COLLECTOR OF CUSTOMS & ORS. versus PEDNEKAR AND COMPANY (PRIVATE) LIMITED (IN LIQUIDATION) & ANR.

Citation: [1976] 3 S.C.R. 971 · Decided: 31-03-1976 · Supreme Court of India · Bench: HANS RAJ KHANNA · Disposal: Dismissed

Judgment (excerpt)

971 
COLLECTOR OF CUSTOMS & ORS. 
A 
v. 
PEDNEKAR AND COMPANY (PRIVATE) LIMITED (IN LIQUI-
DATION) & ANR. 
March 31, 1976 
[H. R. KHANNA AND P. K. GOSWAMI, JJ.] 
B 
Sale of Goods Act (3 of 1930), s. 20-Time of passing of property 
in 
goods. 
Constitution of India, 1950, Art. 226-When may be invoked. 
Practice-Raising new contention, if permissible. 
The. first respondent, an importer and dealer in sewing machines, was granted 
C 
an import licence for importing industrial sewing. machines and spare parts. 
After importing some goods through the Bombay port, the first respondent was 
permitted by the Customs Authorities to import the rest through the Calcutta 
port, and the first respondent entered into contracts with Japanese companies 
for supply of a certain number of industrial sewing machines and oscillating 
rock shafts. Being in some financial difficulty the first respoildent approached 
the 2nd respondent, _and the latter stood guarantee to Bankers at Delhi enabling 
the first respondent to open the necessary letter of credit. Thereafter, while 
.the goods contracted for from the Japanese_ conlpanies were on the high seas, 
D 
there was an agreement by which the first respondent agreed to sell to the 
second respondent at a future date, certain quantities of sewing machines, heads 
and oscillating rock shafts. 
When the goods arrived at Calcutta, the Customs 
authorities took the view that the goods were ascertained and specific goods, 
that the property in them had passed to and vested in second respondent by 
reason of the agreement to sell, so that at the time of importation the goods 
were not covered by the licence in favour of the first respondent and ordered 
confiscation of the goods and the imposition of a penalty. Tue first respondent 
E 
thereupon moved the High Court and the High Court held against the appel -
lant. 
In appeal to this Court, the appellant-Collector of Customs, also raised the 
contentio~ that though everything ostensibly was done by the 1st respondent, 
the real importer was the 2nd respondent and that, therefore, the importation 
was unauthorised~ and that the High Court had no jurisdiction to interfere 
under Art. 226, with the order of the Customs authority. 
Dismissing the appeal, 
I 
HELD.: ( 1) It is not possible to hold on the facts of this case, that the 
property in the goods passed to the second respondent at the time of the 
agreemeI?-t• and the High Court was right in holding that the property in the 
goods dtd not pass to the buyer till the time of delivery of the goods in 
Bombay.. 
[977E, G-HJ 
(a) T~e agreeme~t t~ sell related not to the entire consignment of the 
goods which were being l!llported by .the first respondent but only to part of 
G 
th~e goods . even though 1t was a maior part. 
Out of 208 dozen rock shafts 
1vh1ch we~e 1mported, 200 dozen were to be sold to the 2nd respondent. 
There 
was nothing to prevent the first re~pondent from selecting for itself any s 
dozen rock shafts, out of th~ consignment. The place of deliverY was the 
second respondents g?down 1n Bombay, and therefore, the property in the 
goods could n?t pass in favour of the second respondent until after the arrival 
of the goods in Bombay and the 200 dozen rock shafts to be delivered to the 
2nd respondent w.ere separated. So far as the sewing machines were concern-
ed, the property ~n them could also not pass to the buyer before the 
assing 
H 
of the i;iroperty 1n. rock s~afts as the contract was one indivisible c6ntract 
No ~pecrfic QOods 1n a deliverable state were attached to the contract wh -
·~ 
was made. [977E-G] 
en '' 
?{ 
A 
B 
c 
972 
SUPREME COURT REPORTS 
[1976] 3 s.c.R. 
(b) In many genuine commercial transactions guarantee can be arranged by 
a party importing or exporting goods under a valid licence. The mere fact 
of financial guarantee by the second respondent to a banker for the purpose of 
enabling the first respondent to open a letter of credit, without anything more~ 
would not convert the guarantor (2nd respondent) to be the o\vner_ of the 
property, the moment the contract was entered into, if the terms therein pointed 
to the contrary. 
[978A-B] 
(2) It was never the contention of the Customs authorities that the importaw 
tion of the goods was not done by the 1st respondent or that the 1st respond-
ent'~ contracts with the Japanese suppliers were shan1. 
Therefore the appellant 
cannot be permitted to raise the contention that the real importer was the 2nd 

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