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TMI Blog1952 (5) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether you say delivery order or delivery of the goods, it is one and the same thing." That is how he carries on business. 3. As to the defendant, the learned trial Judge has thus summarised its position :- "A large part of the defendant's contracts is settled by paying the difference in price. In my judgment neither the making nor the settlement of a contract for purchase and sale of jute goods is a dealing in sale and purchase of goods involving actual delivery thereof. With regard to some of the contracts which are not settled, the defendant gives and takes delivery orders and receives and pays the price of jute goods against such delivery orders ........ . Some of the defendant's contracts are however strictly performed by actual delivery of the goods alongside the steamer." 4. He has further held that "the defendant does give and receive shipping instruction's and does also pay and receive the price of jute goods in exchange for mate's receipts. Such mate's receipts are obtained by the mills after the goods are delivered alongside the steamer." The learned Judge continues : "The defendant is neither a mill nor a shippe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and the Governor is satisfied that circumstances exist which render it necessary for him to take immediate action, to promulgate such Ordinance as the circumstances appear to him to require. 9. The Ordinance in question came into force on 22nd September 1949, the date of its publication in the official gazette. 10. Shortly before that date the Government of India had devalued its currency. The Pakistan Government did not. The result was a great disparity between the Indian currency and the Pakistan currency. So much so that 100 Pakistan Government rupees became equivalent to 140 rupees of the Indian Government. The effect of devaluation could not at that time be correctly ascertained and there was confusion in the minds of merchants and traders as to what the effect would be. 11. One of the principal trades in West Bengal is the jute trade. But all raw jute practically at that time came from East Bengal which was then and now is a part of East Pakistan. The mills are in Calcutta. But the mills cannot run without raw jute. Any one in India who wanted to buy one hundred rupees worth of raw jute in Pakistan had to pay ₹ 140 in Indian currency. The situation led to a lot of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be void and unenforceable, and (ii) every such contract made prior to the date of publication of the notification shall be varied and settled on the basis of the last closing rate in a notified market. That section also defines what a 'closing rate', and a 'notified market' is. Section 4 provides for penalty and Section 5 the procedure for the trial of a person who acts in contravention of the provisions of the Ordinance. 14. The defendant's case is that as the settlement contracts were made after the notification referred to in Section 3 of the Ordinance, they are void and unenforceable, and that being the position the original contracts must be settled on the basis of the last 'closing rate' in a 'notified market'. The Provincial Government notified as to what that market was. 15. The contentions of the respective parties *may be summarised thus : the plaintiff contends that he is entitled to the sum of ₹ 1,15,000 and ?odd as agreed between the parties. The defendant's contention, on the other hand, is that the plaintiff is entitled only to the difference between the contract rate and the last 'closing rate' in the notified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uously contended by counsel for the respondent that delivery of the delivery order means actual delivery of possession of the goods, and reliance has been placed on various English cases in support of that contention. On the evidence the learned trial Judge has held on this point that in the Calcutta jute trade, pukka delivery orders are ordinarily issued by the mills against cash payment and pass from hand to hand by endorsement and are used in the ordinary course of business, authorising the endorsee to receive the goods which they represent. They are dealt with in the market as representing the goods. The learned Judge refers to Anglo-India Jute Mills Co. v. Omodemull 38 Cal. 127. He has further held that the holder of a delivery order is the person to whom the holder of the goods must deliver the goods though the transfer of the delivery order has not the effect of delivery of the goods. The learned Judge points out that on this point there is a difference between bills of lading and other documents of title. After referring to the observation of Lord Parker in Ramdas v. Amerchand & Co. 43 I A 164 (P. C.) at p. 171, the learned Judge said : "the transfer of a bill of lad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with in the market as absolutely representing the goods to which they relate. 23. It is clear that in that case what was considered was the negotiability of a pucca delivery order. The question was whether title passed by endorsement of delivery orders. In that case the question which we have to determine in this appeal, namely, whether the endorsement of a delivery order amounts to 'actual delivery of possession of the goods,' did not fall to be considered. In that case the delivery order was held to be a document of title, which by endorsement passes the title in the goods it represents to the endorsee. But it still has to be considered whether such endorsement gives 'actual delivery of possession of the goods. 24. It appears from the observation of Lord Parker in Ramdas's case 43 I. A. 164 (P. C.) that the assignment of even a bill of lading operates only as a constructive delivery of the goods which it represents and not actual delivery of the goods. 25. In the Indian Sale of Goods Act, 'delivery order' is included among documents of title, 'mate's receipt' is not. In Mulla's Sale of Goods Act, the distinction between a bill of lading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person whom he names by indorsement thereon, is a document of title within the meaning of the Indian Contract Act, 1872, Section 178 (for which a new section was substituted by the amending Act IV [4] of 1930), and a pledge of a railway receipt-operated under the repealed section as a pledge of the goods. The pledgee does not release the pledge by handing the receipt to the pledgor in order that he may collect the goods from the railway company and place them in a warehouse on behalf of the pledgee. Goods so pledged are not in the possession, order or disposition of the pledgor within the meaning of sub-section 2 (c) of Section 52, Presidency Towns Insolvency Act, 1909, even where the railway receipt has been handed to the pledgor for the purpose above stated. Lord Wright after referring to Bamdas's case (43 I.A. 164 P. C.) makes the following observation at pp. 58-59: " The two questions which next arise on Section 178 are (1) whether the words 'a person who is in possession of any goods or of any bill of lading ', etc., include the owner, and (2) whether a pledge of the documents is a pledge of the goods as distinct from the documents. The questions must be sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted, it is not necessary for us to discuss the English cases on this point which were cited at the bar. 28. Section 33, Sale of Goods Act provides that delivery of goods sold may be made by doing anything which the parties agree shall be treated as delivery or which has the effect of putting the goods in the possession of the buyer or of any person authorised to hold them on his behalf. (a) A sells certain specific goods to B which are locked up in a godown. The seller gives the key to the buyer so that he may get the goods. (b) A sells goods to B in the possession of a warehouseman. Subsequently the three agree that the warehouseman would hold the goods for the buyer. 29. In each case there is a delivery. But there is this difference. In the first case the delivery of the key to the buyer gives him actual control of the place where the goods are and thereby of the goods themselves. This is symbolic delivery. The delivery of the key is a declaration of the seller's intention to transfer control of the goods. But delivery of a key does not operate as delivery of the goods under the lock if it does not in fact give complete access to the goods. 30. In the other case possessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance. 34. In this case, it is admitted, what happened was this. The mills who held the goods sold them to A, A to B, B to the defendant, defendant to the plaintiff, plaintiff to o and c to the shipper. This is what is known as a chain contract. It is admitted by the plaintiff, that the mills give the delivery order to A. A endorses it to B, B to the defendant, defendant to the plaintiff and so on. 35. None of them pays the actual price of the goods except the shipper who takes delivery of the goods from the mills against payment. From the mills' custody the goods go to the custody of the shipper, who puts them on the vessel and sends them away. The question is whether such a contract can be called a contract between the plaintiff and the defendant involving the actual delivery of possession of the goods. 36. A endorses the delivery order over to B and takes the difference, B in his turn to the defendant and takes the difference and so on. Sometimes in a chain contract, settlement is made and nobody takes delivery of possession of the goods. Such a contract cannot be called a contract by way of wager as that is ordinarily understood. But there is no doubt that this is a highl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I cannot read in the statute words which are not there and say that the dealer must himself give delivery of the goods in order to come within the definition in sub-section 2 (1) (b)(i) of the Ordinance. The legislature simply insists that the sales and purchases of the dealers should involve actual delivery of possession of the jute goods. I do not see why the sales and purchases do not involve actual delivery, if such actual delivery is given not by the dealer but by a third party in performance of and in relation to the sales and purchases of the dealer. Even the buyer and the seller of jute goods over the counter rarely takes and gives manual delivery of the goods. Very often such manual delivery is given and taken not by the buyer and Seller but by their respective servants and agents. I do not see why instead of the buyers' and sellers' employees and servants giving and taking delivery of the goods somebody else on their behalf gives and takes delivery such delivery is not actual delivery of possession of the goods." 39. I am unable to take the view of the law that the learned trial Judge has taken. The words in the Ordinance are 'actual delivery of possess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y law of the land. For that purpose no legislation was necessary. The mischief 'which the Ordinance was intended to redress was that created by these highly speculative transactions namely the chain contracts. I have already said that a part of the jute trade in Calcutta is carried on by these chain contracts. They are highly speculative transactions and are carried on by means of forward contracts. Sometime' delivery is taken. But in majority of cases, they are settled by cross contracts. Section 3 (l) gives power to the Provincial Government to prohibit the making of such contracts relating to jute goods. 44. The words of the Ordinance are 'by or with any person not being a person who habitually deals in the sale or purchase', which clearly refer to contracts which involve delivery between the intermediate buyer and seller and not to that kind of delivery which the learned Judge says takes place when the mills make over goods to the shipper. 45. The original contracts were made before the date of the notification, namely 22-9-1949 the settlement contracts after that date. 46. The practical effect of a settlement contract is to wipe out the original contract. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In Sch. 7 of the Act there are three legislative lists. List I is the Federal Legislative List- list of subjects on which the Federal Legislature alone could make laws. List II is the Provincial Legislative List, which enumerates the subjects on which the Provincial Legislature could make laws, and List III is the Concurrent Legislative List, on which the Provincial Legislature could make laws with the assent of the Governor-General of India. In this case the Ordinance has not received the assent of the Governor-General. The question is whether the Ordinance comes within List II or within List in. If it comes within List III, then since the assent of the Governor-General has not been obtained, the Ordinance must be invalid. The Provincial Legislature without the assent of Governor-General had no legislative authority. And what the Provincial Legislature could not legislate, the Governor ? was incompetent to do by Ordinance. 52. On behalf of the respondent it was contended that the Ordinance came within head 10 of List in : "Contracts, including partnership, agency, contracts of carriage, and other special forms of contract, but not including contracts of agricultural land.& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e insurance properly falls within the description of a 'trade' must, in their Lordships' view, depend upon the sense in which that word is used in the particular statute to be construed; but in the present case their Lordships do not find it necessary to rest their decision on the narrow ground that the business of insurance is not a trade." 57. Their Lordships abstained on that occasion from any attempt to define the limits of the authority of the Dominion Parliament. They said (p. 113): "It is enough for the decision of the present case to say that, in their view, its authority to legislate for the regulation of trade and commerce does not comprehend the power to regulate by legislation the contracts of a particular business or trade such as the business of fire insurance in a single province and therefore that its legislative authority does not in the present case conflict or compete with the power over property and civil rights assigned to the Legislature of Ontario by No. 18 of Section 92." 58. The case before us is not exactly similar to the appeals before their Lordships of the Judicial Committee. Here we have to consider the reverse of what the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Northern Ireland 'in respect of precautions taken to secure the health of the inhabitants of Northern Ireland by protecting them from the dangers of an unregulated supply of milk. These questions affecting limitation on the legislative powers of subordinate parliaments or the distribution of powers between parliaments in a federal system are-now familiar, and I do not propose to cite the whole range of authority which has largely arisen in discussion of the powers of Canadian Parliament It is well established that you are to look at the 'true nature and character of the legislation' : Russell v. The Queen (1882 7 A. C. 829) 'the pith and substance of the legislation'. If, on the view of the statute as a whole, you find that the substance of the legislation is within the express powers, then it is not invalidated if incidentally it affects matters which are outside the authorised field. The legislation must not under the guise of dealing with one matter in fact encroach upon the forbidden; field." 65. To the same effect is the . observation of Lord Porter in Attorney General for Canada v. Attorney General for the Province of Quebec (1947) A. C. 33. Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... godown or any place for storage of goods. It was necessary to put a stop to this part of the jute trade, so that the price of jute might not go sky-high and create a deadlock in jute business. The Ordinance was really aimed at the jute trade, and to regulate the trade it was necessary to make certain contracts void. So it was provided that the contracts made before the Ordinance would not be void but would be settled at a particular rate. Only three markets were selected, called the 'notified market' at the last closing rate of which, contracts made previous to the Ordinance must be settled. It is quite clear therefore that the real character of the Ordinance was to regulate the jute trade within the province. This is the pith and substance of the Ordinance. It was necessary to pass the Ordinance to meet the situation brought about by devaluation. The provisions in the Ordinance relating to contracts are only incidental. 69. We are therefore of opinion that the Ordinance is intra vires and declare it to be such. The original contracts must be settled in terms of Cl. 3 (c) (ii). But no claim has been made on this basis either before us or the Court below. 70. The result t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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