STATE OF MADRAS Vs. GOVINDLAL

JUDGEMENT

(1.) THESE two appeals are preferred by the State against the judgment and decree of the Principal Judge of the City Civil Court in O. S. No. 1377 of 1949 and O. S. No. 287 of 1950. C. C. C. A. No. 7 of 1952 is against the decision in o. S. No. 287 of 1950. C. C. C. A. No. 8 of 1952 is against the decision in O. S. No. 1377 of 1949. A common question of fact and law arises in both the suits and so they were tried together and a common judgment was given. In each case the plaintiff sued for recovery of the sales tax which was levied from him by the Government and which he paid under protest. The main question in both the cases is whether in respect of the two transactions, the sales took place within the State of Madras or outside the State. In both cases, the goods were sent by rail consigned to self and the railway receipt was sent to the agents of the plaintiffs outside Madras on condition that it should be given to the buyer on payment of the sale price. There is one clause in the invoice to the effect that the responsibility of the seller ceases after the goods are booked and the railway receipt obtained and sent to the party. It is on account of this clause, it was contended before the taxing officers, as well as before the lower court and here, that the goods have passed to the buyer even at the time the goods were booked, and therefore the goods must be deemed to have been sold within the State.

(2.) THE documents of title, viz. , the railway receipts, as already stated, were drawn in favour of the vendors and were endorsed in favour of their agents outside Madras for the purpose of collecting the sale price and to be delivered to the purchasers on payment of the price. THE question is whether in those circumstances it can be said that the goods have passed to the buyer. THE fact that the railway receipts are drawn in favour of the vendors themselves and that they can be delivered only on payment of the price, clearly shows that the intention of the sellers was not to part with the goods till the price was paid and the railway receipts obtained by the buyers. THE buyers can get title to the goods only when they obtain the railway receipts endorsed in their favour. That, they will be entitled to get only on payment of price at the other end, which is outside the State of Madras. THEy do not therefore get any title till they pay the price and obtain the railway receipt. But it is contended that the clause to the effect that the responsibility of the vendor ceases after the goods are booked and the railway receipt obtained clearly shows that the risk follows ownership, and that the risk having been incurred by the purchaser immediately after the booking, the ownership vests with the purchaser within the Madras State itself. But, as has been pointed out by pollock and Mulla, at page 122 of the Sale of Goods Act, such a clause is not inconsistent with the ownership continuing with the vendors themselves. THE observations of Lord Hatherley in Anderson v. Morice 1876 (1) AC 713 at pages 728, 729), are extracted at page 123 of the book and they are as under :- "it is perfectly conceivable, indeed, in many cases it has been so as a matter of fact, that a person selling some goods at a distant place to a person living in this country, may say,'i am perfectly willing to sell you these goods; I am perfectly willing to complete the cargo so to be sold, but I do not intend to be at the risk of their loss during the transit or on the voyage, and although you will not be expected to pay for the goods and acquire the property until you have the bills and the documents attached sent to you, still in the meantime there will be a risk in transit, and that is a risk which I am not desirous of undertaking, and I must throw that risk upon you as part of our bargain.'" *