale of Goods Act, title whereof is Effects of the Contract (Transfer of Property as between Seller and Buyer) . The title in goods is transferred from the seller to buyer only on the sale of goods. As to when such a sale fructifies and the property passes is to be ascertained from the intention of the parties having regard to the terms of the contract. If no such intention can be gathered from the terms of the contract, the property in goods passes where the goods are in a deliverable state and there is unconditional contract for sale of specific goods. Once the goods bought are agricultural produce on which market fee is leviable in terms of Schedule attached to the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of SLP (C) No. 38533 of 2012), Civil Appeal No. 8300 of 2017 (Arising out of SLP (C) No. 38567 of 2012), Civil Appeal No. 8301 of 2017 (Arising out of SLP (C) No. 192 of 2013), Civil Appeal No. 8302 of 2017 (Arising out of SLP (C) No. 256 of 2013), Civil Appeal No. 8304 of 2017 (Arising out of SLP (C) No. 1133 of 2013), Civil Appeal No. 8207 of 2017 (Arising out of SLP (C) No. 1567 of 2013), Civil Appeal No. 8298 of 2017 (Arising out of SLP (C) No. 1570 of 2013), Civil Appeal No. 8303 of 2017 (Arising out of SLP (C) No. 9980 of 2013), Civil Appeal No. 8305 of 2017 (Arising out of SLP (C) No. 10341 of 2013), Civil Appeal No. 8306 of 2017 (Arising out of SLP (C) No. 10361 of 2013), Civil Appeal No. 8307 of 2017 (Arising out of SLP (C) No. 20464 of 2014) and Civil Appeal No. 8308 of 2017 (Arising out of SLP (C) No. 16245 of 2015) Hon'ble Judges A.K. Sikri and Ashok Bhushan JJ. For the Appellant : T. Mahipal For the Respondent : Milind Kumar JUDGMENT A.K. SIKRI, J. 1. Leave granted. 2. Singular question of law, which is common in all these appeals, that arises for consideration is as to whether the Appellants herein who are purchasing the material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btained by it Under Section 14 thereof. Likewise, all other Appellants are also licensees. 5. Some relevant provisions of the Act, Rules and the Administrative Circulars require a mention at this stage, which read as follows: Section 14 of the Act Power of market committee to issue Licence.-(1) Where a market is established under the provisions of this Act, the market committee may issue and renew Licence, in accordance with the Rules and bye-laws, to traders, brokers, weighmen, measurers, processors, surveyors, warehousemen or other persons to operate in the market on payment of the prescribed fees. (2) The market committee may also grant Licence,-(a) for direct purchase from the agriculturists for the following purposes, namely: (i) to processor for processing; (ii) to exporters for export of agricultural produce; (iii) for trade of agricultural produce of particular specification; and (iv) for grading, packing and transacting in other way by value addition of agricultural produce: Provided that no sale or purchase shall be permitted under this Clause within the market proper except for the purposes specified in sub clause(i) and (iv). Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to make good the market fee. Insofar as levy of market fee is concerned, power is given to the Market Committee in this behalf to prescribe the market fee on agricultural produce, bought and sold by the licensee in the market area. Rule 58 is the Rule under which this market fee is prescribed. Initially, when the Rules were framed in the year 1963, Rule 58 contained Sub-rule (4) as well, which empowered the Market Committee to exempt payment of market fee in respect of certain market produce. Circular dated March 07, 1992 was issued Under Sub-rule (4) of Rule 58 of the Rules whereby agricultural produce was exempted from market fee if the product was purchased outside the State of Rajasthan. However, amendment to Rule was carried out by the State Government vide Notification dated April 27, 2005 vide which Sub-rule (4) of Rule 58 was deleted. Effect thereof was that Circular dated March 07, 1992 issued Under Sub-rule (4) of Rule 58 was rendered otiose. Consequently, in terms of Section 17 of the Act, all the agricultural produce, bought and sold in the market area, became liable for payment of market fee. Vires of Notification dated April 27, 2005, vide which Sub-rule (4) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remain responsible. Admittedly, the goods were to be delivered only at Jodhpur (i.e. within the market area), which is so stipulated in the invoice. On the basis of the aforesaid conditions, the High Court held that as per the provisions of Sale of Goods Act, 1930 the ownership in the goods stood transferred to the Appellant only on the delivery of the goods, which delivery took place within the market area at Jodhpur and, therefore, the transaction of buying and selling was completed at Jodhpur. On this analogy, the High Court came to the conclusion that the market fee is payable. 10. It was argued by Mr. Rishabh Sancheti, learned Counsel appearing for Arihant Udhyog, that the Appellant's case stands covered by a recent pronouncement of this Court in the case of Gujarat Ambuja Exports Limited and Anr. v. State of Uttarakhand and Ors : (2016) 3 SCC 601 wherein the court held that if the agricultural produce is brought into the market for the purpose of manufacture or further processing, but not for the purpose of sale, then the market fee is not payable inasmuch as the State Legislature does not have competence to enact a provision for levying the market fee on agricultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties as to the time at which the property in the goods shall be treated to have passed to the buyer. Both Sections 19 and 20 apply to the sale of specific or ascertained goods. 39. Section 20, which contains the first Rule for ascertaining the intention of the parties, provides that 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. This indicates that as soon as a contract is made in respect of specific goods which are in a deliverable state, the title in the goods passes to the purchaser. The passing of the title is not dependent upon the payment of price or the time of delivery of the goods. If the time for payment of price or the time for delivery of goods, or both, is postponed, it would not affect the passing of the title in the goods so purchased. 40. In order that Section 20 is attracted, two conditions have to be fulfilled: (i) the contract of sale is for specific goods which are in a deliverable state; and (ii) the contract is an unconditional contract. If these two conditions are satisfied, Section 20 becomes applicable immediately a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricultural produce was outside the State of Rajasthan which was transported to Rajasthan at the Appellant's risk and cost, as per the provisions of the invoice. The goods are ascertained and in deliverable state. The invoices itself mention the terms and conditions that the goods are being sold at the risk of the Appellants, in clear terms and in some of the cases the Appellant has even obtained the insurance of goods in its name. After the goods were entrusted to the carrier, the sellers from outside the State of Rajasthan had absolutely no liability with regard to any future losses. When goods have been delivered to a common carrier to be sent to the Appellants, the carrier becomes the agent of the Appellant and such a delivery amounts to delivery to the purchaser Under Section 23(2) of the Sale of Goods Act, 1930. There was, thus, complete sale outside the market area the moment the goods leave the factor/of the seller. As such, as soon as the goods leave the factor/of the seller (outside the State of Rajasthan), the ownership in the goods passes on to the Appellant. In such a situation, the place of delivery within the market area of agricultural produce is not a relevant f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide the State of Rajasthan and the ownership in the goods also passes outside Rajasthan, then the market fee is not payable. It is also the common case of the parties that answer to the aforesaid question would depend upon the applicability of Section 4 read with Section 19 of the Sale of Goods Act, 1930, which provisions are to be applied keeping in view the terms and conditions on which the goods are sold. That is the exercise which is done by the High Court by looking into the terms on which the goods were sold by Jawahar Exim Ltd. to Arihant Udyog. Insofar as Arihant Udhyog is concerned, this was the only invoice produced before the High Court and is also made Annexure P-3 in the present proceedings. On going through the same, we do not find any fault in the approach of the High Court. 15. Section 4 of the Sale of Goods Act deals with the contract of sale and defines 'sale' as well as 'agreement to sell'. It reads as under: 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 part-owner a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an intention as to when the parties to the contract intend the property in goods to be transferred cannot be gathered from the contract, Rules contained in Sections 20 to 24 would be applied. 17. Section 20 deals with a situation where specific goods are in a deliverable state. In that case property in goods passes to the buyer when the contract is made, even when time of payment of the price or the time of delivery of the goods or both is postponed. In order that Section 20 is attracted, two conditions have to be fulfilled: (i) the contract of sale is for specific goods which are in a deliverable state; and (ii) the contract is an unconditional contract. If these two conditions are satisfied, Section 20 becomes applicable {See-Shalimar Chemical Works Ltd.}. 18. However, Section 21 is exception to Section 20 which states that where there is a contract for 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 a thing is done and the buyer has notice thereof. Likewise, Section 22 carves out another exception and mentions that even when the specific goods are in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach case the High Court was supposed to go into the contract for sale between the licensees and their sellers and in view of the terms and conditions contained in each of the case, the High Court was supposed to decide as to whether in their cases also ownership in goods transferred only in the market area within the State of Rajasthan. 24. Insofar as the case of M/s. Deepak Enterprises is concerned, the same is decided by the High Court by separate judgment dated July 27, 2012. However, the High Court has simply followed the earlier judgment dated May 14, 2012 in Arihant Udhyog without going into the invoices of M/s. Deepak Enterprises. Therefore, the appeal has to be allowed and the impugned judgment will have to be set aside on this ground itself by remitting the case back to the High Court to decide the same on the basis of the terms and conditions contained in the invoice which would decide what was the intendment between the Appellant and the seller who sold the goods. Ordered accordingly. 25. One more aspect, however, needs to be dealt with by us. It was argued before us that the agricultural produce bought is not meant for further sale but is processed at the factory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Appellants. This exercise is not done and after dealing with the case of Arihant Udhyog, other writ petitions are also dismissed. Thus, except Arihant Udhyog, where we have upheld the judgment of the High Court, orders of the High Court in other cases are set aside and writ petitions are remanded back to the High Court to decide them in the light of the law stated by us in this judgment. 29. The consequence is that the appeal of Arihant Udhyog is dismissed and other appeals are allowed in the manner mentioned above. No costs. 1 Sub-rule (4) of Rule 58, before deletion, read as under: (4) No cess shall be levied on agricultural produce brought from outside the market into the market for use therein by the industrial concerns situated in the market or for export and in respect of which a declaration has been made and a certificate has been obtained in Form-V: Provided that if such agricultural produce brought into the market for export is not exported or removed therefrom before the expiry of twenty days from the date on which it was so brought, the market committee shall levy and collect cess on such agricultural produce from the person bringing the produce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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