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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.

"58. In the case of a sale by auction-
(1) x x x x x x (2) A sale by auction is complete when the auctioneer announces its completion by the fall of the hammer, or in other customary manner. Until such announcement is made any bidder may retract his bid."

In Halsbury's Laws of England (4th Edn., Vol. 2) at page 380 Para 742 runs thus:

"742. Bidding. The method of bidding and the amount of the bids are usually regulated by the conditions of sale (1). Until the property is actually knocked down there is no complete contract of sale. A bid is a mere offer, and can be retracted by the bidder at any time before the auctioneer announces the completion of the sale by the fall of the hammer, for in other customary manner (2)" (Emphasis supplied). At foot-note (2), s. 58(2) of the Sale of Goods Act 1893 is the provision indicated in support of the aforesaid statement of law and it is further stated: "In an unconditional sale the property in the goods passes on the fall of the hammer" Sale of Goods Act 1893, s. 18 r. 1 [Dennant v. Skinner and Collom. This would show that under s. 58(2) of the English Sale of Goods Act 1893 normally in an auction sale at the fall of the hammer a completion of the contract of sale takes place and until such time the bidder may retract his bid but if the auction sale happens to be an unconditional sale in respect of specific and ascertained goods, the title to the property passes simultaneously at the fall of the hammer not by virtue of s. 58(2) but by reason of the operation of s. 18 r. 1 of the English Act which is equivalent to s. 20 of our Act].

Section 64(2) of our Sale of Goods Act, being in pari materia with s. 58(2) of the English Sale of Goods Act 1893, will have to be interpreted in the same manner and we are therefore, of the view that it does not deal with the question of passing of the property at auction sale but merely deals with completion of the contract of sale which takes place at the fall of the hammer or at the announcement of the close of the sale in other customary manner by the auctioneer. It would also be correct to say that if the auction sale of chattels is unconditional and is in respect of specific ascertained goods and nothing remains to be done to the goods for putting them in a condition ready for delivery, the property in the goods would pass to the purchaser upon the acceptance of the bid but that would not be because of s. 64(2) but because of s. 20 and such would not be the case if the goods sold thereat are non-specific or unascertained goods or the auction sale is conditional. In this context it will be useful to refer to a decision of this Court in A.V. Thomas & Co. Ltd. v. Deputy Commissioner of Agricultural Income Tax where this Court recognised a distinction between auction sales pertaining to specific or identifiable goods and auction sales in regard to unascertained goods and held that in regard to the former the property in the goods passed when the contract was accepted at the fall of hammer and not in the latter case. That was a case where the teas were stored in the godowns in the Willingdon Island which was in the State of Travancore Cochin and samples of those teas were taken to Fort Cochin which at the relevant time was in the State of Madras. At Fort Cochin by the samples the teas were sold by public auction in lots, some of the lots were purchased in their entirety and others in parts and after the consideration money was paid at Fort Cochin delivery orders were given to the buyers addressed to the godown keepers at Willingdon Islands and actual delivery of tea was taken there. These teas were then sent out from willingdon Island in Travancore Cochin for consumption either in other parts of India or were exported out of India. The taxability of the sales of teas in the manner mentioned above under the Travancore Cochin General Sales Tax Act depended upon whether the sales could be held to have taken place at Willingdon Island. i.e., within the territory of Travancore Cochin State and were liable to sales tax under the Act or whether the sales were 'outside sales' and, therefore, not subject to sales tax in the State of Travancore Cochin in view of Article 286(1) (a) read with the Explanation. This Court after referring to s. 64(2) and the definition of 'specific goods' in s. 2(14) of our Sale of Goods Act, took the view that on the fall of the hammer the offer would get accepted and if the goods were specific goods the title would pass to the buyer. The distinction that was made by the Sales Tax Appellate Tribunal between goods which were sold in "full lots" and those which were sold "in portions" and its view that in regard to the former title had passed as soon as the hammer fall and not in regard to the latter was referred to by this Court with approval. At page 612 this Court observed thus:

Approving the distinction this Court ultimately held that the sales of 'full lots' being outside sales were not liable to the levy of sales tax. Thus s. 64(2) has nothing to do with the aspect of the passing of the property at an auction sale and it is by virtue of goods being specific and in a deliverable state that under s. 20 the property in such goods passes to the buyer at the completion of the contract at the fall of hammer at such sale.

On the other question there is no difficulty in coming to the conclusion that s. 64 is subject to a contract to the contrary, especially in light of the above discussion. In the first place s. 64 occurs in Chapter VII which contains "Miscellaneous" provisions and s. 62 which occurs in the same Chapter clearly provides that where any right, duty or liability would arise under a contract of sale by implication of law, it may be negatived or varied by express agreement or by the course of dealing between the parties or by usage, if the usage is such as to bind both the parties to the contract. Ordinarily, the rights, duties and liabilities arising under a contract of sale by implication of law spoken of in s. 62 refer to the rights, duties and obligations referred to in Chapter III containing provisions which lay down rules as to transfer of property as between seller and buyer and transfer of title but there is no reason why s. 62 should not apply to rights, duties and obligations arising under s. 64 in regard to auction sales. In other words, s. 64 would be subject to s. 62. Moreover, there is intrinsic material in s. 64 itself which shows that the provisions thereof could be subject to a contract to the contrary. For instance, sub-s. (1) thereof provides that where goods are put up for sale in lots than each lot is prima facie deemed to be the subject of a separate contract for sale, which means terms between the parties may provide to the contrary or circumstances may indicate to the contrary. Again, sub-s. (5) provides that the sale may be notified to be subject to a reserved or up set price which means that the auctioneer may not fix a reserved price; further, it is well settled that if such a reserved price has been fixed than notwithstanding the fact that the highest bid has been accepted by the auctioneer and that the sale relates to specific or identifiable goods no concluded contract comes into existence if the highest, bid so accepted falls short of the reserve price and the property in the goods will not pass. Sub-ss. (3) and (4), if carefully scrutinised, also indicate that there could be a contract to the contrary. Moreover, once it is accepted that auction sales to which s. 64 applies could be unconditional or conditional and that the auctioneer can prescribe his own terms and conditions on the basis of which the property is exposed to sale by auction it must be held that the acceptance of any bid as well as the passing of the property in the goods sold thereat would be governed by those terms and conditions.