M/S. CARONA SAHU CO. LTD. versus STATE OF MAHARASHTRA

Citation: [1966] 2 S.C.R. 845 · Decided: 02-12-1965 · Supreme Court of India · Bench: P.B. GAJENDRAGADKAR · Disposal: Dismissed

Judgment (excerpt)

B 
c 
D 
E 
F 
G 
H 
[P. B. 
M. 
M/S. CARONA SAHU CO. LTD. 
v. 
STA TE OF MAHARASHTRA 
December 2, 1965 
GAJENDRAGADKAR, C.J., K. N. WANCHOO, 
HIDAYATULLAH, 
V. 
R.AMASWAMI 
AND 
P. SATYANARAYANA RAJU, JJ.] 
Bombay Sales-tax Act (3 of 1953), ss. IO(a), 10-C-Goods shipped 
front Ccchin under biU of lading at risk of buyer in Bon1b11y but de!t-
verable to buyer only on paymen..r of price to bankers-Properly in goods 
whether passes to buyer in Cochin or in Bombay-Goods whether liable 
to purchase tax under s. lO(a)-Sectlon 10-C whether applies .. 
Sale of Goods Act (3 of 1930), s. 25(2)-Passing of property when 
gaods shipped under bill of lading. 
The appellant-company, a rnanufac~u~er ?f foot\vear in Bom~ay, pur-
chased rubber from certain dealNs residmg m the State of Cochm. The 
goods were shipped by the Cochin sellers from Cochin to Bombay. under 
bills of lading in which the sellers themselves were Il?Jlled as cons1~ees. 
The invoices however showed that the goods were shipped at the nsk of 
the 
appellant 
which 
was 
to 
pay insurance 
as 
well 
as freight 
and other charges. 
For the period April I, 1954 ta 
March 31, 1955, 
the appellant was assessed to purchase tax under s. IO(a) of the Bombay 
Sales-tax Act (3 of 1953). The appellant"s appeal under s. 30 of the 
Act failed. 
In a reference under s. 34( I) of the Act the High Court 
held that the property was intended 
by the parties to pass in Bombay 
and the appellant was liable to purchase tax. 
The appellant then came 
to this Court by special leave. 
It was contended an behalf of the appellant that (I) the property in 
the rubber consignments had passed ta the appellant in Cochin, (2) the 
term 'person' in s. lO(a) should 
be read 
as meaning a 
dealer 
who 
carries on business in Bombay but \Vho is not registered undet the Act 
and (3) s. 10-C and not s. lO(a) applied to the transactions in question. 
HELD : ( i) The ordinary rule that unascertained goods are uncon-
ditionally appropriated to the contract and property passes to the buyer 
on the de1ivery of the said goods to the common carrier, does not apply 
to cases where goods are shipped under a bill of lading. 
In the latter 
case deliv~1y by the seller is .nat delivery to the buyer but io the Captain 
of the ship as bailor for delivery to the person indicated in the bill of 
ladmg. 
The seller may .take the bill of lading to his own order. 
The 
effect. of such a transact10n would be to control the possession of the 
Captam as ballce and make him accounfable for delivery of the goods tn 
the seller. 
The seller thu~ keeps 
to himself. the right of 
demanding 
possession from the Captan~ and this 
is consistent 
even with a special 
tenn that th.e goods are sh1pp~d on accGunt of and at the risk of the 
buyer. 
Section. 25 of the Indian Sale of 
Goods Act itself states that 
where goods shipped are and by the bill of lading they are deliverable to 
the order of .the seller or his agent, the seller is prinza facie deerned to 
reserve the nght of disposal. [848 E-G] 
Gabarron v. Kreeft. (1875) LR. 10 Ex. 274,. referre\I t~. 
The fact. tha.t the goods were shipped at the risk of the buyer would 
not necessarily imply that property. in the goods had 
passed to the 
846 
SUPREME COURT REPORTS 
[1966] 2 S.C.R. 
buyer. The endorsement to that effect in the invoice only indicated that 
A 
the insurance charges were to be paid by the appellant. The clause 
bad no bearing on the question of passing of title. [849 G-H] 
. Shephered v. Harrison, 1871 L.R. (V) H.L. 116, relied on. 
(ii) There is nothing in the context or language of s. lO(a) for im-
porting any qualification on the plain 
meaning of the word 'person' in 
that section. The section plainly states that purchases made by a dealer 
from a person who is not a registered dealer will be subject to purchase 
B 
tax. The appellant was a dealer and it had made the purchases in ques-
tion from sellers who were not registered dealers. The 
provisions of 
s. lO(a) of the Act were thus. clearly attracted and the purchases V.'ere 
liable to tax. [852 F] 
(iii) The contention that s. 10-C governed the transactions in ques-
tion could not be sustained. Section 10-C reproduces the Explanation to 
Art. 286(l)(a) of the Constitution and would apply only where under 
C 
• general law the sale takes place out>ide 
the State but the goods 
are 
delivered as a direct result of the sale for consumption within the State 
of Bombay. 
[853 BJ 
CIVIL APPELLATE JURISDICTION

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