GORDON WOODROFFE & CO. versus SHEIKH M. A. MAJID & CO.

Citation: [1966] SUPP. 1 S.C.R. 1 · Decided: 22-03-1966 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Appeal(s) allowed

Judgment (excerpt)

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GORDON WOODROFFE & CO. 
v. 
SHEIKH M. A. MAJID & CO. 
March 22, 1966 
[K. SuBBA RAO, V. RAMASWAMI AND J. M. SHELAT, JJ.J 
Contract-Difference between sale and agency to se!!-Accaunt 
stated, what is-When can be re-opened. 
The respondent was a trader in hides and skins and the appellant 
was an exporter. During the periad January to August 1949, there were 
several contracts betweelli them. The contracts mentioned that the 
appellant was buying the goods for resale in U.K. The price quoted 
was C.I.F. less 2! %. The contracts also provided that time should be 
the essence of the contract, that the sales tax was on respondent's ac-
count, that the respondent was answerable for weight as well as qua-
lity, that there should be a lien on the goods for moneys advanced 
by the appellant, and that any djspute regarding quality should be 
settled by arbitration according to the custom of the trade in the U .K. 
The course of dealing between them showed that before the goods were 
shipped they were subjected to a process of trimming and reassort-
ment in the godowns of the appellant with a view to make them 
conform to London standards, that the goods were marked with the 
respondent's mark and that premiums were paid to the respondent 
in case the goods supplied were of special quaLity. The respondent 
filed a suit on the original side of the High Cou!'t praying that an 
account should be taken of the dealings between himself and the 
appellant on the ground that the appellant was his agent. The appel-
lant's case was that there was an outright purchase of the respon-
dent's goods and that the appellant was not an agent of the respon-
dent. The trial Judge dismissed the suit. On appeal, the High Court 
held that the appellant acted as a de! credere agent of the reSpOn-
dent and directed the taking of accounts. 
In appeal to this Court, it was contended by the appellant that: 
(i) the terms of the contracts and the course' of dealing between the 
parties showed that the appellant was not the agent of the respon-
dent but was an outright purchaser of the goods. and (ii) that there 
was a settled account between the parties which the respondent 
could not reopen. 
HELD: (i) The appellant was the purchaser of the respondent's 
goods under the several contracts and not his agent for sale, and 
therefore, the view taken by the High Court was not correct. 
The essence of sale is the transfer of title to the goods for pi'ice 
paid, or to be paid, whereas the essence of the agency to sell is the 
delivery of the goods to a person who is to sell them, not as his own 
property but as the property of the principal who continues to be the 
owner of the goods, and the agent is liable to account for the proceeds. 
On the terms of the contract and the course of dealing between the 
parties, the contract was not one of agency for sale hut was an 
agreement of sale. The appellant purchased the goods from the res-
pondent 2i% less and sold them to the London purchasers at the 
full p~ic~ so that the 2!% was its, margin of profit and not its agency 
comm1SS10n. The fact that the goods were sent with the respondent'& 
2 
SUPREME COURT REPORTS 
[1966] SUPP. S,C,R. 
mark, that the premium was paid outside the terms of the contract, 
A 
that the appellant considered it fair and just to pay the whole of 
the premium to the respondent or to share it with him, and that addi-
tional burden with respect to weight and quality was thrown on the 
respondent, have no significance, in deciding the nature of the con-
tract. The clause with regard to lien is consistent with the transac-
tion being an outright sale, because the appellant was acting as 
creditor of the respondmt and charged interest on advances only till 
B 
the date of shipment of the goods when it became the purchaser of 
the goods from the respondent. An agent can become a purchaser 
when the agent pays the price to the principal on his own responsibi-
lity. The clause regarding arbitration in the U.K., though unusual, is 
not also inconsistent with there being a sale of goods between the 
parties in India. [3H-4B; 5G-H.] 
(ii) The accounts were settled between the parties and the res-
pondent could not be allowed to r>eopen the settled account as there 
was no proof of fraud, mistake or any other sufficient ground. 
Accounts are "settled or started" if they are submitted and ac-
cepted as correct by the other side to whom they have been rendered. 
For almost every s

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