9911796707
TMI Blog1991 (12) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... evasthanam sent a telex on 28-8-1990 to the second respondent requesting quotations from overseas supplier for the supply of two containers of 20 tonnes each of dried grapes. The second respondent replied by telex dated 7-9-1990 stating that they have asked for fresh quotations for further import of raisins from overseas suppliers by inviting samples. This was followed by another telex by the second respondent dated 17-9-1990 stating that only two suppliers from Turkey who had earlier supplied raisins to the petitioner-Devasthanam have quoted prices and sent samples. It was also communicated in the said telex that fresh samples of certain type of raisins are being sent by air parcel for approval by the petitioner-Devasthanam. On 3-10-1990, the petitioner-Devasthanam wrote a letter to the second respondent that among the samples received it favoured Standard 9 Natural Sultana and as the price seemed to be high, it requested the rate to be negotiated with the supplier. Later on, on 11-10-1990, the petitioner-Devasthanam accepted the re-negotiated rate of US $ 1070 metric tonne for Standard 9 Sultana and placed orders for two containers of 20 tonnes each. The second respondent informe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fidavit that on 17-2-1991, the petitioner-Devasthanam wrote a letter to the second respondent stating that as the consignment has not been cleared under the Prevention of Food Adulteration Act, 1954, the goods will have to be reshipped back to Turkey. In that letter it has also been stated that immediate action for reshipment has to be taken as the containers are incurring demurrages. It is also stated in the affidavit that the petitioner-Devasthanam has not accepted the goods, that it has also made it clear to the State Trading Corporation, the second respondent herein that the goods should be reshipped and that it had also called upon the second respondent not to delay the matter further. A telex was also given on 6-3-1991 asking the second respondent to take immediate action regarding reshipment or dispose of the cargo. At this point of time, a notice under Section 124 of Customs Act, 1962 was issued to the second respondent, with a copy marked to the petitioner's agent Shaw Wallace Company Limited, stating that as the goods appear to have been imported contrary to the prohibitions imposed by Section 5 of the Prevention of Food Adulteration Act, 1954 read with Sections 6 and 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffidavit that the petitioner has paid the second respondent the entire purchase consideration for goods, that it has been unable to take possession of the goods as the goods have not been cleared by the Port Health Authorities and that the said fact had been brought to the notice of the second respondent. It is further alleged in the affidavit that the invoice for the purchase of goods is made in the name of the second respondent, that the order was placed on the foreign supplier by the second respondent and as such, it is only the second respondent who can take action against the foreign supplier. The petitioner refers to the bill of lading which states that in case cargo has been rejected by the Port Health Authorities in the discharge point the reshipment expenditure and freight charges are on the shippers account and as such, the second respondent has to reship the goods as they were not cleared by the Port Health Authorities. It is further alleged in the affidavit that as early as 17-2-1991 the petitioner had written to the second respondent to reship the goods, back to the supplier, and that the second respondent did not take prompt action which it was legally bound to do. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... davit that how the second respondent requested the Turkish Shipper that for the supply of raisins Sultana Standard 9 Natural they should produce quality inspection certificates, that the shipper should confirm that they will ship the raisins of same quality as requested by the petitioner by its telex dated 11-10-1990 and that it is clear that the second respondent had merely acted upon the order placed by the petitioner-Devasthanam by its telex dated 11-10-1990 and as such, the second respondent cannot be held responsible for any consequences. It is further claimed in the counter-affidavit that after endorsing the shipping documents in favour of the petitioner-Devasthanam, the second respondent lost control over the goods, that the title to the goods passed on to the petitioner for all purposes, and as such the clearance of the consignment has to be made only by the petitioner-Devasthanam. It is further claimed in the counter-affidavit that the invoice for the purchase of raisins was made in the name of second respondent by overseas supplier since the import licence dated 30-1-1989 was issued in favour of the petitioner-Devasthanam for importing raisins through the second responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of obtaining fresh opinion from the Central Food Technological Research Institute, Mysore and that the Additional Collector of Customs has not passed any final orders and that the confiscation proceedings are still continuing. It is further claimed in the counter-affidavit that when the proceedings are pending before the Additional Collector of Customs, the first respondent herein issued a notice on 11-7-1991 for auctioning the consignment for non-payment of the dues, that the petitioner is not justified in asking the second respondent to bear the expenses in connection with the drawal of fresh samples, that by letter dated 7-8-1991 the Assistant Collector of Customs has concluded that the petitioner-Devasthanam is the ultimate buyer and the user of the goods, that as buyer and owner of the goods the petitioner-Devasthanam has a right even to relinquish the goods at any time, that the second respondent is not the owner of the goods, that it is not liable to incur any expenses in this regard, and that in view of the stand taken by the foreign shipper the petitioner-Devasthanam is not entitled to get refund of the purchase money and other expenses. It is further stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n seller. Referring to Sections 16(2) and 17 of the Sale of Goods Act with regard to sale by samples, the learned counsel contends that in such matters the question has to be considered along with c.i.f. contract and the goods should revest with the seller. The learned counsel relies upon the decision in Muthukrishna v. Madhavji Devichand and Company (AIR 1953 Madras 817). According to the learned counsel for the petitioner, if goods are rejected after inspection it revests with the seller. He further relies upon the decision in Trilokchand Poosaji v. Crystal and Company (AIR 1955 Madras 481) and In re : Firm Beharilal Baldeoprasad (AIR 1955 Madras 271) and in Sorabji H. Joshi Company v. V.M. Ismail (AIR 1960 Madras 520). The learned counsel further relies upon Chalmers "Sale of Goods" and refers to Section 40 of the Sale of Goods Act to substantiate his contention. The sum and substance of the argument of the learned counsel appearing for the petitioner-Devasthanam is that insofar as there is no privity of contract between the petitioner and the second respondent, even though the title of the goods is vested on the petitioner by endorsing the bill of lading when once it is rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first respondent and of Mr. V. Aravamudan, the learned counsel appearing for the third respondent. The facts are not disputed. An order was placed by the petitioner-Devasthanam for the purchase of raisins from the foreign seller and due to canalising it has been routed through the State Trading Corporation, the second respondent herein. As such, the State Trading Corporation has placed orders with the foreign seller to the account of petitioner-Devasthanam. It is true that the import licence and insurance stand in the name of the State Trading Corporation. But, it is to be noted that it is only to the account of the petitioner-Devasthanam. It is also not disputed that when a sale was concluded by high seas by endorsing the bill of lading by the petitioner-Devasthanam. The only question to be decided is who is the owner of goods, when the goods arrived at Madras Port and when it is rejected, whether the petitioner-Devasthanam or the S.T.C. A Division Bench of this Court in Muthukrishna v. Madhavji Devichand and Company (AIR 1953 Madras 8) has considered the scope of Sections 42 and 59 of the Sale of Goods Act, 1930 has held that : "In a c.i.f. contract the purchaser is entitled t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods are inspected and accepted, it cannot be stated that the relationship of buyer and seller has become extinguished and the relationship of debtor and creditor or of principal and agent alone remained to be considered. In other words, contract to buy does not immediately transfer ownership but only when goods are found by buyer to be in good condition or when he has accepted them. . ." Again, in the very same judgment, the Division Bench, considering the scope of provision of Sale of Goods Act with regard to sale by description, considered the remedies of the buyer and observed as follows :- "On rejection of the goods as not answering to description the buyer, if he has paid for them, is entitled to recover from the seller the price as money had and received for his use. Ordinarily when there is a dispute between a buyer and a seller with reference to quality, it would be the duty of the seller to prove that the goods were of the quality contracted for." In Sorabji H. Joshi and Company v. V.M. Ismail (AIR 1960 Madras 520) a Division Bench of this Court has held that where goods are bought by description there is an implied condition that the goods shall be of merc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sale of Goods Act with regard to c.i.f. contract, since all the goods are rejected. The other question is who has got the privity of contract with the foreign seller. It has been decided in Mohd. Serajuddin v. State of Orissa [Vol. 36 (1975) STC 136], when considering the issue "in the course of export" under Section 5 of the Central Sales Tax Act, 1956, that the privity of contract was only between the Corporation and the foreign buyer in that case. It has been held in the above-mentioned case that the appellant therein was under no contractual obligation to the foreign buyer either directly or indirectly. Here, it is a converse case. The State Trading Corporation, the second respondent herein, is the buyer, and the seller is in Turkey. As such, the contention of the learned counsel for the petitioner that the petitioner-Devasthanam had no privity of contract with the foreign seller has to be accepted on the principles laid down by the Supreme Court in Mohd. Serajuddin v. State of Orissa [Vol. 36 (1975) STC 136]. The decision relied upon by the second respondent in J.V. Gokal and Company v. Assistant Collector Sales Tax (AIR 1960 SC 595) is with regard to the question "in cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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