INDIAN CONTRACT ACT

1. S. 124 - Gajanan Moreshwar Parelkar v Moreshwar Madan Mantri

(Indemnity) (Plaintiff, at the request of the defendant, executed two
mortgages in favour of Mohandas. Defendant wrote a letter promising to
indemnify the plaintiff against any suits by the mortgagee, along with
executing a third mortgage in place of the previous two. Plaintiff prays that
the defendant obtains a release of liability from Mohandas; Issues: 1) Can
the indemnified ask for performance of the contract of indemnity without
suffering actual loss? 2) Whether the obligation of the plaintiff was
absolute. Held: S 124,125 do not apply, as said sections do not cover the
transaction. ICA is not exhaustive, and principles of equity will allow the
indemnified to enforce said contract of indemnity without having suffered
actual loss, when the obligation of the indemnity holder is absolute. Here,
obligation is absolute. RATIO: There exist contracts of indemnity, which do not fall
within the ambit of S 124,125. Contracts of indemnity can be enforced without the
actual loss of the indemnified so long as there is an absolute liablity of the type
covered by the contract of indemnity.)

2. S. 124 - Lala Shanti Swarup vs Munshi Singh & Others (Indemnity)

(Vendor sold an encumbered land to vendee, who promised to make
required payment against a mortgage to the mortgagee; Vendee
fails to do so, vendor sustains loss in the form of th of their
property being sold; Vendor sues under implied contract of
guarantee. Issue: Is there a contract of guarantee? Is the suit barred
by limitation? Held: A conveyance which contains a covenant
whereby th epurchaser promises to pay off encumberances on the
sold property is nothing but an implied contract of indemnity, whose
cause of action arises when ACTUALLY DAMNIFIED (Mortgage decree
being passed does not amount to actual damnification))

3. S. 125 Gray v Lewis& Parker v Lewis (Indemnity)

4. Lep Air Services v Rolloswin (Guarantee) ( Plaintiffs were the forwarding agents of
the defendants wherein they had to hand over imported goods to rolloswin. They had to be paid 40000
in sex weekly instalments of 6000 and one time 4000 payment. Moschi, owner of Rollswin
guaranteed the payment. Rolloswin could only pay 10000 and then defaulted. Lep air treated that as
wrongful repudiation and repudiated the contract and brought this suit. The refree held that the
guarantor was liable to the amount of 10000 only and not afterwards. Both parties appealed.) (Moschi
contended that he was not liable at all-As (1)repudiation was accepted, it changed the essential nature
of the debt to damages for which moschi was not the guarantor. (2)Acceptance of repudiation
amounted to a material variation in the terms of contract which discharged him.) (held that he guarantor
is liable for both before and after the date of acceptance of repudiation. (1) court held that liability for
breach cannot change the existing liability of the guarantor as the creditor company has merely

exercised a legal right conferred upon him by law. A change in form is not a change of substance.
(2)the exercise of right of repudiation given to the creditor cannot be regarded as a variation of the
material terms of contract. According to the court, the referees judgement redress a guarantee obsolete
as, if the creditor exercises his lawful right to accept repudiation, he forfeits the right to get payment for
the instalments due after the repudiation, and if he doesnt, he must continue to perform his end of the
contract at considerable loss.)(repudiation is not to be taken as a material change in terms)

5. S. 126 Mountstephen v Lakeman (Guarantee) (L, director of the

Board, tells M to connect the sewer system with individual houses
although the Board hasnt asked M to do so, as a whole. L says that
he will see M gets paid (I will see you paid). Issue: Does the above
statement impose a primary of secondary obligation on L (ie is this a
contract of indemnity or guarantee?) Held: Through his statement
(when given its natural meaning), L placed a primary obligation on
himself to indemnify M; Lack of a principal debtor also makes this a
contract of indemnity )
6. S. 126 - Punjab National Bank Limited v Bikram Cotton Mills
(Guarantee) ( The Company executed 3 documents (promissory
note, hypothecation and a letter) in favour of its creditor, the bank;
On the same day, the Managing Agent of the company executed an
agreement of guarantee with the Bank; Issue: Is this an issue of
guarantee or indemnity? Whether the suit filed was premature?
Held: As all documents were executed on the same day, it can be
inferred from the conduct and intention of the parties that the agent
enetered into an agreement of guarantee. The bank was entitled to claim
at any time the money due from PD as well as from G under the promissory note and
the bond. The suit could not therefore be said to be premature. Also, the binding
obligation created under the composition between the company and its creditors does
not affect the liability of the surety unless the contract of surety-ship otherwise
provides.G is liable for ultimate balance which should be determined) (the

nature of the bond of guarantee would be that of a continuing

guarantee)

7. S. 126 - Ramchandra B. Loyalka v Shapurji N. Bhownagree

(Guarantee)(D, a broker, forms a contract with P, to be a sub-broker
reponsible for certain constituencies; Said constituencies default
and owe D 16,000. P and D enter into a second agreement whereby
P will be liable for the above amount; Note: Sub-broker is suing
broker for his commissionIssue: Was the agreement whereby P will
be responsible for the constituencies a contract of guarantee or
indemnity? Held: For a contract of guarantee to subsist, there must
be three parties to the contract (PD-C, G-C and PD-G (this last
contract can be implied (S 145) or express, and is a contract of

indemnity between PD and G); (i) Here, the last contract was
absent, with the constituencies being unaware of the offer of P (the
sub-broker); (ii) P (sub-broker) has an interest in the transaction
(which happens in contracts of indemnity and not guarantee). Thus,
contract was of indemnity; Also, the fact that D sued the clients for
the price and then compromised without the consent of P is
immaterial as P is not a party to the contract (i.e., not guarantor))

8. S. 126 - U. P. State Sugar Corporation v Sumac International Limited

(Bank Guarantee) (Sumac entered into a contract with Sugar
Corporation wherein Sumacwould have to deliver a new wing of
Sugar mills to the corporation by a certain date; Sumac had to
execute fiveunconditional bank guarantees in favour of P(plaintiff)
for delivery, advance payments, etc. U.P. Government informed P
that it was to be converted into a joint venture and hence should
stop expansion of mills; P cancelled agreement with D, and sought
to enforce the bank guarantees. D applied for arbitration and an
interim injuction against encashing the bank guarantees. Issue:
When can injuctions be granted on unconditional bank guarantees.
Held: Injuctions are not easily granted as this would affect
commercial transactions. Two exceptions: (i) Fraud: must be of an
egregious nature such as to vitiate the entire underlying transaction;
must be that of the beneficiary, and not the fraud of anyone else. (ii)
Irretrievable harm/injury caused to either party on encashing
guarantee: exceptional circumstances that make it impossible for
the guarantor to reimburse himself if he ultimately succeeds, will
have to be decisively established; existence of any dispute between
the parties to the contract is not a ground for issuing an injunction
to restrain the enforcement of bank guarantees. Hence, no injuction
was granted)

9. S. 126 National Highway Authority of India v Ganga Enterprises

and Another (Bank Guarantee) (P invited bids for collection of toll on
a highway; D had to provide Rs 50 lakhs as bid security on issuing a
bid, in case of withdrawal of bid before 120 days, and Rs 2 Cr on
acceptance of the bid, as performance security; The bank guarantee
was to be paid by the bank without demur on a written demand
merely stating that one of those conditions has been fulfilled, D
removes his bid before 120 days, and his bid is found to be the
highest and is accepted, but after withdrawal of offer; Thus, no
contract formed; Issue: Whether P can enforce the bank guarantee
of bid security without the breach/formation of a contract? Held: The

bank guarantee was an on demand guarantee to be granted

without demur; By invoking the bank guarantee and/or

enforcing the bid security, there is no statutory right, exercise

of which was being fettered.Withdrawal of a bid and forfeiture
of security are two different things. Forfeiture of such
earnest/security, in no way, affects any statutory right under
the Indian Contract. Thus guarantee was enforceable, and to
enforce the back guarantee the creditor doesnt have to show
any evidence to show a breach.The bid security was given to
meet specific contingency i.e. withdrawal of the offer within
120 days. The contingency having arisen, Appellants are
entitled to forfeit. The existence and non-existence of an
underlying contract become irrelevant when the invocation is
in terms of the bank guarantee.

10.
S. 126 - Mahatma Gandhi Sahakra Sakkare Karkhane v
National Heavy Engineering Co-Operative Limited and Another
(Bank Guarantee)

11.
S. 126 - Hindustan Construction Co. Ltd v State of Bihar &
Others (Bank Guarantee) (HCCL contracted with the government to
contruct a dam; had to execute two bank guarantees in favour of
the governement (performance and mobilisation advancement);
Governement applied to encash said guarantees claiming nonperformance by HCCL, who then files for interim injunctions; Issue:
Whether the bank guarantee is conditional or unconditional. Held:
Bank Guarantee was conditional (terms are of material importance);
Advancement guarantee can be enforced only if obligations of HCCL
are not discharged or there is misappropriation(neither of which can
be proved) Performance guarantee can be given only to the chief
engineer who was not the one who applied for it; Thus, injuction
granted)

12.S. 128 - Greer v Kettle (Guarantee) ( An agreement was made whereby

Austin Friars ( A) were to be given a loan from Mercantile Marines(MC). A was to
provide MC collaterals by way of shares of Iron Industrial Company to make the
transaction a secured one. The Parent Trust company (P) agreed to guarantee the

secured debt , thereby becoming the surety. However, it was later found out that
A had not issued any shares, and A went on to default on the loan. Issue:
Whether P is still liable as surety although the debt is no longer secured, and
whether P is estopped from declining the liable of surety. Held: The shares being
given as collaterals was one of the pre-requisites for the defendant (P) to become
a surety. They didnt become guarantors for any unsecured loan , thus there is no
question of imposing liability for which they never consented to. Also, estoppel
cannot aply as P was not in a position to gain knowledge/privy to the existence or
lack thereof shares mentioned in the recital; M was in such position, thus M is
estopped. RATIO: A surety can insert pre-conditions to his liability as
guarantor when he enters into a contract.)

13.
S. 128, 133-139 - Charan Singh v Messrs Security Finance Pvt.
Ltd. and Others (Co-extensive Liability) (Facts: Decree holder entered
into a compromise with one of the judgment debtors(Principal debtor) for
the payment of Rs. 10,000/- then sues the other judgment
debtor(Guarantor) for the remaining Rs. 20,000/- Issue:Do sections(S 133
to 139) of ICA apply when the surety, PD, and creditor acquire the roles of
decree holder and judgment debtors?Held: After a decree has been
passed, the liabilities of the surety and principal debtor are that under the
decree and not under the original contract. i.e. The liability of the surety is
no longer co-extensive with that of the debtor. The surety and PD become
co-judgment debtors. The relevant sections of the ICA do not apply to
decrees, only apply to creditor, surety and principal debtor. Thus, the
creditor can get amount for surety)

S. 128, 134 - Syndicate Bank v Channaveerappa Beleri and

Others (Co-extensive Liability) (Period of limitation for contracts of
guarantee) ( The Bank (P) gives a credit loan to a company, who defaults

14.

on their payment. P sues the directors of the company (D), who are the
sureties of said loan; D claims limitation period starts from when the
company (ie Debtor) defaults on payment; Issue: When does the period of
limitation start for a contract of guarantee, as against the surety? Held: It
runs from the time when the balance is constituted and demand is made. The
Guarantee Contract mentions that there shall be payment on demand , thus a
demand is a condition precedent for the liability of the guarantor. Time will start
running when the contract is broken ( A. 55) or when the right to sue accrues
( A.113) , that is when the demand is made and it is refused by the surety. This is
a contract of continuing guarantee with a live account. The time period started to
run from the moment the refusal by the surety was made. Thus the suit is not

time barred. RATIO: Limitation period for a debtor starts when the debt is
incurred , and for surety when the demand for payment is made.)

15.
S. 139 - Radha Kanta Pal v United Bank Of India Ltd.
(Guarantee) (Raji Kanta (legal heir-Radha Kanta) gave a fidelity bond
in favour of Nishe Kant (an employee of the bank), who then
misapproprited funds and left without a notice. The bank then
encashing promissory notes given by Rajni Kant as security; Radha
Kant wants to stop payment as he claims the bank continued to hire
Nishi Kant, even after knowlegde of dishonesty, without informing
the surety (Invoking the aplicability og S 139) Issue: Does the
suretys liability get discharged under S 139? Held: The suretys
liability, for the faithful discharge by another, of his duties depends
on the exact terms of that guarantee. (Utmost care in supervision
may not be a term in the contract; continued employment of proved
dishonesty is an implied term, wherein the suretys liability is
discharged) The guarantor in such a case guarantees the fidelity
and not the infidelity of the servant. He guarantees the fidelity and
ensures the loss against the risk of infidelity and not the fact of
infidelity.Under Section 139 the two important requirements are: (i)
The act of the creditor is inconsistent against with the rights of the
surety. (ii) The remedy of the surety against the principal debtor
has been impaired. (ii) is lacking, thus S 139 does not apply,
although the creditor continued to hire Nishi Kant after knowledge
of his dishonesty, thereby violating the rights of the surety. Verdict
for the Bank to encash promissory notes, and Radha can sue Nishi
Kant)
S. 134, 137 - Aziz Ahmad v Sher Ali and Others (Time bar=
barred debt, NOT extinguished debt; barred debt is still a live debt)
(Facts: NA; Issue: Whether the surety is discharged when the creditor

16.

allows the execution of his decree against the principal debtor to be barred
by limitation; Held: Mere omission to sue within limitation period does not
discharge the surety. S 137 states that mere forbearance on part of the creditor
does not discharge the surety.Debt becoming time barred does not amount to
omission under S 134. On expiry of the period of limitation, the creditor
loses the remedy but not the right to the debt, and thus omission to sue
does not discharge the debtor. S 134 does not apply; The surety has argued
that he will lose the right to seek remedy under s. 140 and s.145 as the rights of
the creditor cannot be enforced.
(Applicability of S 139??) However the surety can guard against such contingency
by including a term in the contract whereby as soon as the guaranteed debt
becomes due , the surety will be invested with all the rights creditor has against
the debtor after making the payment; read this case against the case of

Syndicate bank) RATIO: A creditor has no duty to the surety to pursue

his legal remedy against the principal debtor and his failure to take
action will not discharge the surety.

17.
S. 129 - Margaret Lalita Samuel v Indo Commercial Bank
Limited (Continuing Guarantee) (Samuel and his wife, the appellant,
exected a continuing guarantee in favour of a company which the
bank had a running account with. The company ceased to operate.
Issue: Was each debt a new loan, with a different cause of action,
thus barred by limitation? Ie what is the limitation period of a
continuing guarantee? Held: The defendant undertook to pay any
amount that may be due by the company at the foot of the general
balance of its account or any other account whatever. In the case of such
continuing guarantee, so long as the account is a live account in the sense
that it is not settled and there is no refusal on the part of the guarantor to
carry out the obligation, the period of limitation does not commence
running. Limitation would only run from the date of breach (ie refusal to
pay by surety). The over draft account that the bank had in the name of
the company continued to be active even after the company ceased the
business. The defendant also sent a letter acknowledging her liablity, thus
confirming the liability for the still active account)

18.
S. 133 - M. S. Anirudhan v The Thomco'S Bank Ltd ( the Bank
gave a form of guarantee, to be filled by G (Guarantor) to the PD
(debtor). G put in th value of 25K, which the bank refused, stating
their maximum was 20K. The PD made the value 20K, thus altering
the document; Issue: Whether suretys liability is discharged under S
133; Whether this was a material alteration (change in the
nature/obligation of the contract), affecting the original contract;
Whether PD acted as the agent of G, who was thus estopped from
going back on granting implied authority to PD to make said
changes. Held: The alteration was held to be unsubstantial, as 25K
includes 20K, and it is in fact to the benefit of the guarantor. Also,
said alteration did not change the nature/obligation of the surety, it
only reduced the liability. S 133 does not apply. PD was held to act
as agent, had apparent authority to make such changes (due to the
fact that G had handed over the form to PD to give to the Bank), and
hence G was bound by the principle of estoppel. DISSENT: The
original offer of 25K was rejected by the Bank, and thus, no contract
was formed.)

19.
S. 129, 130 H.B. Basavaraj v Canara Bank (Continuing
guarantee: In the absence of a specific written document by Basavaraj
revoking the guarantee, the guarantee stands and the legal
representatives of the deceased are liable to repay the loan.)

20.
S. 140, 141 - Craythorne v Swinburne (Guarantee) (CHECK
BRIEF; The oral promise that John Swinburne gave was

actually, collateral to facilitate the guarantee and others were

not privy to the agreement and as such John Swinburne had
limited his liability. Defendant was collateral security and not
co-surety, and is exempt from the principles of equity (to
contribute to the debt payment) as he did so through specifics
in a contract)

21. S. 139, 141 - State of Madhya Pradesh v Kaluram (Security) (Facts:

Auction by the Divisional Forest officer held J as the highest bidder. Four
installments of payment had to be made for the sold forest produce. As
per the terms of the contract, the Government may prevent the forest
contractor (J) from taking forest produce in excess of that which was paid
for, w.r.t. particular installments. i.e. the forest produce not yet paid for
was equivalent to security. (This could be resold). Issue: Whether S 141 of
the ICA applies. I.e. whether the Government lost the principal debtors
security without the consent of the surety, thus discharging the surety.
Held: The surety is discharged from all liability as S 141 applies. The State
lost the security of the forest contractor by allowing forest produce
(completely under their control) to be taken without payment. Thus, the
rights against the debtor that the surety acquires after the creditor is paid
no longer exists, thereby discharging the surety. Ratio: The term
security under S 141 is not used in strictly technical terms, but refers to
all rights, which the creditor possesses against the debtor/his property at
the time of formation of contract. In this case, the right of re-sale of goods
served as security under S 141)

22.

S. 134, 139 - Mahanth Singh v U Ba Yi (Facts: Plaintiff was a

building contractor employed by four trustees of X pagoda. Respondent is
the guarantor of said trustees. Plaintiff filed a suit for payment against the
four trustees, then changed the suit to strike down the names of the four
ex-trustees, and add eight names of present trustees. Thus, due to some
procedural rule, the plaintiff is prevented from instituting proceedings
against the original four trustees. Issue: (i) whether the liability of the
surety is discharged by the act of the present appellant in forgoing his
claim against the principal debtors. i.e. Whether S 134, 139 apply. (ii)
Whether the agreement of debt is declared void (due to inability of the
creditor to file a claim) under S 2 (g), (j) under the ICA Held:(i) Surety is

still liable. S 134-The principal debtor is not discharged of his debt, the
creditor is merely stopped from claiming said debt due to procedural
instruments. S 139-The right of the surety against the debtor is not
infringed, thus this section does not apply. (ii) S 2 (g), (j) apply only to
those contracts which are void by substantive law, not procedural law.
Hence, the principal debtor is not discharged absolutely, and surety
remains liable. )

23.
S. 133, 135, 141 - Amrit Lal Goverdhan Lalan v State Bank of
Travancore & Others (Plaintiff is partner of a firm that is the pricipal
debtor of the bank. P is surety of said debt. According to facts, the
Bank owned certain stocks of the firm as collateral, but admitted to
being short of stocks worth Rs. 35,000 (or there abouts), through its
own negligence; Issue: Is the suretys liablity discharged by virtue of
applicability of S 133, 135, 141? Held: S 133 is not applicable as the
facts show that the variance referred to by P (ie, variance wrt the
limit of credit to be granted) were merely internal communications,
not in the form of a formal document and thus not binding on the
Bank (ie no varuance took place); S 135 is not applicable as
according to facts, the Bank gave time to the PD to make good the
quantity of goods referred to in the monthly statement, which is not
equivalent to giving time to make payments ithin the meaning of S
135; S 141 is applicable; The bank, through its own carelessness,
lost some share of security for which the surety will no longer be
liable, under S 141; Thus, surety has to pay amount due-35,000 (ie
security lost))
24.
S. 139, 141 - State Bank of Saurashtra v Chitranjan Rangnath
Raja and Another (Bank had granted credit to the limit of Rs. 75,000
to the PD, who pledged 5000 tins of groundnut oil to the Bank, who
negligently lost said security; Issue: Whether the surety had
knowledge of the said securtiy and whether S 141 is applicable;
Held: S 141 would apply if it can be shown that the creditor had taken more
than one security from the principal debtor at the time when the contract of guarantee
was entered into. Here there were two forms of security: plegde of goods and personal
guarantee of the surety. Section 141 comprehends a situation where the debtor has
offered more than one security one of which is the personal guarantee of the surety.
The knowlegde of the surety wrt to the existence of the security is immaterial
(Although, it was found that the surety granted the guarantee on the assumption that
the security would be given). S 141 applied regardless of presence of knowledge on
the behalf of the surety)

25.
S. 148 - Trustees of the Port of Bombay v Premier Automobiles
Limited (Bailment) High Court
26.
S. 148 - Trustees of the Port of Bombay v Premier Automobiles
Limited (Bailment) Supreme Court
27.
S. 148 - State of Maharashtra, Bombay and Others v Britannia
Biscuits Company Limited and Others (Bailment) (Facts are similar
to United breweriers, except that there was a three month epriod
within which the biscuit tins had to be returned, and such tins were
accepted even after time limit was over. Issue: Sale or bailment?
Also, was there an obligation on the purchasers to return the tins?
Held: Intention (As can be seen from the accounts) of the company
shows that the transaction was a composite one, resulting first in
entrustment of the tins with the purchasers. If returned within three
months, the trust is returned, if not, the transaction becomes one of
sale. There exited no obligation to return (time was not strictly
followed). Neither the endorsement on the price list nor the endorsement on the
invoice can be said to create an obligation to return.)

28. S. 148 - Messrs Kalyani Breweries Limited v State of West Bengal

and Others (Bailment)(Facts: Kalyani Breweries sell beer, and the Tax
Authorities claim that the amount obtained through the forfeited
deposits for the bottles actually amount to sale of the bottles. Issue:
Were the bottles sold or bailed?Held: The court held that the bottles were
sold and not bailed for two reasons. (i) The company failed to issue a
circular describing their bailment scheme. I.e. The terms of the bailment
were not set. Also, the bailee had no knowledge (implied of actual) of
the proposed bailment. There can be no bailment WITHOUT the knowledge
of the bailee. Further, CONSENT is not equal to KNOWLEDGE (ii) The
deposit amount was the same as that of the price of the bottle. This
favoured an intention to sell, rather than bail.)

29.
S. 148 - State of Bombay v Memon Mahomed Haji Hasam
(Bailment)(Facts: The Customs Authority requisitioned the petitioners
trucks, and later sold said goods in an auction as unclaimed goods, while
the appeal against the initial requisition was pending. The appeal was
granted, and the owner demanded Issue: (i) Was there any obligation to
take reasonable care of said goods? i.e. Whether the Government was in a
position of bailee while the appeal was in progress. (ii) Whether bailment
can take place without a contract Held: The argument of the government,
which stated that bailment was absent due to the lack of a contract, was
rejected, as there can exist a bailment WITHOUT a contract. The
Government was under both a statutory as well as implied obligation to
take reasonable care of the goods. Also, the order of auction does not
interfere with the owners right to his goods as said auction was procured
through false representation of fact.)

30.
S. 148 - K. L. Johar and Company v Deputy Commercial Tax
Officer (Bailment) (Hire-purchase agreement amounts to a sale; A
was the owner and not the financial agent as the terms of the
agreement say that title will remain with the A till option to purchase
is exercised. A hire purchase agreement has two elements: (1) element of
bailment and (2) element of sale in the sense that it contemplates an
eventual sale. The element of sale fructifies when the option is exercised
by the intending purchaser after fulfilling the terms of the agreement.
When all the terms of the agreement are satisfied and the option is
exercised a sale takes place of the goods which till then had been hired.
Tax is from the sale transaction. Also, the taxable amount will not be the
final price paid at the option to sale (Re. 1) or the amount paid through
hire instalations; will be determined reasonably by th etax authorities)

31.
S. 148 - United Breweries Limited v State of Andhra Pradesh
(Bailment) (Facts: UB are suppliers of beer. The Sales Tax authority
wants to tax UB for the sale of the bottles and crates, while UB claims
that there was no sale, but only bailment of said bottles and crates. UB
charged a certain amount for the bottles and crates, providing for a refund
of the said amount of the return of the bottles. They also asked their
customers to charge the consumers the same amount as a deposit for the
bottles. UB also issues a circular publicizing their scheme regarding
refundable deposits for bottles. Also, it must be noted that the deposit for
the bottles was lesser than the actual price. Issue: Whether the bottles
and crates were sold, or bailed. Held: The court looked into the
INTENTION of the parties. From the circular issued by UB, it is observed
that they were anxious to get the bottles back. They urged their
customers to charge a deposit from the consumers so as the get the
bottles back. They also stated that they would be able to gain greater
business efficacy on return of the bottles. The forfeiture of the deposited
amount did not amount to the price of the bottle, but came under S 74 of
the ICA as LIQUIDATED damages. Also, the argument that there was no
contractual obligation on the part of the customers to return said bottles,
and hence bailment cannot be proved failed. This is because bailment is
possible without the presence of a contract (implied, or otherwise)).

32.
S. 150 - Hyman v Nye & Sons (Bailment) (Defendant is a
jobmaster from who the plaintiff hired a pair of horses, a carriage
and a driver; Carriage breaks down, P sues for damages. Issue: The
degree of duty of care in the case of a hire agreement. Held:
Reasonable care must be taken. NOTE: English law says that the
hirer is not liable for defects he knew nothing about (or
could not have reasonably known about). S 150 negates this

rule wrt India.The thing bailedmust be as fit and proper as care

and skill can make it for use in a reasonable and proper manner. It is
not at all unreasonable to exact such vigilance from a person who
makes it his business to let out carriages for hire. The defendant had
to show in this case that the accident was not preventable by him
by exercise of any skill. He did not show the same in the initial trial.
Result: The trial judge gave too low a level of duty of care to the
jury, new trial.)
33.

S. 151 Coggs v Bernard (Gratuitous Bailment) (Check briefs)

34.
S. 148 - The Pioneer Container, KH Enterprise v Pioneer
Container (Sub Bailment) Privy Council (Taiwan, Hong Kong, subbailment; imposition of a duty on sub-bailee outside a contract;
clause regarding specific governing law applicable based on the
terms which the owner had allowed to bailee to sub-bail said goods.
Check brief)
35.
S. 148 - Morris v C. W. Martin and Sons Ltd. (Sub Bailment) Court of Appeal (D as sub-bailee for reward was under a duty of

care and P as head-bailor could sue for breach of this duty.A

common law duty exists only if there is a relationship between
the parties. One way of establishing such a relationship is by
taking voluntarily into custody the goods which are the
property of another.The judge held that the defendant by
voluntarily accepting from Mr Beder the custody of the fur,
which they knew was a property of a customer of his, brought
into existence a relationship of bailor and bailee by sub
bailment and created a common law duty by the defendant to
the plaintiff. The common law duty was with respect to taking
care of her mink stole. The other common law duty was that
the mink stole should not be converted meaning that nothing
should happen to it that interferes with Mrs Morriss right to
property of the mink stole. Whether it be a contractual
bailment or a tortious bailment, the bailee has reversionary
rights over the goods and thus the bailee would have the
liability that the goods dont get converted. CW Marrtin held
vicariously liable, exemption clause does not apply.)
36.
S. 151 - Lakshmi Narain Baijnath v Secretary of State for India
(Duty of Care of Bailee) (Defendant was transporting bales of jute-

caught in cyclone-allowed jute to stay in the boat during the

cyclone-boat leaks, jute stays wet for 30 hours-damaged, and
rejected by the Mills; Issue: To what extent is the duty of care of the
bailee under S 151; Held: This is an issue of fact rather than an issue
of law. Courts held that the bailee did not take reasonable care of a
prudent madn u/S 151, held liable for damage caused.)

37.
S. 160, 161, 167, 171 Coastal Oil Mills, Ongole v Andhra
Pradesh Industrial Development Corporation, Vice-Chairman,
Hyderabad and Others (Third Party in Bailment) (AP Ind Corp seized
bailees goods on default of the latter in certain payments; AP
wrongfully claimed the bailors goods and refused to give said goods
(oil) back; By a petition and decree by the 2nd defendant- the bank,
goods were auctioned off (however, most of the goods had perished
by then); Issue: third party in bailment; Held: the Bank was held to
be liable as it failed to establish its lien over the goods; The bank
was also responsible for withholding and auctioning the goods; AP
and bailee not liable.)

38.
S. 170 - Messrs Kalloomal Tapeshwari Prasad and Company v
Messrs Rastriya Chemicals and Fertilizers Limited and Another
(Particular Lien) (Bailor had contracted to send 5000 metric tons of
fertilizer for storage to bailee; bailor sent more than the agreed
amount; bailee incurred expenses in accomodating for the excess;
Issue: Whether the bailee could exercise a particular right of lien;
Held: S170 applies only to situations where labour and skill have been
applied to the goods bailed so as to improve the goods bailed. The bailee
was only required to transport and store the goods and hence it was
decided that no labour, skill or improvement in the goods to entitle him
enforce the lien. Also, there was a clause in their bailment contract than
prevented any exercise of lien by the bailee, and hence the bailees suit
fails on this ground as well. Held that he has right to recover the extra
charges by separate suit but his lien is unenforceable. )

39.
S. 170 - E. H. Parakh and Others v G. Mackenzie and Company
Limited (Particular Lien) (The bailee did not do anything to improve the
goods by exercise of labour or skill but only stored it, hence no lien under S170 of
ICA)

40.
S. 171 - R. D. Saxena v Balram Prasad Sharma (General Lien of
advocates) (The relationship of advocate and client was severed as
between the plaintiff (advocate) and defendant (MD of firm);
Advocate claims a right of lien over case files till general balance is
paid; Issue: Does P have a right of general lien over case
files/litigation paper? Held: Files containing copies of the records (perhaps
some original documents also) cannot be equated with the "goods" referred to in
the section. The advocate keeping the files cannot amount to "goods bailed". In
the case of litigation papers in the hands of the advocate there is neither delivery
of goods nor any contract that they shall be returned or otherwise disposed of.
Goods are items as defined under the SOGA. Thus understood "goods" to fall
within the purview of section 171 of the Indian Contract Act should have
marketability and the person to whom it is bailed should be in a position to
dispose it of in consideration of money. In other words the goods referred to in
section 171 of the Indian Contract Act are saleable goods. There is no scope for
converting the case files into money, nor can they be sold to any third party.
Hence, S 171 does not apply.)

41.
S. 171 - Board of Trustees of The Port of Bombay v Sriyanesh
Knitters (General Lien) (Respondent settles disputes with the import
authorities on import duty, and meanwhile, appellants hold the
goods; A then claims right of general lien as wharfingers. Issue:
Whether A falls into the category of five specified persons who have
a right of general lien without the existence of an express contract
(as there was no contract of bailment in this case; Held: S 171 has
two parts. Part I refers to five categories that have a statutory right
of general lien, in the absence of a contract to the contrary; Part II
refers to any other person not in part I, who do not have a statutory
right under S 171; Court, through an analysis of fact and law, holds
that A has the statutory right of general lien, as they fall under the
category of wharfingers)

42.
S. 172 - 176 - Central Bank of India v Siriguppa Sugars and
Chemicals Limited and Others (Pledge) (Rights of the pawnee to
acquire sale proceeds over the rights of any unsecured creditors;
Both the Cane Commissioner and the workmen in the absence of a liquidation, stand
only as unsecured creditors and their rights cannot prevail over the rights of the
pawnee of the goods. The appellant as the pawnee, is entitled to the amount in
satisfaction of its debt to secure which, the goods had been pawned and to appropriate

the sale proceeds towards the debt due and only if there is surplus, to make it
available for disbursal to the Cane Commissioner and to the Labour Commissioner.)

43.
S. 172 - 176 - Karnataka Pawnbrokers' Association and Others
v State of Karnataka and Others (Pledge) (Right of the
pawnee/plegdee to sell goods on default of pawner; Question of
whether sales tax is to be imposed on the pawnee of the auctioner
of resale of unredeemed goods. Held: Pawnee has special property
right over pawnors goods. Pawnee falls under dealer, and
conducts business. The act (of selling goods) incidental and ancillary to the
main business will also come under the definition of business under the sale tax Act)

44.
S. 172 - 176 - Lallan Prasad v Rahmat Ali and Another (Pledge)
(Aero scraps; Whether a plegdee can sue for debt given that he
denies the pledge (which, on facts was found to have taken place)
and he is not in a position to return said goods. Held: But if he sues

on the debt denying the pledge, and it is found that he was

given possession of the goods pledged and had retained the
same, the pawner has the right to redeem the goods so
pledged by payment of the debt. If the pawnee is not in a
position to redeliver the goods he cannot have both the
payment of the debt and also the goods. Ingredients of a valid
pledge: (1) that it is essential to the contract of pawn that the
property pledged should be actually or constructively
delivered to the pawnee and; (2) a pawnee has only a special
property in the pledge but the general property therein
remains in the pawner and wholly reverts to him on discharge
of the debt.
45.
S. 178 - 178A - The Official Assignee of Madras v The
Mercantile Bank of India (Mercantile Agent)
46.
S. 178 - 178A - Morvi Mercantile Bank Limited and Another v
Union of India, Through The General Manager, Central Railway,
Bombay (Mercantile Agent)

47.
S. 182 - Loon Karan Sohan Lal v Firm John and Co. and Others
(Agency) (Difference between a person employed to do an act for
another, and a person employed to do at act at the bidding of the

other. Loon not agent, as the actual relationship is looked at, and
not the terms of the contract)

48.
S. 182 - Lakshminarayan Ram Gopaland Son v The
Government Of Hyderabad (Agency) (Appellants were agents of the
government; Whether remuneration given by the government to the
app. Is taxable (ie whether agent ran a business or not; whether
app. Was servant or agent; Held: Difference between agent and
servant: An agent is just given direction regarding the nature of work, the
manner of doing it is his discretion, has authority to enter into contracts. Independent
contractor: only undertakes to provide a specified result; Held, app. Were agents; Did
not carry out a business (trade, commerce of manufacture), rather simple received a
commission, not taxable)
49.
S. 182 - Kuchwar Lime And Stone Co v MS. Dehri Rohtas Light
Railway (Agency) (Authority of an agent can be implied, and a
contract for agency is not required. Colliery, by sanction for the coal
commissioner, acted as agent of the co. whose actios were binding.
Liable for demmurrage although delivery of goods did not take
place, as goods stored for the benefit of the co. Once Compnay
refused to take delivery, Railway was to act as bailee of the goods,
but only for a reasonable time, after which they must sell said
goods. Co. not liable for 200 days, only liable for a reasonable period
of a month)

50.
S. 185 - Mohd. Moinuddin v Mir Ahmed Ali (Agency) (Plaintiff
represents def. in suits, then sues for remuneration as consideration
for agreement to represent. Held: S 185 does not mean that P
cannot sue D for the amount owed, merely states that consideration
is not required for a contract of agency, does not stop the agent
from claiming remuneration/commission for work done)

51.
S. 186, 237 - Harshad J. Shah and Another v L.I.C. of India and
Others (Case for LIC; Two types of authority: (1) Actual: a manifestation
of consent that he should represent or act for the principal made by the principal to the
agent himself ; Can be express (writing) or implied (by law or conduct or
circumstanes of the case); (i) Incidental (ii) Usual (iii) Customary
authority. (2) Apparent Authority: a manifestation made by the principal to
third parties.It is the authority of an agent as it appears to others. S 237; Held: The
court holds that the mere fact that LIC accepted the premium cannot be

regarded as proof for inducing the policy holders into believing that the
agents have authority to do so.)

52.
S. 186 Chairman, Life Insurance Corporation and Others v
Rajiv Kumar Bhaskar (Agency)

53.
S. 189 - Shanti Lal and Another v Tara Chand Madan Gopal
(Agency, Agents authority in emergency) (R had a commission
agency shop, bought grains for A, destroyed by flood. Whether R
can be reimbursed by A; Application of S 151, 152, 189, 214; Held: R
was not careless, complied with S 151, 152 (Duty of care of a
bailee); In case of emergency, bailee has the authority to act as
agent under S 189 and S 214; Held in this case that R complied with
all above sections and did not breach any duty of care; Judgment for
R)

54.
S. 190, 194(direct application) - De Bussche v Alt (Sub
Agency) (P gives a ship to be sold to a company who, with the
EXPRESS authority of the principal (P), appoints D as the subagent/substitued agent. D must sell the ship for 90,000 cash only,
but instead buys it himself, then sells for a profit. Issue: Whether D
is liable to P as an agent, for derivation of profits, being a sub-agent;
If this authority is exercised, privity arises between the principal and the
sub-agent. The latter becomes responsible to the principal as if the
principal himself had appointed him his agent. When the agreement for
resale of the ship was concluded, the defendant was still an agent of the
plaintiff. Therefore, the plaintiff had a right to the benefits accrued from
the sale transaction)

55.
S. 190 - 194 - Nensukhdas Shivnaraen v Birdichand Anraj (Sub
Agency)

56.
S. 196 - Bolton Partners v Lambert (Ratification of Agency) (D
withdrew offer before ratification of the agents unauthorised act of
acceptance of sale of goods; It was held that the principle of ratification had
a retrospective effect and therefore the contract would have been complete on
the day the agent accepted on behalf of the company. Exceptions to Ratification: (1)
Where a vested estate is divested; (2) Where there has been forgery; (3) Where the ratification is after
the time when the act could be done.Doctrine of ratification- when a principal on whose

behalf a contract has been made, though it may be made in the first instance

without his authority, adopts it and ratifies it, then, whether the contract is one
which is for his benefit and which he is enforcing, or which is sought to be
enforced against him, the ratification is referred to the date of the original
contract, and the contract becomes as from its inception as binding on him as if
he had been originally a party)

57.
S. 196 - Keighley Maxsted & Co v Durant (t/a Bryan Durant &
Co) (Ratification of Agency) (Agent(Corn merchant) entered into a
contract (Buying of corn at a higher price than agreed upon) with D
in his own name/his own interest with no intention to do otherwise
given to the D. Ratification is not possible by P as they were third
parties to a contrcat already formed. The question which arises on this
state of the facts is whether, where a person who has made a contract for
himself without a suggestion that he is acting to any extent for another
(an undisclosed principal), and without any authority to act for another,
can bind a third party as principal the person with whom he contracted, by
the fact that in his own mind merely he made a contract in the hope and
expectation that his contract would be ratified or shared by the person as
to whom he entertained that hope and expectation. The Court held that he
could not. )

58.
S. 201 - Monindra Lal Chatterjee v Hari Pada (Revocation of
Agency, formation of new agency with legal representatives)
(Plaintiff is suing the defendant for accounts, primary contention
being that the suit is barred by limitation due to the death of one
principal. Held: The agency of defendant 1 under Guru Pada and Hari Pada was
a separate agency. The properties which defendant 1 was to manage were no
doubt the same, viz., the joint properties of Gokul Mohini and Guru Pada and Hari
Pada, but the defendant was the agent of two sets of principals appointed at
different times and by different acts. When Guru Pada dies, that specific agency
was severed, while the other one with Hari Pada continued (he failed to show that
they were jont principals, and not joint and several principals); A new agency was
enetered into by the son of Guru Pada with the defendant, and as three years had
elapsed since the formation of this agency, the claim for accounts by the son is
barred by limitation. Hari Pada can still claim accounts as the agency is
substisting)

59.
S. 202 - Ishwarappa v Arunkumar (Irrevocable Agency) (A
claims to be personally liable for the contruction of Rs house, thus
claims agency cannot be termination until A is reimbursed. Whether
the power of attorny granted to A is one of general agency or of the
type uner S 202 (with a self-interest); Held: A is unable to establish

via facts, the personal liablity he claimed to have incurred. The

power of attorny granted does not give him authority to become
personally laible; For power of attorny to fall uner S 202, the suit
property must be given as security for person liablity, this was not
the case; Appeal dismissed, R (Principal) wins)

60.
S. 205 - Boulton Brothers and Company Limited, (India) v New
Victoria Mills Company Limited, Cawnpore (Revocation of Agencysufficient cause)

61.
S. 205 - Drew v Nunn (Revocation of Agency) (D acts as
principal, and held out his wife as his agent, having full authority to
contract with P; D goes insane, notice of the same is not given to P
(a prior creditor) W contracts with P; Is authority revoked on the
principals insanity Yes, In the present case a great change had occurred in
the condition of the principal: he was so far afflicted with insanity as to be
disabled from acting for himself; therefore his wife, who was his agent, could no
longer act for him. Thus, anyone to whom D himself had not held out W as agent,
could only sue the agent for wrongful act, and not D; However, the defendant, by
holding out his wife as agent, entered into a contract with the plaintiff that she
had authority to act upon his behalf, and that until the plaintiff had notice that
this authority was revoked he was entitled to act upon the defendant's
representations, and sue D for amount.)

62.
S. 212 - Pannalal Jankidas v Mohanlal and Another (Negligence
of the Agent) (Go down-explosion-government ordinance-distinction
between insured and uninsured; Majority: Agents were negligent,
breach of duty, Mohanlal wins; Diss: Too many intervening acts
(ordinace), chain of causation broken)

63.
S. 213 - Narandas Morardas Gaziwala and Others v S. P. Am.
Papammal and Another (R (Agent) sues A for accounts; Issue:
Whether the agent can sue the principal for accounts; Held: Under
equity, agent can sue for accounts, although there is no statutory
right conferring the same. There may be special circumstances
rendering it equitable that the principal should account to the agent. Such
a case may arise when all the accounts are in the possession of the
Principal and the agent does not possess accounts to enable him to
determine his claim for commission against his principal. The right of the
agent may also arise in an exceptional case when his remuneration

depends on the extent of dealings which are not known to him or where he
cannot be aware of the extent of the amount due to him unless the
accounts of his principal are gone into.)

64.
S. 215 - Gopaldas v Thakurdas (Agent Lien) ( D agent of P,
invested their own money to buy goods for P; P did not pay the
balance due, so D sold, without notice, Ps goods. Issue: Extent of
agents lien; Held : General rule: Agent has only right of retention,
not sale; However, when agent in vests his own money, he acts as
tacit pawnee and thus can sell the goods to claim his dues, but only
after reasonable notice to the principal (akin to plegde); P entitled to
loss sustained by Ds sale, as the agent wrongfully sold said goods
(in excess of their authority) without any notice)

65.
S. 230 - Patiram Banerjee v Kankinarra Company Limited and
Another (Undisclosed Principal) (Facts: Plaitiff contracted to buy
goods from X (apparently their principals) for the defendant. P gives
a bought note for the same; Failure to make payment or delivery;
Issue: Whether this is a case ruled by S 230 of the ICA, or is P
merely a broker/intermediary of D; Held: Now there is, I think, a material
difference between the words sold for you to my principals' and 'bought of you for my
principals'. The rule of law, no doubt, is that, if the principal is undisclosed, the broker
saying 'bought of you for my principals' is himself liable; but this contract says 'sold
for you to my principals, i.e., I, your broker, have made a contract for my principals,
the buyers.'I have already pointed out that the note in this case is in the 2nd of these
two forms, and, on its true construction, I hold that the plaintiff was no more than an
intermediary, and was not an agent for sale, to whom the provisions of S. 230 of the
Contract Act applies, so as to make him liable as an agent who has not disclosed his
principal's name.)

INDIAN PARTNERSHIP ACT

1. S. 4 - Santiranjan Das Gupta v Dasuram Murzamull (Pliantiff owned a
mill, defendant wanted to use said mill for his paddy. Issue: Was there a
partnership. Held: No partnership as only oral evidence with no
factual/written/documental (common account) present; Lack of mutual
agency; No record of terms and conditions; S 4 and 6 must be complied
with to amount to a partnership. Not done so here.)
2. S. 4 - Champaran Cane Concern v State of Bihar and Another (Issue:
Whether the Cane Concern was a co-ownership for income tax
puposes. Points of difference between co-ownership and partnership:
Agreement, sharing of profits, transfer of interest (partnership-only
with the consent of the other partners), mutual agency)

3. S. 4 - Deputy Commissioner of Sales Tax (Law), Board of v K. Kelukutty

4. S. 6 - Govindan Tea Kadai Nair v Nagabhushanammal and Another

(Plaitiff bought a tea shop, with defendant paying half the price
amount; Leased out, sharing of profits Issue: Co-ownership or
partnership; Whether the City Civil Court had the required jurisdiction
(would be present if there is a partnership). Held: Mere sharing of
profits/return from property held by persons with a common interest
would not make them partners; No business was carried out; Essentials
under S 6 and S 4 lacking)

5. S. 7 - Karumuthu Thiagarajan Chettiar and Another v E M Muthapp

Chettiar (Managing agency to run Mills for a period of four years, in
rotation. Sole business was management of mills; business was to pass
to heirs. Issues: Was this a partnership at will? Was there fraud on part
of the defendant who had purchased shares of one Mill and was now in
a controlling position. Held: Duration was implied, though uncertain
(Rotation, passes to heirs); Failing which, determination was defnitely
provided for termination of the agency led to termination of the
partnership; No fraud- no agreement to not buy shares. Defendant had
two capacities: that of a partner and shareholder)

6. S 13(c). Bhagchand v. Kaluram (Ratio: S 13(c) is applicable unless there

is a contract to the contrary, which is not so in this case. The deep

provides for interest on the capital to a partner which means that the
plaitiffs are entilted to interest on the capital, but said unterest is only
payable out of the profits, as laid down in S 13(c), in the absence of a
contract to the contrary)

7. S. 14 - Ganpati Salt Works and Another Etc. v State of Gujarat and

Another

8. S. 14 - Ved Gupta v Apsara Theatres (Facts: Ved Gupta procured a

license for the running of a Cinema in his name; Entered into
partnership with 11 other people to run Apsara Theaters; Was expelled
from the partnership; Surviving partner filed petition to state that the
license was partnership property, and hence Apsara Theters could still
screen films; Issue: Was the license personal or partnership property?
Held: License was granted to Ved Gupta in his sole capacity; Was not
incorporated into the firm, according to facts and circumstances)

9. S. 14 - Addanki Narayanappa and Another v Bhaskara Krishtappa and

13 Others (Members of two HUF form a partnership; Members of one
family files for dissolution, but the other family claim dissolution has
already taken place by an unregistered document which noted the
relinquishment of interest in certain firm assets (immovable property)
by the other family members. Issue: Do documents dealing with
relinquishment of interests w.r.t immovable property of the firm need to
be registered? (Status of immovable and moveable property under firm
property) Held: Document merely represented that the partnership
came to an end. The interest of a partner in partnership assets
comprising of movable as well as immovable property should be
treated only as movable property.)
10. S. 14 - Boda Narayana Murthy and Sons v Valluri Venkata Suguna
and Others (Mortgagor (Boda) took a mortgage on a property where a
firm of which he was partner screened movies in Minerva Theaters.
Petitioner wants to obtain a mortgage decree against the firm, but this
is possible only if said property is partnership property u/S. 14; Issue: Is
the aforementioned property that of the firm? Held: Firms can use
property owned by others for the purpose of business; The status of
any property depends of the agreement between partners; The
partners co-owned the property in different shares when compared to
their interests in the firm (This goes against the principle that this was

firm property); No evidence to support the proposition that said

property fell within S 14)

11. S. 4 and S 6 - S. K. Parthasarathy Naidu and Another v K. Rama

Naidu and Others (Conflict between three persons as to whether there
exists a relationship of partnership or debtor-creditor. Documents
signed that gave capital of Rs. 1 L each to the respondent (R), with
sharing of certain profits agreed upon. Held: Intention of the parties
must be looked at to determine whether a partnership existed or not;
Sharing of profits is not the only criterion for formation of a partnership;
Three ingredients: (i) Agreement (ii) Sharing of profits (iii) Mutual
agency; Here, (i) and (iii) were missing; Relationship= to that of debtorcreditor)

12. S. 15 - Deoraj Divanchand Verma v State (Facts:Applicant convicted

for violation of certain rules; Acknowlegdes that he is parter of shop in
question. Issue related to whether or not applicant fell within the
definition of employer under the Central Provinces Act; Held: The
concept of agency is inbuilt within the IPA i.e. Partner acts as agent of
the firm in firm business (S 18); Also, u/S 15, a partner is owner of firm
assets)

13. S. 16 & 17 - Devilal Jaiswal and Another v Vidarbha Bottlers Private

Limited and Others

14. S. 11(2),9 - Novartis Vaccines & Diagnostics Inc., United States of

America v Aventis Pharma Limited (Rights and Duties of a Partner)
(Facts: NV and AP enter into a JVA agreement; AP sells competing antirabies drugs; Issue: Was this in contravention of the JVA; Held:
Contruction of partnership deeds must be done as a whole, in its
entirity; Four canons of construction for commercial documents:
ordinary, businesslike, commercial object, Avoid unreasonable
outcome; S 11(2): validity of negative covenant. RATIO: Just because
there is no negative covenant restricting sale does not mean said sale
is allowed by the agreement; Partners have an obligation and duty to
act in good faith, for the benefit of the company (S 9)).

15. S. 19 - Prabhakar Traders v Veejay Traders and Others (Implied

Authority) (Plaintiff claims the defendant firm purchased paddy on
credit; One partner accepts the same AFTER the suit is filed; Issue:
Whether the admission of this partner can bind the firm; Held: S 19
limits the scope of implied authority; This case falls within S 19 (2) (e),
where a partner is restricted from making any admissions regarding a
pending suit w.r.t. the firm; Distinction must be recognised between S
19 and S 23; Also, the partner cannot be held liable either as his
admission was neither clear nor categorical)

16. S. 28, S 32 (Proviso) - Tower Cabinet Co v Ingram (Holding Out)

(Ingran and Christmas enter into a partnership; Ingram retires, issues a
notice to the banks; C uses notpaper with both their names for an order
given to Tower Cabinet; T did not know I was a partner, found out after
Is retirement; Suing for holding out. Issue: Whether I knowingly
allowed himself to be represented i.e. Whether I was holding himself
out. Held: Use of old notepaper did not amount to I knowingly
representing himself as a partner; Client needs to know about the
status of partner before retirement thereof.)

17. S. 28 - Scarf v Jardine (Holding Out) (Scarf and Rogers were

partners, Scarf retired, and was replaced by Beech; Jardine sold goods
to the new firm, as he did to the old firm, without notice of the change;
On non-payment, Jardine sued B and R, and when they became
insolvent, he filed a suit to sue S, B and R jointly liable; Issue: Can S, B
and R be held jointly liable? If not, was there election as to whom to
hold accountable? Held: The principle of estoppel applies, whereby J
can sue either S and R (estoppel/holding out) OR R and B (on
fact). He cannot sue all three as they are not jointly liable; By suing B
and R first, he has made his election and cannot now sue S; Novation?)

18. S. 25, 28, 32 - Ms. Glorious Plastics Ltd. v (1) Laghate Enterprises
and Others, (2) Andvilal Doshi and Others (Holding Out) (Bills of
exchange drawn on the plaitiff; on non-payment plaitiff sues the firm
and one retired partner under S 25, or under S 28; Issue: Do S 25, S 28,
S 32 proviso apply? Held: S 25 applies ONLY to acts done when said
person was partner of the firm; here, said transaction was done after
the partner retired thus S 25 does not apply; Applicability of S 28: (i)
representation (ii) reasonable belief in rep. (iii) Reliance amd faith on

rep.; here, the plaintiff did not even know of the existence of said
partner; Also, the proviso of S 32 applies: lack of knowledge)

19. S. 29 - Mangilal v Bhanwarlal and Others (Rights of transferee of a

partners interest; Facts: Assignee sued for accounts claiming the firm
that dealt with cotton was dissolved. Issue: Whether said firm was
dissolved. Held: Dissolution can be express or implied. Implication of
dissolution cannot be determined by mere closure of business, lack og
interest of partners, vacating of shop, discharge of servants. Intention
has to be determined. Found that evidence was lacking to prove
dissolution; assignee was suing for accounts in an undissolved firmunder S 29, claim fails. Ratio: Assignee can sue for accounts ONLY
in a dissolved firm)

20. S. 30 - Narayan Prasad Vijaivargiya v Commissioner of Income Tax,

West Bengal (Minor as a Partner) (The assessee-firm filed a suit again
the Income Tax Officer as the latter refused to renew the registration of
said firm on the basis that Mohanla (a minor) was treated as a fullfledged partner in contravence with the IPA. Issue: Status of Mohanlal,
the minor. Held: The partnership deed expressly stated that the adult
partners intend to give the benefits of the partnership to said minor,
and when calling the minor a partner, included that partner included
those deriving only benefits from the firm; The objective of the deed
must be looked at in its entirity, and such intention shows that S 30 has
been complied with)

21. S. 30 - Income Tax Officer v Messrs Sureshchand Rameshchand

(Minor as a Partner) (Difference between accounting and assessing
year; 3 major partners + 2 minors formed a partnership. Income Tax
Officer refused to grant registration of the firm for the assessing year of
1971-72, 72-73 as they claimed Sureshchand gained majority during
1970-71 as he also signed the application form; Issue: Applicability of S
30(6); Held: S turns 18 on May 4th, 71 after the close of the accounting
year for 1970-71, thus registration for 1971-72 must be granted; S
30(6) allows 6 months to pass before declaring whether said minor
joins or leaves the partnership; this period had not expired by the time
the accounting year 1971-72 had closed. Thus authorities should have
granted registration for assessment year 72-73 as well.)

22. S. 30 - The Commissioner of Income tax, Bombay - Messrs

Dwarkadas Khetan and Co. (Minor as a Partner) (Khetan entered into a
contract with four other people, one of whom was a minor; The deed
provided that said minor was a full-fledged partner with managing
ability and sharing of losses. Issue: Whether the commissioner can
interpret the deed as merely a beneficiary and thus alter the deed;
Held: Above cannot be done as the commissioner does nort have the
power to register a firm different from that of the intention of parties.
Deed invalid, registration not granted)

23. S. 30(7) - B. Anandkumar and Co. and others v Southern

Petrochemicals Industries Corporation Limited, Represented by its
Secretary (Minor as a Partner) (Plaintiff, seller of fertilizer, sues the
defendant, a partnership firm. Two members retired, a minor elected to
be a partner, suit against last aforementioned partner filed four years
late. Issue: Can the retired partners and the minor who elected to be a
partner be held liable? RATIO: Retired partners liable only for those
transactions that occurred while they were partners; Minor, u/S 30(7)
liable retrospectively (i.e. S 31 is subject to the provisions of S 30(7))
but suit was barred by limitation)

24. S. 30 - Venkideswara Prabhu Ravindranatha Prabhu v Surendranatha

Prabhu Sudhakara Prabhu and Others (Minor as a Partner) (Partnership
formed out of a joint family for retention of a provision store. One minor
elects to be a full-fledged partner, and one partitions his interest in the
property in favour of three others. Issue: Do the last three persons
mentioned become partners by virtue of being part of the Hindu Joint
Family; transferees by virtue of S. 29 due to execution of the partition;
beneficiaries under S 30. Held: HUF does not mean partnership, cannot
be a partner by birth/status; Partition does not fall under transfer of
interest as given in S 29;To be a beneficiary, two conditions must be
satisfied: (i)Proof of Consent of all partners and (ii) Agreement between
minor and partner, both of which are herein lacking) Partnership
dealing with the concept of sub-partnership (S 29)

25. S. 31 - Meenakshi Achi and Another v P. S. M. Subramanian Chettiar

and Others ( Partnership of which one partner dies and his widow is
said to be partner by the plaintiff, a creditor. M tries to deny being a
partenr to avoid liability wrt to payment of debts to P. Issue: Whether M

is a partner; Whether novation has taken place, and the reconstituted

firm is now liable for the debt. Held: M, through examining the
relationship of the parties, and the conduct thereof (M had access to
accounts, management and so forth), is held to be a new partner; For
novation to take place, two things have to be proved: whether the new
firm has taken over liabiltiy of the old firm and whether the creditor has
accepted the new firm in place of the old firm as debtor. Here, through
the conduct of the creditor, novation took place and M is held to be
liable. Her son is also held liable- holding out)

26. S. 32 - Paulraj v T.M.Mathalai Nadar Sons Through Its Proprietor T.M.

Sadasiva Nadar No.182, 183 Keezha Masi Street, Madurai Nagar (Plaitiff
is suing the defendants for cost of goods provided; one of the
defendants has retired, and according to facts, the plaintiff continued
providing goods to both the new firm set up by the retired partner and
the old firm; Issue: Can the retired partner be liable under S 32; Held:
Although no notice of retirement was given to the thrid party, the old
partner is not liable as said party can be said to have agreed to the
new firms liablity and lack thereof the old partner through the course
of conduct of the party S 32(2)(ie he dealt with the retired partners as
well as the other firm). Thus, retired partner is not liable)

27. S. 37 - Mohanasundaram and Others v Neelambal and Others

(Dissolution+profits accrued) (Two partners have a partnership dealing
with hides and skins, each with initial capital of Rs. 10,000/- One
partner dies, dissolving the firm; Surviving partner pays 1000 for the
funeral, 10,000 to the representatives, and overdraws for 6000 after
paying 7500 tax; Starts similar business under his own name, with a 5
lakh loan. Issue: S 37 applies, and the surviving partner must pay a
share of profits to representatives. Held: S 37 applies only if there is
CONTINUATION of the old partnership business. Starting of a similar
business under one owns name, not the old firm name, (hence, S 53
does not apply; also, S 16 does not apply as DISSOLUTION has taken
place) does not fall within S 37. Also, 6000 overdraft was not used for
starting the business, rather 5 lakh loan was used; Thus, S 37 does not
apply, surviving partner is not liable)

28. S. 40 - Venkatlal Baldeoji Mahajan v Kanhiyalal Jankidas and Others

(Partnership in continuance v. Sole proprietership) (Partnership of five

members, for the running of a mill. Plaitiff failed to successfully run

said mill, and hence, the management was passed to defendant who
ran said mill successfully. Issue: Defendant claims that the plaintiff had
abandoned his right to profits, by conduct, under S 40 of the IPA. Held:
Laches (Check brief); Matter if inference from the facts and
circumstances of the case in order to see whether a partner has
abandoned his interest wrt the partnership; Here, it can be said that all
partners agreed to the transfer of management and that plaitiff cannot
be said to have abandoned any interest. Also, it must be noted that
mere cessation of interest in the business by a partner is not equal to
retirement thereof, or dissolution)

29. S. 40 & 41 - Abbasbhai K. Golwala v R.G. Shah and Others(Plaintiff

and 4 other people entered into a partnership, whose deed stated that
death or retirement will not dissolve the partnership; also, dissolution
shall only be with the mutual consent of all partners. Issus: One
partner died, and three others submitted notices for retirement to the
plaitiff; the retiring partners claimed that, seeing as only one partner
would be remaining, the partnership business cannot continue and the
partnership is dissolved. Held: The court held that the contentions of
the defendants were wrong, and if followed would be contrary to the
partnership deed (mutual consent, partnership continues in all cases of
retirement/death). Also, the business of the partnership can be
continued as a sole proprietership/with any other peron/s, thus
partnership not dissolved)

30. S. 42 - Commissioner of Income Tax, M. P., Nagpur and Bhandara v

Seth Govindram Sugar Mills (Govindram and Gangaparsad entered into
a partnership to run various mills; Gangaprasad died, Govindram and
Bachulal, Gangas son, entered into partnership; Govind died, Nandlal
and Bachulal enter into a partnership; Nandlal dies, succeeded by two
minor sons, and three widows. Bach says that there in a partnership
with Nandlals heirs. Issue: Whether there existed a partnership or an
association of people for the assessment of tax. Whether S 42, 31
applies, and whether an agreement to the contrary can be valid in a
partnership of two people. Held: S 42 and S 31 (agreement to the
contrary) can apply only in cases of partnerships more than 2 people.
Death in a 2 member partnership dissolves the firm. Heirs cannot enter
into a partnership by status, only by contract. Also, Nandlals widow
was not found to be a partner by facts and conduct of the parties)

31.

S. 43 - Ganesh Chandra Mukherji v Gopal Chandra Hazra

32. S. 44 - Rajkishore Guru Prasad Khatri, Satna and others v Jwala

Prasad Bhimraj (Compulsory Dissolution) (Issue: Whether the dispute
relating to the partnership (ie whetehr or not said partnership should
be dissolved or not, under S 44) has to be decided by the arbitrator of
the court; Held: The above issue will depend on the partnership deed,
and the words of the arbitration clause; S 44 is dissolution by Courts: ie
based on equity not contract, thus in most cases arbitrators will not be
able to decide the matter; Judicial discretion under S 44 is, in this case,
left soley to the courts) (Where the issue arose as to whether plaintiff-

partners petition concerning dissolution of partnership mainly on just and

equitable ground u/s 44(g) (here, on alleged grounds of malfeasance,
misfeasance, fraud, misconduct, etc.) should be referred only to arbitration
as provided in partnership deed or should be filed before Court, HC, while
observing that the question as to whether a partnership should be
dissolved or not is a question within the arbitration clause generally
(however, depending essentially on the particular terms of the arbitration
clause in each case), nevertheless held that notwithstanding the
partnership deed and the arbitration clause thereof, Court has jurisdiction
to entertain the suit u/s 44(g) because it confers the statutory and
necessary power on Court to exercise of judicial discretion on basis of
equity and may appoint a receiver, if necessary.)
33. S. 46 & 48 - Commissioner of Income Tax, Madhya Pradesh v Dewas
Cine Corporation (Two partners formed a firm for the pupose of showing
films in two theaters, one of each brought into the stock og the
partnership by each partner; After 4 years, the firm dissolves and the
theaters are returned to the former owners; Tax has been imposed on
the apparent sale of the tehaters bac to the respective partners.
Income Tax office contends that this amounts to a sale of proerty to the
partner in consideration of the money value of his share in the
partnership. Issue: Whether, after the dissolution of a partnership firm, the
assets, after setting off the debts and fulfilling all the obligations, if retained
by the partners, amount to a sale. Held: Sale=transfer of propery for a
price; here, neither is there a transfer of property (adjustment of a partners
rights after dissolution is not a transfer nor is it a price). Rather, The
distribution of surplus is for the purpose of adjustment of the rights
of the partners in the assets of the partnership; it does not amount
to transfer of assets.Hence, on dissolution of the partnership, each theatre

must be deemed to be returned to the original owner, in satisfaction partially

or wholly of his claim to a share in the residue of the assets after discharging
the debts and other obligations)

34. S. 47 - New Bank of India v Roshan Engineering Industries and

Others (Winding Up) (Bank gave a loan to the defendant firm which is
later dissolved by the retirement of teo partners; The bank has notice
of said retirement and opens a new account of sole proprietership for
the second defendant (D2); D2 had signed an acknowledgment for
payment of balances due, and the issue is whether D2 had authority to
bind the retired partners, who if so would be liable. Held: The
acknowledgments were not signed during the process of winding up,
rather, they were signed when the new firm was established. Thus
retired partners are not liable as they are not bound by signed
documents, and the suit against them for the debt is now barred by
limitation)

35.

S. 48 - K. R. Mallesha v Ramnath Gajanand (Settlement of Accounts)

36. S. 48 - S. Kadir Ibrahim Rowther and Another v Noor Mohammad

Rowther (Settlement of Accounts) (Plaintiff was a working partner in
the defendants transport concern, filed a suit for dissolution and
claimed accounts; defendant wants to deduct the dpreciated value of
the vehicles before giving profits; Issue: What amounts to profit. Held:
Profit depends on the agreement between the parties (express or
implies; Intention must be looked at; Purpose and nature of payment of
profit must be taken into account; This is a case of service agreement
and not a partnership, although K can be compared to a working
partner (Only shares profits, not losses/capital); Therefore,
depreciation of the vehicles cannot be taken into account as that would
amount to K (an employee of the proprieter) contributing indirectly to
the capital. Thus, there cannot be an allowence for depreciation for
payment of profits)

37. Registration of the firm - Dulichand Lakshminarayan v The

Commissioner of Income Tax, Nagpur (Three firms and a HUF wanted to
form a partnership and sent a deed in an attempt to register said
partnership. Held: Firms do not have a legal/juristic identity, and hence
cannot enter into partnerships with each other. One partner from each
firm signed the deed, but accoring to the law, each member/partner to

the partnership must sign; this was not the case; Ratio: Firms/HUFs
cannot enter into partnerships)

38. S. 69(2) - Kamal Pushp Enterprises v D. R. Construction Company

(Effect of Non-Registration) (Kamal Pushp entered into a contract with
DRC, and then claimed the latter (an unregistered partnership) had
breached the contract; Under said contract, any dispute was referred to
an arbitrator; The arbitrator ruled in favour of DRC, and Kamal then
went to court stating that u/S 69(2), DRC could not assert a right
against third parties. Issue: Whether the arbitration was binding in case
of unregistered firms. Held: Arbitration processes are binding even in
cases of unregistered partnerships as S 69 reffers only to filing a suit in
a court of law. Also, the firm did not initiate any proceedings and was
merely defending itself, which does not fall u/S 69.

39. S. 69 - Raptakos Brett and Company Limited v Ganesh Property

(Registration) (R enetered into a contract with unregistered firm G,
whereby a lease was granted by G in favour of R for five years. R failed
to vacate after the period of lease expired, G filed a suit for possession.
Issue: Whether G can be granted possession (ie whether the suit is
sustainable in light of S 69(2); Whether Gs registration AFTER the filing
of the suit has any effect thereof. Held: S 69(2) has three components:
The firm must be unregistered, must be suing a third party and such a
suit must be for the enforcement of a right arising from a contract of
the firm with said third party. In this case, G is using the TP act and
Common Law to prove that R is under an obligation to return
possession (ie right comes from statutory duty/Common law, and not
contract between both parties). The court held that S 69(2) is not
whooly applicable, and G can get relief based on statutory duty. Obiter:
Gs registration can be used to persuade the SC (in certain cases) to do
complete justice and review the case. (As a suit after registration can
be re-filed) Verdict for G)
40. S. 69 - Rajinder Singh and Others v Kartar Singh and Others
(Registration)(Facts- Appellant and Respondent were partners in an unregistered
firm. Resp dies, firm dissolves and the heirs of Resp file for a share of the profits. App
refuses, contending that the suit would be barred under Section 69 as the firm was
unregistered. Issue- whether claim for profits after dissolution of the firm will amount to
an exception under S69(3). Judgment- S 69 is no bar to the suit as the circumstances fall
under the ambit of the exceptions under S 69 (3)- S 69 will not affect proceedings arising
from a right which comes from the dissolution of the partnership. )

41. S. 69 - Valji Shamji Chheda and Others v Bhuderbhai Bajidas Patel

and Others (Registration)
42. S. 69 - Ramniklal Mohanlal Chawda v Sharad Vasant Kotak and
Others (Registration)
43. S. 69 - Sharad Vasant Kotak & Others v Ramniklal Mohanlal Chawda
& Another - Supreme Court (Registration)
44. S. 69 - Shreeram Finance Corporation v Yasin Khan and Others
(Registration)
45. Saremal Punamchand v Kapurmal Punamchand

SALE OF GOODS ACT

1. S. 4 - Damodar Valley Corporation v State of Bihar (Definition of Sale)

( Difference between a hire/hire-purchase agreement; Difference
between an agreement to sale and sale (Transfer of propery, Right in
personum/Right in rem, Damages/Cost of goods, Risk on the seller/ on
the buyer); Intention of the parties- The contractor had to pay full price
of equipment and once the purpose is fulfilled, the residuary price is
given back: this is a hire with an option to purchase not just hire)

2. S 18,19,20 Ghulam Mohmmad Wani vs State of J&K(Facts- P applied for

the purchase of timber from the state. This was sanctioned at. P deposited a
certain amount with the State but at the time of delivery, the price of timber
increased and the P faced financial constraints. Issue- whether there was an
implied promise that the timber would be sold at the rate prevailing at the
time of the sanction. Judgment- The sanction did not specify the time, place
or quantity of goods to be delivered and hence were not ascertained as under
s 18 of the SOGA. Hence, the contract had not been concluded and there was
no sale and therefore no implied promise.)

3. S 21,23 Emperor v Kunverji Kavasji Kavarana(Facts- Def is a liquor vendor

who was under licence not to sell liquor outside of his shop. However, he
started a home-delivery service of sorts and was hence held to have violated
the terms of the licence. Issue- whether the sale took place outside of the
shop. Judgment- Court said that s 21 of the SOGA would not cover this case
as the goods were not ascertained or specific. Hence, s 23 would govern this
case. The bottling of the liquor would be an act of ascertainment and appropriation. It

cannot be said that the goods are ascertained until the appropriation by one party is
assented to by the other. The section itself provides that the assent may be express or
implied, and may be given either before or after the appropriation is made. The question
whether the assent was implied must necessarily depend upon the circumstances of each
case and it appears that the customer had assented that the goods should be delivered to
the shop's servants for delivery to him. Therefore, the servant of the seller in the
circumstances could be considered a bailee for the purpose of transmission to the buyer;
and delivery to such servant, which admittedly took place in the licensed place, would be
effective delivery to the buyer himself. Thus, sale is not completed outside the place of
license and the appeal is dismissed.

4. Ramniwas Satyanarayan v Commissioner of Taxes, Assam

5. S 39 Messrs Escorts JCB Ltd v Commissioner of Central Excise, Delhi-II

(Delivery to carrier as good as delivery to buyer)

6. S 26 Multanmal Chempalal, Bellary v CP Shah and Co (Facts- App entered

into a contract for the sale of cloth but paid the full price only two months after the
despatch of the goods. When the app went to retrieve the goods, they had disappeared
from the railway station and hence, filed a suit claiming the price of the goods. The resp
countered this by using clause 7 of their contract which said that the delivery of goods
would be at the buyers risk. The app challenged this on grounds that the goods were still
the sellers property at the time of delivery (as per some clause 8 of their contract). Issuewhether the goods were at the buyers or sellers risk. Judgment- Court rejected the apps
argument and stated that clause 8 was not connected to risk and this falls under a
contract to the contrary under s 26. Hence, it would be at the buyers risk and the appeal
was dismissed.)

7. S. Rama Rao v Dasarathy Rao

8. Jacob Phillip v Union of India

9. Bibhuti Bhusan Bose v National Coal Trading Co

10.

Pawan Hans Helicopters Ltd. vs Aes Aerospace Ltd.

11.

Suchetan Exports Pvt Ltd (through Pankaj Ojha) v Gupta Coal India

12. S 47, 54(2) Kalka Prasad Ram Charan v Harish Chandra (Lien of
unpaid seller, Right to re-sell under S 54(2)) (Buyer (A) contarcted to
buy from Seller (R) 57 thans of silk, but took delivery of only 10; R resells remaining; Issue: When does the sellers right of lien start? Is the
seller allowed to claim difference on re-sale when no notification was
provided to the buyer? Held: Right of unpaid seller starts from the time

of completion of contract (ie when buyer took delivery of 10) Seller

cannot claim damages as no notice was given)

13. S 19, 22 Usha Beltron Ltd v State of Punjab (Transfer of propery

takes place when intended by the parties; Mere delivery of goods does
not result in transfer of ownership; Here, ownership transferred only
after goods were tested, and take-over certificate is handed over)(FactsDept of Tel of Punjab sent out circulars for the manufacture of cables and these orders
were taken to be contracts. The app manufactured these cables and sent them to the resp.
The municipality claimed octroi (local tax) on these cables. The app refused to pay on
grounds that the cables belonged to the govt. Issue- whether this would be subject to s 22.
Judgment- Ratio- s 22- the goods would pass into the govts possession only after they
were tested. Also, s 19 was applied- the goods would pass only when the parties intended
for them to.)

14. S 17, 54, 56, 60 Kaluram Bhagwati Prasad v Balramdas Laxmi

Narain Sale by Sample (D sent toor dal to the P, and delivered said
goods to the Railway station. P refused to take delivery, saying goods
were of inferior quality when compared to the sample provided. Issue:
Can the seller claim damages for non-acceptance of goods by the
buyer? Held: Goods were proved to be of inferior quality: the seller
himself lowered the price, and admitted that the said goods were of
lesser quality when compared to the sample. S 54(2) only applies when
the buyer is in the wrong (not paid), S 17- implied condition as to
quality is breached; S 56 does not apply as the buyer has to do a
wrongful act in order to apply)

15. S 13(2), 32, 42, 59 Kailash Sharma v Patna Municipal

Corporation(Facts- App bought fogging machines from the resp and the resp
were to pay in one week. They did not pay in one week and called 6 months
later to complain of the inefficiency of the product. The app filed a suit for
the payment of the price. Judgment- direct application of s 13 (2)- warranty
can raise a claim for damages but cannot repudiate transaction, 32concurrence of payment and delivery should take place, 42- use for a
reasonable time amounts to acceptance, 59- suit for breach of warranty)

16. S 12, 15 Anthony Thomas v Ayuppunni Mani (Condition and

warranty)(Facts- A contract of sale of cashew nuts took place between the
appellant (seller) and the respondent (buyer). On delivery, the respondent rejected

the goods on the ground that the bad nuts exceeded the stipulated (in the contract)
maximum of twenty percent. Judgment- A condition is a more vital undertaking than
a warranty, and that the consequences that flow from its breach are different. It said
that the breach of a condition entitles the injured party to repudiate the contract, to
refuse the goods, and, if he has already paid for them, to recover the price s 12.
The only remedy for the breach of a warranty is the recovery of damages. The sale
was a sale by description, and there is an implied condition that the goods shall
correspond with the description s 15.)

17. S 11 Orissa Textile Mills Ltd v Ganesh Das Ramkishun (Stipulation as

to time) (bales of cotton sold- buyer extended time for delivery- new
extention stiputation as to time- of the essence; RATIO: Time as to
delivery of goods, will be of essence or not based on the terms of the
contract (S 11))

18.

Smt. Claude-Lila Parulekar v Messrs Sakal Papers Pvt Ltd

19. M. Abdul Sathar Sait v. Kunjuvarkey (Ratio: Market price is as

determined by the demand and supply of the market, and not what the
government fixes; Contract null as it is impossible to form, due to the
lack of a fixed ascertainable contract price, necessary for sale under
the Sale of Goods Act)

20. Sagar Warehousing Corp; Fly Jac Forwarders v Pawan Hans

Helicopters; Aes Aerospace(Facts- PH sells helicopters to AES for certain
consideration. Cost of delivery etc to be borne by AES. PH gives helicopters to carrier
(SW) but AES defaults on payment. SW sues for cost of carrying. Judgment- there
was no completion of sale as the full price had not been paid. Also, PH did not have
to pay the carriers as there was an express provision which said that AES would be
responsible for payment of the carriers.)

21. S 5, 9 G R Parry v Union of India (Issue: Whether pledged goods can

be sold by the pawnor; Whether an unascertained price of shares still
amounts to a sale; Held: Plegded goods can be sold as they would
ultimately be redeemable, and they were in the possession of the
pawnor; S 9 states that sale of unascertainble price of goods can be
made, and a reasonable price shall be paid)

22. S 18, 23 Dun Singh Bisht v Firm Janki Saran Hailash Chander
Dhampur(Facts- JS was given the right to cut down trees on Xs land after
they had attained a certain girth. Xs land sold to DSB who refuses to grant
them rights. Suit filed on whether the agreement between JS and X was one
of sale. Judgment- Not of sale as the goods were still unascertained. Only
after the trees had attained a certain girth could they be cut down- there was
no ascertainment and hence no sale possible under s 18 and 23. )

23.

PSNS Ambalavana Chettiar v Express Newspapers Ltd

24.

S 23(2) Birendranath Guha v State of Bihar(The petitioners had a

timber business and they supplied timber to various sources and store it in
godowns. To supply the timber, they would load it on trains at the Jogbani
station in Nepal. Issue- whether sales tax can be levied on these goodswhether they were sold within the territory or Bihar or whether the sale was
complete at the Jogbani station and only delivery was to Bihar. Judgment- The
goods were unconditionally appropriated at the Jogbani station and the
property passed to the buyers when they were loaded onto the train- falls
under completed sale transaction under s 23(2). There was also a clause
which said that the goods would be deemed to be delivered once they were
given to the carrier and the receipt given.)

25. S 2, 4 Indian Railways Catering and Tourism Corp Ltd v Government

(NCT of Delhi)(Facts- IRCTC and Indian Railways contracted that IRCTC would
provide food for IR in the manner of a catering service and IR would pay them
according to the number of passengers. Issue- whether sales tax should be
levied- whether it was a contract of sale or of service. Judgment- it is a
contract of sale as they sold them the actual good- must look into the
intention of the parties- service was not greater than the sale. The service
was instead incidental to the sale. This is comparable to the sale of food in a
restaurant.)

26. S 35 Devi Lal v (Goswami Maharaj) Govind Lal ( Buyer to apply for
delivery) ( That the defendant appellant Devi Lal could not insist on the
payment of the price of the part of ghee supplied by him before
supplying the entire quality of ghee as had been agreed upon. In this
case, the defendant appellant had refused to supply the entire quantity
of ghee even before the final date of delivery. No question arises in
this case, therefore, of the application of Sec. 35 under which the duty
has been cast upon the buyer to apply for delivery; WRT delivery by

instalments: Where there is an agreement (which may be inferred) for

delivery by instalments, the contract is not split up into separate
contracts for each instalment; the contract is still an entire contract for
the whole quantity, though it is divisible in performance. The seller is,
therefore, liable if he fail to make Up the complete quantity, and cannot
recover any part of the price unless there be a provision that
instalments are to be separately paid for.

27.

Central National Bank Ltd v United Industrial Bank Ltd

28. S 52(3)?! Classic Furniture Manufacturing Company Pvt Ltd v DHL

Lemuir Logistics Pvt Ltd (Refusal on part of the carrier to redeliver
goods to unpaid seller on seller exercising his right of stoppage in
transit is lawful, until payment for transport of the same is received by
the carrier. Possible reasoning: Bailment: neccessity>)

29.

Cochin Port Trust v Chopra(Facts- The port trust sold a crane in an

auction to the highest bidder, Chopra. Chopra paid earnest but when the trust
sent him an acceptance letter, he did not respond. Chopra was informed that
his earnest would be forfeited and the trust re-sold the crane to another party
at a loss of 43k. Issue- Whether seller could act under S 54 (4), and re-sell
goods without giving notice; Mitigation of damages. Judgment- under 54 (2),
notice must be given to the buyer about resale. However, under 54 (4), if the
seller has reserved his right to resell, then the buyer will be liable for
damages irrespective of notice. The Court looked into the terms of the
contract and concluded that there was such reservation. However, if he acts
unreasonably then the doctrine of mitigation of damages will apply)
Difference between S 54(2) and S 54(4)

30. S 15, 16 In re: Andrew, Yule and Co v Unknown (Facts: Andrew,

buyers, contract to sell goods (bales) to sub-buyers, who accept 50/150
bales rejecting the rest, claiming the smell and thus are unfit for the
purpose of purchase (packaging); Issue: Whether there was an implied
condition as to the fitness of goods for the purpose of purchase; Held:
The goods were held to have "disconformed substantially". However, under
S 16: (i) If the buyers expressly communicate to the sellers the purpose for
which the goods are wanted (and the, other conditions are present), then
there is an implied condition of fitness. (ii) Apart from express

Communication, that knowledge may be imputed to the sellers by reason of

the circumstances of the case. (iii) Where the goods may be utilized for a
variety of purposes known to the supplier, then unless he is notified of the
particular purpose for which these goods are wanted, there is no condition of
fitness that they shall be fit for that particular purpose. Thecircumstances of
this case render Rule (iii) above applicable, and there was no communication
by the buyer of the particular purpose out of the several purposes for which
the goods in question are used. Therefore there was no condition for fitness in
this case, that is to say, fitness for being used for the purpose of packing
foodstuffs. LOSS OF RIGHT OF REJECTION for breach under S 15: There are
three classes of circumstances, which may cause a loss of the right of
rejection by the buyers. All these are present in this case; First of all, acts of
ownership such as sub-sale, shipment, sending forward, etc. Second, delay in
giving notice of rejection. Third, part retention of goods. In this case the
buyers resold, received the goods F. A. S. and, without inspecting, sent
forward the goods to America. They did not give notice of rejection until 4th
November 1930. They, or their sub-buyers, retained 50 bales)

31.

S 16(2) Hasenboy Jetha, Bombay v New India Corporation (In the

case of goods sold by description by a seller who deals in such goods, that he
is always, in the absence of agreement to the contrary, responsible for latent
defects in the goods which render them unmerchantable whether the buyer
has examined them or not, and for all such defects whether latent or
discoverable on examination in cases where the buyer has not in fact
examined the goods.)

32. S 4 Bharat Sanchar Nigam Ltd (BSNL) v Union of India (Are

telecommunication connections taxable: NOT GOODS: Electromagnetic
waves are neither abstracted nor are they consumed in the sense that they are not
extinguished by their user. They are not delivered, stored or possessed. Nor are they
marketable. They are merely the medium of communication. What is transmitted is not an
electromagnetic wave but the signal through such means. The signals are generated by the
subscribers themselves. In telecommunication what is transmitted is the message by
means of the telegraph. No part of the telegraph itself is transferable or deliverable to
the subscribers.A subscriber to a telephone service could not reasonably be taken to
have intended to purchase or obtain any right to use electromagnetic waves or radio
frequencies when a telephone connection is given. There is no transfer of right to use, as
goods were never in a deliverable state. WRT severabiltiy of contracts of service and
sale: Court followed thebasic principle of Gannon DunkerleysCase which was
unless the transaction in truth represents two distinct and separate contracts and is
discernible as such, then the State would not have the power to separate the agreement to
sell from the agreement to render service, and impose tax on the sale.Severability: The dominant
nature Test for distinguishing two types of transactions: did the parties have in mind or
intend separate rights arising out of the sale of goods. If there was no such intention there

is no sale even if the contract could be disintegrated. The test for deciding whether a
contract falls into one category or the other is to as what is 'the substance of the contract)

33. S 4 State of Madras v Gannon Dunkerley and Co(construction contracts

entered into by the respondent were agreements to execute work to be paid
for according to measurements and quantities of the materials used at the
specified rates. The contracts were, therefore, not held to be contracts for
sale of the materials used, and that such works contracts were indivisible and
could not be broken up into a contract for sale of materials and a contract for
payment for work done. )

34. S 2 Tata Consultancy Services v State of Andhra Pradesh (Whether

canned software fell within the definition of goods for tax purposes;
Held: The term goods as defined under Art. 336 (12) of the Constitution and
under this Act, are very wide and include all kinds of moveable property,
whether they are tangible or intangible. (all materials, articles and
commodities); The court was of the opinion that the copyright of the
software may remain with the originator but the moment copies of the
software are made and distributed, it becomes goods. The court held no
distinction between the sale of music on a CD and that of software on a CD. It
further stated that the media and software cannot be split. Therefore, what
the buyer purchases and pays for is not the CD. In conclusion, a transaction
sale of computer software is a sale of goods within the meaning of the term
in this Act. The term "all materials, articles and commodities" includes both
tangible and intangible/incorporeal property which is capable of abstraction,
consumption and use and which can be transmitted, transferred, delivered,
stored, possessed etc. The software programmes have all these attributes.)

35. S. 4 - Messrs. Jay Bharat Credit And Investment Co. Ltd. v

Commissioner of Sales-Tax & Another
36. S. 4 - C.C.E. Vadodara v Gujarat Narmada Valley Fertilizer Co. Ltd.
37. S. 4 - Messrs Xerox Modicorp Limited v State of Karnataka
38. S. 12 - Mathew Varkey v T. C. Abraham
39. S. 40 - (1) Suresh Kumar; (2) Rajendra Kumar v K. Assan Koya and
Sons
40. S. 59 - Sha Thilokchand Poosaji v Crystal and Company By Its
Authorised Agent and Manager C. Satyam