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TMI Blog1957 (6) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... o refer the matter to a Bench so that an authoritative decision might be pronounced by this Court. In pursuance of the above order of reference these second appeals came on for hearing before the Division Bench. The Judgment of the Court was delivered by SUBBA RAO, C.J.-These two second appeals arise out of two connected suits, O.S. Nos. 268 and 309 of 1951 filed by the respondent against the appellant, the State of Madras, in the Court of the District Munsiff, Rajahmundry. O.S. No. 268 of 1951 was a suit filed by the plaintiff to set aside the orders of assessment made by the Commercial Tax Officer levying from him sales tax of Rs. 2,941-7-0 for the year 1947-48 in respect of the turnover relating to the sale of delivery orders as first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst certain contracts. On payment of the hundies, the purchasers receive delivery orders. The delivery orders can be endorsed by the holders any number of times and when they are presented to the mills by the ultimate holders, delivery of the gunnies will be given to them by the mills. Both the parties argued the appeals on the basis that the aforesaid pattern of transactions was followed by the mills and the plaintiff in the two suits. It is, therefore, unnecessary to give particulars of the transactions as nothing turns upon them. The plaintiff is a purchaser from the mills. He endorsed the delivery order to third parties, who took delivery of the goods from the mills. The short question is whether the endorsement of delivery orders in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r than actionable claims etc., would be liable to sales tax on his total turnover. The question, therefore, is whether the assignment of the delivery orders by the purchaser of the goods from the mills would be a sale of goods within the meaning of the Act. It is contended that the delivery order is a document of title authorising the possessor of the document to transfer the goods, and, therefore, the sale of delivery order constituted transfer of the goods. This argument pre-supposes that the mills, by issuing the delivery orders to a purchaser, transfers the property in the goods to the purchaser. From the nature of the transactions, it is seen that the goods sold by the mills are not ascertained till delivery order is presented to the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er is not decisive on the question whether the property in the goods passed to the buyer at the time the delivery order is given to him. There is much room for argument that the delivery order is a document of title. But where the goods are not ascertained, the delivery order is nothing more than an authority conferred upon the buyer or his nominee to take delivery of the goods from the godowns. In the present case, as no property in the goods passed from the mills to the buyer, till the goods are separated from the joint stock, we have no hesitation to hold that the delivery orders in question are not documents of title. As the buyer himself had no title to the goods, it follows that the endorsement of delivery orders in favour of the plai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal contract would become complete." From the aforesaid observations, it will be seen that the sale by the mills was of ascertained goods and, therefore, the assessees, to whom property in the goods passed validly transferred the goods to the purchasers. That would be sufficient to dispose of the case. Even on the assumption that the goods were not ascertained at the time of the first sale, the Division Bench negatived the contention of the assessees on the ground that the ultimate delivery of the goods to third parties, simultaneously fed both the contracts. It would be seen from the facts in that case that the assessees entered into an agreement to sell the goods to a third party. When delivery was taken at the other end, it was construed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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