Meaning of expression “valuable consideration” - Indian Laws - General

Meaning of expression valuable consideration The expression valuable consideration is not defined either under the Central Sales Tax or under the respective State Acts under consideration. Price is the amount of consideration which a seller charges the buyer for parting with the title to the goods. The price would include not only the price of the goods but also the expenditure incurred for transporting the goods, duties levied, etc. The entire amount of consideration including the sales tax component which the purchaser pays, constitutes the price of goods. As already noted, the expression price under the Sale of Goods Act is limited to a money consideration, cash or deferred payment but under the definition of sale under the Sales Tax legislations, the expression used is not just cash or deferred payment but also a valuable consideration. The expression valuable consideration has a wider connotation but must be read ejusdem generis to cash and deferred payment. The expression valuable consideration takes colour from the preceding expressions cash or deferred payment, therefore, it means payment in monetary terms i.e. in the nature of cash or deferred payment such as cheque, bank draft, promissory note, etc. Cash and deferred payment are relatable to the expression money . In other words, a transaction could amount to a sale if consideration is in terms of money. Thus, money is a genus of which cash or deferred payment in the form of cheque, bank draft, promissory note, etc. are species. Money has a wider connotation to include a valuable consideration in the form of money or a payment in monetary terms which is the price for the transfer of property paid. Thus, a valuable consideration is also a species of money which is the consideration for the transfer of goods under the sales tax enactments. Benjamin s Sale of Goods, Eighth Edition, states that- the consideration in a contract of sale of goods must in English law, be a price in money, either paid of promised. By money is meant legal tender; it does not mean money s worth. Payment need not, however, be made in cash: a method of payment that enables the seller to obtain money such as the use by the buyer of a credit card or a debit card or digital cash or cheque or banker s draft or trading cheque also comes within the expression payment of price . It is only a method of payment or a form of payment. It is also irrelevant that the money payment comes, not from the buyer of the goods or to whom the property in the goods are transferred, but from the card issuer. Thus, there can be various methods of payment i.e., by cash, by negotiable instrument, by credit or charge card or by stored value card or sometimes referred to as digital cash card or electronic purses, internet payments on which that value is stored electronically. There can also be payment by direct debits to effect payment of goods supplied particularly when there are recurring payments of variable amounts. The seller can obtain through the banking system in direct debit forms to the buyer s bank. A converse to the system of direct debit is the credit note issued by a buyer in favour of a seller which is a recompense or monetary benefit showed in the buyer s accounts. Thus, the use of the banking system by instructing the bank to transfer of balance from the buyer s account to the credit of a seller is a form of transmission of a valuable consideration. Webster's Third New International Dictionary (unabridged) defines, consideration thus: Something that is legally regarded as the equivalent or return given or suffered by one for the act or promise of another. In Salmond on Jurisprudence, the word consideration has been explained in the following words: A consideration in its widest sense is the reason, motive or inducement, by which a man is moved to bind himself by an agreement. It is for nothing that he consents to impose an obligation upon himself, or to abandon or transfer a right. It is in consideration of such and such a fact that he agrees to bear new burdens or to forego the benefits which the law already allows him. The gist of the term consideration and its legal significance has been clearly summed up in Section 2(d) of the Indian Contract Act which defines consideration thus: When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration to the promise. [M/S. TATA MOTORS LTD.- 2023 (5) TMI 744 - SUPREME COURT]