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The facts giving rise to the writ petitions being common and almost identical may be stated. The Coffee Board, Bangalore is a statutory corporation incorporated under s. 5 of the Coffee Act, 1942, an enactment passed to provide for the development of the Coffee Industry under the control of the Union. Sections 4 to 10 of the Act deal with the setting up of the coffee Board on which all interests are represented and some Members of Parliament and Government officers are nominated. The Board exercises powers and discharges functions assigned to it under the Act and the Coffee Rules framed thereunder. The Act compels the registration of all owners of coffee estates and licensing of curers and dealers and it also imposes control on the sale, export and re-import of coffee into India. In regard to sale it fixes prices for sale of coffee either wholesale or retail by registered owners and licensed curers for the purpose of sale in the Indian Market and the Coffee Board fixes internal sale quota for each estate owner and the owner has to observe this quota and also the price fixed under s. 25 all coffee produced by a registered estate in excess of the quantities specified in the internal sale quota allotted to that estate, or when no internal sale quotas have been allotted to the estates, all the coffee produced by the estate has to be delivered to the Board for inclusion in the surplus pool by the owner of the estate or by the curing establishment receiving the coffee from the estate and under subs. (6) in respect of coffee so delivered for inclusion in the surplus pool the registered owner retains no right except his right to receive payments referred to in s. 34. Section 26(1) enjoins upon the Coffee Board to take all practical measures to market the coffee included in the surplus pool and all sales thereof have to be conducted by or through the Board. These sales include internal sales in India and outside India. We are concerned in these petitions with sales outside India. Under s. 20 of the Act no coffee (barring certain exceptions specified in the proviso) can be exported from India otherwise than by the Board or otherwise than under an authorisation granted by the Board in the prescribed manner and in the prescribed cases, while under s. 21 no coffee which has been exported from India shall be re-imported into India except under and in accordance with a permit granted by the Board. Section 47 provides that all contracts for the sale of coffee in so far as they are at variance with the provisions of this Act shall be void. It will thus appear clear that the Coffee Board exercises complete control-almost monopolistic-over the coffee trade in exercise of its statutory powers.

Export of coffee outside India is particularly controlled under the Act and the Rules by the Coffee Board. As stated earlier coffee can be exported either by the Coffee Board directly to parties outside India or the Coffee Board authorises other exporters to effect such exports. For effecting exports through other exporters the Coffee Board periodically conducts auctions known as "export auctions"

and it follows a procedure in that behalf. To be able to bid at these auctions, exporters have to get themselves registered with the Board. The Board maintains a list of Registered Exporters and grants to each one of them a permit, which authorises him to take part in the "export auction". The conditions which are imposed by the permit (hereinafter called the permit conditions') require, inter alia, a security deposit and a standing deposit (which may be in cash or in the form of bank guarantee) from the Registered Exporters; such permit is liable to be withdrawn or cancelled by the Chief Coffee Marketing Officer, an executive appointed by the Central Government on the Board, at any time if it is found that a permit-holder has sold or has attempted to sell coffee bought by him at the "export auction" within the internal market without his written permission or if any of the other permit conditions are contravened). A specimen of the permit together with the conditions attaching to it has been annexed to each petition. (The actual "export auctions" are conducted on the basis of "the Term and Conditions of Sale of Coffee in the course of Export" framed by it and the Registered Exporters participate in such auctions on those terms and conditions.) A specimen copy of these Auction Conditions has been annexed to each petition. Clause 3 thereof declares that all auctions and sales made thereat are subject to (i) the Auction conditions, (ii) the Permit conditions and (iii) such other rules or conditions as may be prescribed by the Chief Coffee Marketing Officer. Under Cl. 4 only dealers who have registered themselves as Exporters of coffee with the Coffee Board and who hold a permit from the Chief Coffee Marketing Officer in that behalf are permitted to participate in the auctions. Under Cl. 11 no one is allowed to retract his bid when once the same has been entered in the Register of Bids. The highest bid is ordinarily accepted but the sale Conducting Officer may not accept such bid if he has reason to believe that the same is not bona fide or genuine or the same is that outcome of concerted action on the part of the dealers or a section of them for the purpose of controlling or manipulating prices, etc. subject to his recording the reasons for such rejection in the Register of Bids. Clause 19 deals with weighment, delivery and payment of price and contains an over-riding provision the effect that the "property in the coffee sold shall not pass to the buyer until after he has paid the full price and the coffee sold to him is weighed and set apart for delivery to him". Clause 26 declares that it is an essential condition of the auction that the coffee sold thereat shall be exported to the destination stipulated in the catalogue of lots or to any other foreign country outside India as may be approved by the Chief Coffee Marketing Officer within three months or within such extended period as shall not exceed one year from the Notice of Tender issued to the auction buyer (Registered Exporter) and that under no circumstances the coffee purchased at such auction shall be diverted to other destinations or sold or be disposed of or otherwise released in India. Clauses 30 and 31 provide for the consequences of default on the part of the buyer to export the coffee or to produce evidence thereof; he is liable to pay a penalty at the rate specified in Cl. 30 and what is more under Cl. 31 Chief Coffee Marketing Officer is entitled to seize and take possession of the unexported coffee and deal with it as it were part and parcel of the Board's coffee in it surplus pool. Under Cl. 32 it is provided that in the event of the buyer committing any default in respect of any of the terms and conditions of the "export auction" he shall be liable (i) to be removed from the list of the Registered Exporters, the permit granted to him being cancelled; (ii) to forfeit the deposit made by him at the time of obtaining the permit and

As regards Cl. 31 Counsel contended that it does not amount to any reservation of the right of disposal over the goods to the Coffee Board within the meaning of s. 25 of the Sale of Goods Act.

On the other hand counsel for the petitioners contended that s. 64(2) of the Sale of Goods Act does not deal with the question of passing of the property at auction sale but merely deals with the completion of the contract of sale, that is to say, upon the fall of hammer or announcement of the close of sale in other customary manner the agreement to sell becomes complete; in other words an executory contract comes into existence between a promisor and a promisee. Secondly, even if the said provision is regarded as one relating to completion of sale in the sense of passing of property from one hand to the other such result will occur only if the auction sale is in respect of specific or ascertained and identifiable goods and unconditional; in other words, it is only in an unconditional sale by auction the property in the goods passes on the fall of hammer. Thirdly, s. 64 is subject to a contract to the contrary and the auctioneer holding the auction could fix the terms and conditions on the basis of which he would be accepting the bids and in the terms and conditions so setforth by him he could provide for passing of the property at a point of time later than the fall of the hammer or the closure of the auction in the customary manner or on fulfilment of certain conditions (like Cl. 19 in the instant case) and such terms would bind the parties and the property will pass in accordance with those terms. As far as the instant case is concerned counsel for the petitioners urged that s. 64(2) was not attracted for two reasons: (a) the export auctions conducted by the Coffee Board are not unconditional but subject to certain conditions, particularly condition expressly relating to the passing of property as contained in Cl. 19 and (b) factually the sale is never in respect of lots of specific or ascertained goods inasmuch as it is abundantly clear from the affidavit of Shri Meenaxi Sunderam, the Chief Coffee Marketing Officer of the Coffee Board dated 20th February, 1980 that every lot put up for auction invariably contains 5% of coffee more than the quantity indicated in the catalogues and the coffee sold from only particular lot is required to be weighed and set apart and appropriated to the contract before delivery is given. Apart from the factual ground, counsel urged that the position in law that s. 64 is subject to a contract to the contrary is very clear and under Cl.19 the passing of property in the coffee sold at the Export Auctions has been deferred until after the coffee sold is weighed, set apart for delivery and price is paid therefor and according to him Lord Chancellor Herschell's observations cannot avail the States of Karnataka, Tamil Nadu and Kerala for the simple reason that there is nothing contra indicated in other conditions so that the declared intention in Cl. 19 should not prevail. He urged that a statutory body like the Coffee Board must be presumed to act in a bona fide manner and has prescribed terms and conditions of auction genuinely intended to bind the parties to the auction and those terms and conditions must be regarded as truly governing the rights and obligations of the parties and a third party like a State Government or its Sales Tax Authorities must apply their taxing measures by having regard to those terms and conditions. He, therefore, pointed out that if the Court would be inclined to take the view that the property passes to the auction purchaser under Cl.19 then the agreement with or order from a foreign buyer must be available or come into existence just before such passing of the property. However, he contended that Cl. 19 makes a negative provision, namely, that the property shall not pass until after the coffee sold is weighed, set apart for delivery and price is paid therefor which would mean it passes not till then but some time later and, therefore, strong reliance has placed by counsel on Cl. 31 which empowers the Coffee Board to seize the unexported coffee and deal with it as if it were part and parcel of Board's coffee held by it in its pool stock if default is committed by the buyer to export the coffee within the prescribed time or such extension thereof as may be granted and such provision constitutes a reservation of the right of disposal to the Coffee Board within the meaning of s. 25 of the Sale of Goods Act. He, therefore, urged that under Cls. 26 and 31 read with s. 25 of the Sale of Goods Act the property would pass after the coffee is shipped or sent to the customs station for shipment by the auction purchaser and production of the agreement with or order from a foreign buyer before such shipment or despatch to customs station would satisfy the requirement of s. 5(3) of the Central Sales Tax Act, 1956.

If once it is held that the property in coffee sold at such export auctions passes under Cls. 19 and 20 of the Auction Conditions immediately upon payment of price, weighment and setting apart of the coffee for delivery to the buyer, it will be difficult to accept the petitioners' contention that passing of the property in such Coffee is further postponed till actual shipment by reason of Cl. 31 of the Auction Conditions, for, if the title has already passed it cannot pass again, Counsel for the petitioners contended that in view of cl. 31 a reservation of the right of disposal over the goods in favour of the Coffee Board within the meaning of s. 25 of the Sale of Goods Act is made. It is difficult to accept this contention. Section 25(1) which deals with the reservation of the right of disposal provides that where there is a contract for sale of specific goods or where goods are subsequently appropriated to the contract, the seller may by terms of the contract or appropriation, reserve the right of disposal of the goods until certain conditions are fulfilled and if he does so, the legal consequence mentioned in the section flows, namely, that in such case notwithstanding the delivery of goods to a buyer or to a carrier or bailee for transaction to the buyer, the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled. In the instant case it is true that Cl. 26 declares that it is an essential condition of the auction that the coffee sold thereat shall be exported to stipulated destinations or to any other foreign country outside India as may be approved by the Chief Coffee Marketing officer within 3 months or within the extended period but such essential condition is applied to the coffee which has already become the property of the buyer under Cls. 19 and 20 of the Auction Conditions and all that Cl. 31 provides is that if default is made by Buyer in exporting coffee within the prescribed time or extended time it shall be lawful for the Coffee Board without reference to the buyer to seize the unexported coffee and take possession thereof and deal with it as if it were the part and parcel of the Board's Coffee held by them in their Pool Stock. Far from amounting to a reservation of the right of disposal over the unexported coffee to the Coffee Board, Cl. 31 is in the nature of a defeasance clause in the sense that what is vested in the buyer under the earlier conditions, the same shall revert back to the Coffee Board if the buyer commits a default in fulfilling the essential condition. Such a reading of Cl. 31 would be consistent with a further provision which is to be found in the latter portion of that clause. The latter part of Cl. 31 provides that after the coffee is seized and it becomes part and parcel of Board's coffee held by it in its pool stock, the Board shall re-sell the same but after such re-sale the Chief Coffee Marketing officer shall pay to the defaulting buyer only the balance of the sale proceeds after deducting godown charges, insurance premium, selling commission payable to agents and all other expenses of sale together with the penalty due under Cl. 30. But under the proviso it is provided thus: