RAMANLAL MAGANLAL Vs. BINANI COMMERCIAL CO LTD

JUDGEMENT

(1.) THIS is an appeal from a judgment of Mr, Justice Coyajee and the appeal came to be filed in the following circumstances: The plaintiffs filed a suit in respect of a contract arrived at between the parties in January 1952. By this contract the plaintiffs agreed to sell and the defendant agreed to buy 300 torn of eleelro-litic zinc at the rate of Rs. 171 per cwt. The plaintiffs gave delivery and defendant took delivery of 160 tons under this contract and no dispute survives with regard to tin's quantity. With regard to the balance of 140 tons defendant failed to take delivery, and the plaintiffs sold the same and there was a shortfall. The suit is filed in respect of the shortfall. The learned Judge passed a decree in favour of the plaintiffs and the defendant has come in appeal and the main contention that has been raised by Mr. Manecksha on behalf of the appellant -- which contention was not accepted by Mr. Justice Cuyajee -- was that the transaction in suit is void and illegal by reason of the provisions of Act LXX of 1950. Turning to that Act, as the preamble sets out, it is an Act to provide for the control of prices of certain goods and the supply and distribution thereof and the Act was passed alter the necessary resolution under Article 249 of the Constitution was passed. Trial article confers power upon the Parliament to legislate with respect to a matter in a State List, but this power can only be exercised in the national interest and on the Council of State passing a resolution supported by at least two-thirds of the members voting. This procedure having been complied with the Parliament has passed Act LXX of 1950. It is not disputed that the contract goods come within the ambit of the Act and Mr. Naneck-sha's contention is that the Act prohibits the particular transaction which was entered into between the parties and by reason of the prohibition the transaction has become void.

(2.) NOW, Section 4 of the Act provides for the fixation of maximum price of goods and maximum quantities of goods which can be sold-in one transaction and this can be done by the Central Government by a notified order. Section 4 (l) (c), which applies to the facts of this case provides that the Central Government may, by notified order, fix in respect of any goods the maximum quantity which may in one transaction be sold to any person. Section 5 is important. That section prohibits any dealer -- and both the parties to the suit satisfy the definition of ''dealer", and there is no dispute on that score -- from selling, or agreeing to sell or offering for sale to any person any goods for a price and in a quantity exceeding the maximum fixed under Section 4. Section 14 provides for penalties for any person contravening any provisions of the Act, which would include the provisions contained in Section 5. Therefore, reading Ss. 4 and 5 together to the extent they deal with maximum quantity the scheme is fairly clear. By a notification to be issued by the Central Government the maximum quantity which can be sold to any person in one transaction can be fixed. Although Section 4 (l) (c) speaks of a sale when we turn to Section 5 (c) what is -prohibited is not merely a sale but also an agreement to sell or an offer for sale. Therefore, whereas the notification would only refer to a sale in one transaction, the quantity mentioned in Sub-section (1) (c) of Section 4 becomes the quantity prohibited not merely for the purposes of sale but also for the purposes of agreement to sell or offer for sale. Therefore, with respect to the learned Judge, although he has gone into the question as to whether the transaction in suit is a sale within the meaning of the Sale of Goods Act, it is, in our opinion, unnecessary to consider that point because even from that aspect of the case whether the transaction is a sale or agreement to sell if the sale or agreement to sell refers to a quantity which exceeds the maximum fixed under Section 4 (1) (c) then the transaction comes within the mischief of the Act and is prohibited by law, and it will be illegal.

(3.) NOW turning to the relevant notification issued by the Government it is in the first instance significant to note that it was issued under Sections. 4, 7 and 10. We are not concerned with the latter two sections, but it Is pertinent to note that Government has purported to act under the power conferred upon it by Section 4 and with regard to the maximum quantity which may be sold under Section 4 (l) (c) the notification provides that no dealer or producer, shall sell any non-ferrous metals exceeding one ton unless he has obtain-ed a declaration in writing from the buyer that the quantity proposed to be sold to him does not exceed his requirements for consumption for three months or in case the buyer is a dealer his requirements for normal trade for three months. On a plain reading of this notification it is clear that the Central Government has fixed a ceiling for the purposes of sale of non-ferrous metals and that ceiling is one ton; but the (notification goes on to provide that that ceiling may be exceeded provided certain conditions laid down in the notification arc satisfied. And the conditions are: (1) that a declaration in writing is obtained from the buyer that the quantity proposed to be sold to him does not exceed his requirements for consumption for three months; or (2) if the buyer is a dealer then he must obtain a declaration in writing that the quantity proposed to be sold to him does not exceed his requirements for normal trade for three months. Therefore, if a person sold non-ferrous metal without obtaining any such declaration he could not sell a quantity exceeding one ton because that is the ceiling fixed by the Central Government. But if he wanted to sell a quantity in excess of one ton it was incumbent upon him to obtain a declaration in writing whether the buyer was a dealer or not. And the Central Government fixes the ceiling in case of a non-dealer (who _ would be the ordinary consumer) at his requirements for consumption for three months and in the case of a dealer his requirements for normal trade for three months. As presumably the seller would not know what the requirements either of the consumer or of the dealer would be the Legislature thought it "sufficient if the seller obtained a declaration in writing in that behalf either from the consumer or from the dealer. In our opinion, the plain language of this notification leaves no scope for any argument that it means differently from what is stated in clear and precise language. The first contention of Mr. Mistree is that notification does not fix a ceiling with regard to quantity at all. As we have already pointed out in the first place, it is clear that by stating that the notification was issued under Section 4 and looking to the subject-matter of the notification the Central Government was purporting to exercise the power conferred upon it by the Legislature. Of course, even -though an authority may purport to make rules within the ambit of the Act the rules may fail to carry out the intention of the authority and it may not be in exercise of the power conferred upon it. Therefore, it would be quite correct that the mere fact that the notification itself states that it is issued under Section 4 is not necessarily destructive of the argument that in fact the Central Government has failed to exercise, the power conferred upon It and no ceiling has been fixed. What Mr. Mistree urges upon us is that all that the notification does is not to fix a ceiling but to lay down a condition on which goods exceeding one ton may be sold. In our opinion it is impossible to accept that contention. That ceiling of one ton is clearly fixed by the notification. That ceiling cannot be exceeded and it is only in the latter part of the notification that the Central Government permits a seller to exceed that ceiling provided certain conditions are satisfied. Therefore, really what the notification does is to fix two ceilings: one the ceiling of one ton where no writing declaration is obtained by the seller and the other where a written declaration is obtained by the seller, in which case the ceiling is either three months requirements for consumption in case of a consumer buyer or in case of a dealer buyer three months requirements for normal trade.