STATE OF UTTARANCHAL versus M/S. KHURANA BROTHERS

Citation: [2010] 12 S.C.R. 1108 · Decided: 27-10-2010 · Supreme Court of India · Bench: P. SATHASIVAM · Disposal: Appeal(s) allowed
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Judgment (excerpt)

[2010] 12 S.C.R. 1108 
A 
STATE OF UTTARANCHAL 
B 
(NOW KNOWN AS STATE OF UTTARAKHAND) & ORS. 
v. 
M/S. KHURANA BROTHERS 
(Civil Appeal No. 5876 of 2009) 
OCTOBER 27, 2010 
[P. SATHASIVAM AND R.M. LODHA, JJ.] 
Stamp Act, 1899: s. 2(1 O); Schedule 1-B; Article 23 -
C Contract of sale - Auction - Bid - Acceptance of bid - In 
terms of the contract, auctioned lot remained at purchaser's 
risk from the date of acceptance of its bid and seller was not 
responsible for any loss and damage - Held: Since property 
in auctioned lot vested in the purchaser as a result of subject 
o contract, it amounted to transfer of movable property and 
'conveyance' as defined uls.2(10) and was chargeable to 
stamp duty under Article 23, Schedule 1-B - Contract - Sale 
of goods Act, 1930 - s.4. 
E 
Contract: Contract of sale and agreement to sell -
Distinction between. 
Review: Scope of - Held: Division Bench of High Court 
travelled beyond the scope of review. as the view taken in the 
judgment under review did not suffer from any error apparent 
F on the face of record justifying its review. 
In a public auction, the highest bid of the writ 
petitioner-respondent for the purchase of crude resin was 
accepted. On March 24, 2001, a formal contract was 
G entered into between the State Government and the writ 
petitioner. In terms of the contract, the State Government 
agreed to deliver the specified quantity of the crude resin 
to the writ petitioner for the price stated in the contract. 
The parties agreed that the quantity may increase or 
H 
1108 
STATE OF UTTARANCHAL v KHURANA BROTHERS1109 
decrease by 10% and the resin would have to be removed 
A 
by the purchaser within 60 days from the date of approval 
of sale and it would not be removed in more than 60 
installments. As per the terms of the contract, the 
purchaser was required to pay the amount of sale price 
irrespective of the fact whether the contracted quantity 
B 
of resin was lifted by it· or not. By a subsequent 
communication dated April 7, 2001, the purchaser was 
informed of the acceptance of the bid for the stated resin 
lot/s in its favour and it was asked to arrange for lifting 
of the same within 60 days of the issuance of that letter. c 
The short question that arose for consideration in the 
instant appeal was whether the said contract for sale of 
crude resin amounted to 'conveyance' as defined under 
Section 2(10) of the Stamp Act, 1899 and, if yes, whether 
stamp duty was chargeable thereon. 
D 
Allowing the appeal, the Court 
HELD: 1.1. The essence of sale is the transfer of the 
property in a thing from one person to another for a price. 
As per Section 4 of Sale of Goods Act, 1930, the contract 
of sale includes an agreement to sell. It is not necessary 
that contract of sale must be absolute. It may be 
conditional as well. The essential feature that · 
distinguishes the contract of sale from an agreement to 
sell is that in a contract of sale, the property in the goods 
is transferred from the seller to the buyer immediately, 
whereas in an agreement to sell prop~rty is transferred 
on a future date/dates. An agreement to sell becomes a 
sale, on fulfillment of the conditio:1s or when the· time 
provided in the agreement elapses. [Para 7] [1119-B] 
1.2. Schedule 1-B appended to the S~an:p Act 
provides for the rates of stamp duty in re; ,1ect of 
instruments described thereunder. Article 23 thereof 
E 
F 
H 
1110 
SUPRE:ME COURT REPORTS 
[201 OJ 12 S.C.R. 
A provides for rate of stamp duty on the 'conveyance' as 
defined by Section 2(10) of the Stamp Act, 1899 which are 
not exempted under Article 62. Under Section 2(10), inter 
alia, every document by which movable property is 
transferred is 'conveyance'. In the instant case, the 
B contract of sale for crude resin entered into between the 
parties amounted to transfer of movable property. By the 
said contract, the right in auctioned lot of crude resin was 
created in favour of the writ petitioner. Correspondingly, 
the State Government was under obligation to deliver the 
c quantity of crude resin specified in the document. The 
contract provided that resin sold would remain at 
purchaser's tisk from the date of acceptance of its bid 
and seller would not be responsible for any loss and 
damage which might occur thereto from any cause 
0 whatsoever. A perusal of the document as a whole 
showed that property in the auctioned lot of crude resin 
vested in the purchaser as a result of the subject contract
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