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SALE OF GOODS ACT

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					                                      UNIT-IV
   SALE OF GOODS ACT
   CONDITONS AND WARRANTEES
   TRANSFER OF OWNERSHIP
   PERFORMANCE OF CONTTACT (DELIVER OF GOODS)
   REMEDIAL MEASURES (UNPAID SELLER)
   ESSENTIAL COMMODITIES ACT, 1955
   COUNSUMER PROTACTION ACT.
   RULES REGARDING TRANSFER OF PROPERTY

                     1. SALE OF GOODS ACT
 Definition:
 “A contact of sale of goods is a contract whereby the seller transfer or agrees to transfer
      the property in goods to the buyer for a price. There may be a contract of sale
      between one party – owner, and another”. [Sec 4(1)]

Essentials of a contract of sale:
1. Two parties: There must be two distinct parties, i.e., buyer and seller, to effect a
contract of sale and they must be competent to contract.
Ex: A partnership firm was dissolved and the surplus assets were divided among the
partners. Held it was not a sale as the partners were the joint owners of the goods and
they could not be buyers and sellers themselves.
STAT OF GUJRAT (VS) RAMANLAL AND CO. (1965)

2. Goods: These must be some good, the property in which is or is to be transferred from
the seller to the buyers. The goods, which from the subject matter of the contract of sale
must be movable. Transfer of immovable property is not regulated by the sale of goods
Act.
Ex: A Hotel co. provided the residence and food making, a consolidated charge for both
the services. No rebate was allowed if food was not taken by the customers. Held –
supply of food was not sale of goods, but simply service.
ASSOCIATED HOTELS OF INDIA (VS) EXCISE AND TAXATION OFFER. (1966)

3. Price: The consideration for the contract of sale is called „price‟, and must be
specifically, money. When goods are exchanged for goods, it is not sale, but barter.
However, consideration can be partly in money and partly in goods.
Ex: A agreed to exchange with B, hundred quintals of barley for 52 bullocks, and pay the
balance in cash.
ALRIDGE (VS) JOHNSON. (1857)

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SALE AND AGREEMENT TO SELL – DISTINCITON
 Transfer of performance: In a sale, the property in the goods passes from the seller
  to the buyer immediately, so that, the seller is no more the owner. In an agreement to
  sell, the transfer of property takes place at a future date or subject to certain
  conditions to be fulfilled.

 Type of goods: A sale can be only in case of existing and specific goods. An
  agreement to sell is mostly in case of future and contingent goods.

 Risk of Loss: In a sale, if the goods are destroyed, the loss falls on the buyer, even
  though the goods are in the possession of the seller. In an agreement to sell, if the
  goods are destroyed, the loss falls on the seller.

 Consequences of Breach: In a sale, if there is a breach of contact by the buyer, the
  seller can sue for price, even though the goods are in his possession. In an agreement
  to sell, the seller can sue only for damages and not for the price.

 Right of Re-Sale: In a sale, the seller cannot re-sell the goods, after the sale. In an
  agreement to sell, in case of resale by the seller, the buyer can sue the seller only for
  damages.

 General and Particular Property: A sale is a contract and creates jus-in-rem ; i.e.,
  gives right to the buyer to enjoy the goods. An agreement to sell is merely a contract
  and creates jus-in-personam i.e., gives the right to the buyer to sue the seller for
  damages only. However, agreement to sell would become a sale, once the value of the
  goods is paid and accepted by the seller.

 Insolvency of Buyer: In a sale, if a buyer becomes insolvent, the seller must return
  the goods to the official receiver or assignee. In an agreement to sell, the seller is not
  bound to part with the goods, until he is paid for .

 Insolvency of Seller: In a sale, if a seller becomes insolvent, the buyer is entitled to
  recover the goods from the seller and not incase of agreement to sell.

SUBJECT MATTER OF CONTRACT OF SALE:
Goods from the subject-matter of a contract of sale, according to sec 2(7) – “Goods
means every kind of movable property other than actionable claims and money, and
includes stocks, shares, growing crops, etc.



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CLASSIFICATION OF GOODS:
Goods may be either existing goods or future goods. - Sec 6(1)

 Existing Goods: These are the goods which are owned or possessed by the seller at
  the time of the sale. The existing goods may by:

 Specified Goods: There are the goods which are identified and agreed upon the time
  of contract of sale.

 Ascertained Goods: These are the goods which become ascertained and subsequent
  to the formation of contract of sale.

 Unascertained/General Goods: These are the goods which are not identified and
  agreed upon at the time of contract of sale. They are defined only by the description
  and may form part of sale lot.

 Future Goods: These are the goods which the seller does not possess at the time of
    the contract, but which will be procured by him after making the contract of sale- Sec
    2(6)
Ex: A railway co. entered into a contract for the sale of coal-ash that might accumulate
during the period of contract. Held – the contract amounts to an agreement of sale.
UNION of INDIA (VS) TARACHAND

 Contingent Goods: Though a type of future goods, these are the goods, the
    acquisition by which, by the seller, depends upon a contingency which may or may
    not happen.
Ex: A agrees to sell specific goods to B, in a particular ship to be delivered on the arrival
of the ship. Held – the ship arrives but with no such goods on board, the seller is not
liable.



          2. CONDITIONS AND WARRANTIES
CONDITON: Sec 12(2) of sale of Goods Act, 1930.
A condition is a stipulation (demand) essential to the main purpose of the contract, the
breach of which gives rise to a right to treat the contact as repudiated (blank).
These stipulations go directly to the root of the contract, or in other words, these
stipulations are so essential to the nature of the contract that their breach may be
considered by the other party as a failure to perform the contract at all.

  WARRANTY: Sec 12(3) of sale of Goods Act. 1930.
A warranty is a stipulation equatorial to the main purpose of the contract, the breach of
which and gives rise to a claim for damages but not a right to reject the goods and treat
the contract was repudiated.
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In other words, if the stipulation, tough not essential to the main purpose of the contract,
and is equatorial, to the main purpose of the contract, it is known as a warranty.

IMPLIFIED CONDITIONS:

 Condition as to title (sec 14)
 Sale of goods by description (sec 15)
 Sale by sample as well as by description (sec15)
 Condition as to quality or fitness.
 Condition as to merchantability.
 Sale by sample.
1. Condition as to title (sec 14): Subject to a contrary intention, there is an implied
condition on the part of the seller that in the case of a sale, he has right to sell the goods at
the time, when the property is to pass. This is called „Condition as to title‟.

A person may not have the right to sell in 2 cases:
o He may not be the owner of the goods sold.
o He may be the owner, but due to certain reasons, he may not have the „right sell‟.
ROWALD( VS) DIVALL (1923)

Point decided – There can be sale of goods which the seller has no right to sell.
Facts of the case – A bought a car from B, and after using it for sometime, he was forced
to return it to the true owner, it appeared that B had obtained the car by theft.
It was held that – B had broken the condition as to title and A was therefore, entitled to
recover the purchase money from B.
NIBLETT (VS) CONFECTIONERS MATERIALS CO. (1921)
      Point decided – Right to sell means not mere possession of defect free title to
        goods. It also means that seller should not infringe on the trademark of other
        seller.

2. Sale by description (sec 15): Where the goods are sold by description, there is an
implied condition that the goods shall correspond with the description. This rule is based
on the maxim that “If you contract to sell peas, you cannot oblige a party to take beans”.
The word description has not been defined in the Act. It usually means a particular class,
kind or variety of goods. It also includes any statement which may be essential to the
identity of the goods contracted for, as manufacture, made of packing, etc.
Thus, a contract of sale of a „Fiat motor car – 1947 model‟ is a contract for sale by
description. The condition as to description must be strictly fulfilled. The seller must
provide the goods ordered and described, and not something different, however excellent
they may be. The expression sale by description includes many situations. The
description given by the seller.




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   VARLEY (VS) WHIPP (1900)
Ex:A agreed to buy a second – hand reaping machine, which he had never seen, but
which the seller assured him to had been new, the previous year and used to cut abbot 50
acres. The machine was delivered to A. This sale was by description. A found that it was
old and had been mended. It was held that A was entitled to reject it.
Secondly, where the buyer has seen the goods, it may be a sale by description, if he relies
not on what he has seen but what was stated to him.

NICHOLSON AND VENN (VS) SMITH MARRIT (1947)
Ex:There was an auction sale of a set of napkins and table cloths described as “dating
from the 17th century “. X, who was a dealer in antiques saw the set and purchased it. He
subsequently found it to be an 18th century set. It was held that X could reject it.
Thirdly, parking of goods also forms a part of description.

3. Sale by sample as well as by description (Sec 15): If the sale is by sample as well as
by description, it is not sufficient that the bulk of goods shall correspond with the sample,
if the goods do not also correspond with the description. In other words, there is an
implied condition that the goods shall correspond both with sample as well as with eh
description.

4.Condition as to quality or fitness: Where the buyers, expressly or by implication,
makes known to the seller, the particular purpose for which the goods are required, so as
to show that the buyer relies on the seller‟s skill or judgment, and the goods are of a
description, which it is the seller‟s business to supply, there is an implied condition that
the goods shall be reasonably fit for such purpose, i.e., to say, there is an implied
condition as to quality or fitness.

The condition as to quality or fitness will operate if the following conditions are satisfied:
 The buyers require the goods for a particular purpose.
 The buyers make known to the seller that particular purpose.
 The buyer relies on the seller‟s skill or judgment.
 The seller‟s business is to sell such goods, whether he is the actual producer or not.
GRANT( VS) AUSTRALIAN KNITTING MILLS LTD. (1936)

5. Condition as to merchantability: There is always an implied condition in a contract
of sale that the goods purchased should be of a merchantable quality. Where the goods
are bought by description from a seller, who deals in such goods, there is an implied
condition that the goods shall be of a merchantable quality. In order to apply the implied
condition as to merchantability, the following requirements must be satisfied, namely:
 The goods should have been bought by description, and
 From a seller who deals in the goods of that description.
The term „merchantable‟ has not been defined in the Act. It means that the goods comply
with the description mentioned in the contract. In other words, in order to be
Merchantable, the article must be of such quality and in such condition that reasonable
man would accept the article as performance of a promise.
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MORELL (VS) FITCH AND GIBBONS (1928)
Point decided – A dealer who sells goods by description is bound to deliver goods of
merchantable quality.
Facts of the case – M asked for a bottle of stone‟s ginger wine at F‟s restaurant. While M
was drawing the cork, the bottle broke at the neck and injured him. It was held that the
scale was by description and since the bottle was not of merchantable quality. M was
entitled to recover damages.

6. Sale by sample: In a contract of scale by sample, there is an implied condition:
 That the bulk shall correspond with the sample in quality.
 The buyer shall have reasonable opportunity of comparing the bulk with the sample.
 That the goods shall be free from any defect rendering them unmerchantable, which
    would not be apparent on a reasonable examination of the sample.

IMPLIED WARRANTIES:
1)   Implied warranty of quiet possession.
2)   Implied warranty of freedom from encumbrances.
3)   Implied warranty annexed by usage of trade.

1. Implied warranty of quiet possession: In a contract of scale, there is an implied
warranty that the buyer shall have and enjoy quiet possession of the goods. The implied
warranty of quiet possession is a warranty against disturbance of possession.
It is an implied assurance to the buyer that he shall have the possession and enjoyment of
goods sold to him without disturbance by the seller or any other person. If there is a
breach of this warranty, the seller is liable to the buyer is damages.
MASON (VS) BURNINGHAM (1949)
Ex:P purchased a second – hand type writer from on for Q for Rs.200/- and spent
RS.100/- on repairs. Unknown to the parties, the typewriter was a stolen property and P
had to return it to the owner. It was held that – P was entitled to recover damages from Q.


2. Implied warranty of freedom encumbrances: There is an implied warranty on the
part of the seller that the goods are free from any charge or encumbrance. A breach of
this warranty will occur when the buyer discharges the amount of encumbrance. This
warranty will not apply where such encumbrances are declared to the buyer when a
contract is made, or he has notice of them. Where there is a breach of this implied
warranty, the remedy of the buyer is to sue for damages.
 Ex: A pledges a scooter with B for a loan of Rs.1000/- and promises him to give its
possession the next day. Soon after, he sells his scooter to c, an innocent buyer who does
not know about the fact of the scooter being pledged.
C may either ask A to clear the loan or himself pay the money or then file a suit against A
for the recovery of the money.

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3. Implied warranty annexed by usage of trade [sec 16(3)]: A warranty as to fitness for
a particular purpose may be annexed to a contract of sale by a custom or usage of trade –
sec 16(3)

                              CAVEAT EMPTOR
CAVEAT EMPTOR: (Trial the product or goods): In the case of a scale of goods, there is
a fundamental principle in the maxim, “CAVEAT EMPTOR”, i.e., „let the buyer
beware‟.
In other words, it is not a part of the seller‟s duty in a contract of sale to give to buyer an
article suitable for a particular purpose unless such purpose is made known to the seller.
Thus, on a sale of a knife, there is no implied condition that the knife would cut. It is the
duty of the buyer to satisfy him self before purchasing the articles, that the article which
he buys is the one which he wants.
This rule applies to the purchase of specific goods like a horse or a whenever the buyer
voluntarily chooses what he buys.
Exception to the rule of caveat emptor (sec-16): The modern tendency of business is to
narrow the scope of the rule of caveat emptor. These days, trade has become international
in nature, making it difficult for buyers to examine goods before hand, especially, in the
case of mail order purchases.

Sec – 16 lays down the following exceptions to the rule of caveat emptor:
1) Where the buyer makes known to the seller, the particular purpose for which the
    goods are required, so as to show that he relies on the seller‟s skill or judgment and
    the goods are of a description which it is the seller‟s business to supply, there is an
    implied condition that the goods shall be reasonably fill for the purpose. There is
    however, no such implied condition where a specific article is sold under its patent or
    trade name.
Ex: B purchased timber from C and the fact was made known to the seller that the timber
was to be used for railway sleepers. It was held that – B could reject the timber as it was
not fit for the purpose.
BOMBAY BURMAH TRADING CORPORATION (VS )AGHA MOHAMMAD

2) Where goods are bought by description from a seller who deals in such goods, there is
   an implied condition that the goods shall be of a „merchantable quality‟. Where,
   however, the buyer has examined the goods, there is no such implied condition as
   regards defects which such examination could has revealed.
3) Where the seller makes a false representation amounting to fraud and the buyer relies
   on it or where the seller conceals the defects in the goods, which cannot be discovered
   on a reasonable examination, the rule will not apply. A seller, who is guilty of fraud,
   shall have no protection under the doctrine of caveat emptor.
4) An implied condition as to quality or fitness for a particular purpose may be annexed
   by the usage of trade.

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                  4. TRANSFER OF OWNERSHIP
                NEMO DAT QUOD NON HABET: Sale by non owners:

[NO ONE CAN GIVE A BETTER TITLE THAN HE HIMSELF HAS GOT]

In the case of transfer of ownership of goods from the seller to the buyer, it is assured that
the seller is a true owner of the goods, and on transfer, the buyer also becomes an
absolute owner of the goods.

But, where the seller is not an absolute owner of the goods, the buyer will not get a better
title than what the seller himself has. As a general rule, no man can sell the goods and
give a good title unless he is the owner. This rule is expressed by the maxim, “NEMO
DAT QUOD NON HABET”, which means that, „No one can pass a better title than he
himself has‟

This rule „Nemo Dat Quod non Habet‟ is incorporated in sec 27 of the sale of Goods Act,
which is meant to protect the true owner and the innocent buyer from the non – owners.
Exceptions to the rule: (Sale by non – owners)

A person, although he is not the owner of the goods, may sell the goods and pass a better
title than he himself has.

 The following are the various exceptions:
1) Sale by a mercantile agent[sec 27]
2) Sale under the implied authority of the owner (Sec 27)
3) Sale by one of the several joint owners (Sec28)
4) Sale by a person in possession of goods under a void able contract (Sec 29)
5) Sale by a seller in possession after sale [Sec 30(1)]
6) Sale by a buyer in possession after sale [Sec 30(2)]
7) Sale by an unpaid seller.
8) Exception under other acts.

1) Sale by a Mercantile Agent (Sec 27): Where a mercantile agent is, with the consent
   of the owner, in possession of the goods and sale is made by him in the ordinary
   course of business, such sale will be valid.

This exception will be valid if he following conditions is fulfilled:
 The person making the sale must be a mercantile agent.
 The mercantile agent must be in possession of the goods and document of title to the
   goods.
 Such possession must be with the consent of the owner.



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2. Sale under Implied authority of he owner (Sec 27): This exception to the rule of
Nemo Dat Quod Non Habet is based on the principle of personal stopper, i.e., under
certain circumstances, the true owner may be prevented by his conduct from denying the
seller‟s authority to sell.
Thus, where the owner, by his words or conduct, causes the buyer to believe that the
seller was the owner of the goods, or had the owner‟s authority to sell them and induced
him to buy them in that belief, he cannot afterwards set up the seller‟s want of title or
cannot one of his employees B, to have his name painted on it. A did it for the purpose of
inducing (cause) the public to believe that the property belonged to B. C purchased the
wagon from B in good faith. C acquires a good title as A is estopped (stop) from denying
B‟s authority to sell.
O’CONNOR (VS) CLARK.

3. Sale by one of the several joint owners (Sec 28): Where one of the several joint
owners has sale possession of the goods by permission of co – owners, the property in the
goods is transferred to any person who buys them from such joint owner in good faith.For
the application of this section, the following conditions must be fulfilled:

One of the several joint owners of the goods must be in sale possession of the goods.
 The joint owner must be in possession of the goods by the permission of the co –
   owners.
 The buyer should purchase the goods in good faith.

4. Sale by a person in possession of goods under a voidable contract (Sec 29):Sec 29
deals with the case of a sale by a person who has obtained possession of goods under a
void able contract. It provides that a person in possession of goods under void able
contract which has not been rescinded can transfer a good title to the buyer who buys the
goods in good faith and without the notice of the seller‟s defect of title.
In order to fulfill this section, the following conditions must be satisfied:
 The goods must be in possession of the buyer.
 The seller must be in possession of the goods under a voidable contract under sec 19
    and 19(A) of ICA, 1872.
 The contract must not have been rescinded at the time of sale.
 The buyer must buy in good faith and without notice of the seller‟s defect of title.

     PHILLIPS (VS) BROOKS (1919)
Facts – A fraudulent person posed himself to be a respectable person and obtained a
valuable ring from a shopkeeper by giving a worthless cheque. Before the fraud could be
discovered, the cheat had pledged the ring with ring with a bonafide pledge.
It was held that the pledge obtained a good title.

5. sale by a seller in possession after sale [Sec 30(1)]: This section provides that where
a person has sold, but continues to be in possession of them or the documents of title by
them, he may sell them to a third person and if such person obtains delivery in good faith,
without notice of the previous sale, the buyer will get a good title to them.
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Ex: A sold certain goods to B, but continued to remain in possession there of, with the
consent of buyer. A subsequently resold the goods to another person. It was held that the
second buyer had acquired a good title.

6. Sale by a buyer in possession after sale [Sec 30(2)]: This section provides that,
where a buyer having bought or having agreed to buy the goods obtains, with the consent
of the seller, the possession of the goods or documents of title to the goods, and sells the
goods to a bonafide transferee, then the transferee gets a clear title.

 LEE (VS) BUTLER.
Furniture was delivered to X under an agreement that the price was to be paid in 2
installments. The furniture is to become the property of X on payment of the second
installment. X said the furniture before the 2nd installment was paid. It was held that the
buyer acquired a good title.

7. Sale by an unpaid seller: Where an unpaid seller, who has the right of lies ( to hold
another person property until a debt or it is paid) or stoppage in transit, resells the goods,
the buyer acquires a good title as against the original buyer.
Exceptions under other acts:

1. Under Sec 169 of ICA, the finder of goods has the power to sell the goods under
   certain conditions and the buyer will acquire a better title. The finder may sell the
   goods in the following situations:
1. When the goods are found in danger.
a) When the rue owner, despite many efforts, cannot be reached.
b) When the true owner is found, but does not agree to pay lawful charges of the finder
   of lost goods.
c) When the legal charge of the finder exceeds 2/3rds of the value of goods found.

2. Under Sec 176 of ICA, a Pawnee of the goods has a power to sell the goods pawned
under certain conditions and he passes a better title than he himself has.

RULES REGARDING TRANSFER OF OWNERSHIP:
In a contract of sale of goods, ownership in the goods will pass from the seller to the
buyer, when the parties intend to pass it. Parties are intending to pass it. Parties are free to
make any arrangement as to the passing of the property. There are certain rules (or
provisions) laid down in Sec 18-25 of sale of Goods Act.
Passing of property or ownership in case of specific or ascertained goods:

In the case of ascertained goods, the property in them is transferred at such time as the
parties intend it to be transferred. The following are the rules which are applicable in
order to decide intention of the parties.


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1. When goods are in a deliverable state (Sec 20): In an unconditional contract of sale
of specific goods, which are in deliverable, state, property in the goods will pass from the
seller to the buyer as soon as the contract is made and the sale is affected, unless a
contrary intention appears from the dealings of he 2 parties. Time for the payment of the
price or delivery of the goods shall be immaterial (Sec 20)

Ex: B offers A for his horse, a sum of 1000/-. The horse is to be delivered to B on a fixed
day and the price is to be paid on another fixed day. A accepts the offer. The horse
becomes B‟s property as soon as the offer is accepted.

2.When the seller has to do something: Where there is a contract for the sale of specific
goods and the seller is bound to do something for putting the goods in a deliverable state
the property will pass when such thing is done and the buyer has notice there of (Sec 21)

Ex: X contracted to purchase timber from oak trees which belonged to Y. X marked out
the selected part of the trees. Y had to remove the rejected portions from the trees,
according to the custom of the trade. But, before this could be done, Y became bankrupt.
Held – X could not take away the selected portions because the property in the goods
could pass to him only when the goods were put in a deliverable state.

2. When the goods are to be measured etc: When there is a contract for the sale of
   specific goods in a deliverable state, but something has to be done by the seller to
   ascertain the price, eg, weighing, measuring or testing the goods. The property in the
   goods will pass from the seller to the buyer when that thing is done and the buyer has
   notice of it (Sec 22)

Ex: A contract of sale was made to sell a heap of bark at an agreed price per ton. The
bark was to be weighed by the agents of he seller and also the buyer. A part of the bark
was weighed and then carried away; a flood swept away the remaining bark. It was held
that, the loss of remainder should fall on the seller, because the property in the remainder
has not passed as the required weighing, for ascertainment of price was not done.

 When goods are sold on approval (Sec 24): When the goods are delivered to the
  buyer on approval or sale or return basis, the property in the goods will pass from
  seller to the buyer, when any of the following conditions are satisfied:
 The buyer accepts the goods or
 They buyer does something which is similar to his act of accepting the goods.
 Ex: Pledges the goods or sell away the goods.
 The buyer retains the goods without giving notice of rejection beyond the period
  fixed.

Ex: Jewellery was sent by A to B on sale or return. B pledged the jewellery with C. A can
recover the price of the jewellery from B.


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            REMEDIAL MEASURES (UNPAID SELLER)

On credit good sold
According to Sec 45 a seller is deemed to be an unpaid seller:

 When the whole of the price has not been paid or tendered.
 When the bill of exchange or other negotiable instrument is not received or when it is
  dishonored.

The following conditions must be fulfilled before a seller can be deemed as unpaid:
       He must be unpaid and the price must be due.
       He must be having an immediate right of action for the price.
       A bill of exchange received but dishonored.

The Act has given the following rights to an unpaid seller:

RIGHTS OF AN UNPAID SELLER:
The rights of an unpaid seller cane be classified into:
1) Rights against the goods.
2) Rights against the buyer personally.

1. Rights against the goods: Where the property of the goods has passed, but the goods
   were under his possession r in transit. He will have the following rights against the
   goods:
a) Right of lies on goods
b) Right of stoppage in transit
c) Right of resale
d) Right of with holding delivery


A. Right of lies on goods (Sec 47-49): Lien is a right to retain the possession of goods
until payment of price is made. It is available where

   His goods have been sold without any stipulation as to credit.
   The goods have been sold on credit, but the term of credit expired.
   The buyer becomes insolvent.
   The lien can be exercised for the price, not for charges.
   The seller may be acting as an agent or bailee of the buyer at such time.
   It can be exercised even on part of the goods.

The seller should not have waived his right of lien either expressly or impliedly.
If he has delivered part of goods, lien can be exercised on the remaining goods.

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B.Right of stoppage in transit (transport): It is available to the seller:

 When the buyer becomes insolvent and
 When the goods are in transit.

When the buyer of goods becomes insolvent the unpaid seller who ha parted with the
possession of the goods has the right of stopping them in transit. The buyer is said to be
“Insolvent” when he has cease to pay his debts in the ordinary course of business. The
right of stoppage in transit is an extension of the right of lien, but it arises only on the
insolvency of the buyer and when the goods are in transit.

 Transit is an intermediate stage. Goods are deemed to be in course of transit from the
time they are delivered into a carrier, until the buyer or his agent takes delivery of them.
The seller may resume possession of the goods as long as they are in course of transit and
may retain them until payment of the price.

The unpaid seller may execute this right of stoppage in transit, either
  By taking actual possession of the goods, or
  By giving notice of this claim to the carrier or other bailee, in whose possession the
    goods are

C.Right of Resale: The unpaid seller can resell the goods:

 Where, the goods are of perishable nature.
 If he gives notice to the buyer, if the buyer does not tender the price within reasonable
  time.
 When he reserves the right of resale, in case of the buyer‟s default.

        The unpaid seller is not entitled
   To recover any loss on resale of goods, and
   To retain any surplus arising on resale of the goods.

D.Right of withholding delivery of goods: Where the property in goods has not passed
to the buyer, the unpaid seller has a right of with holding delivery of goods, in addition to
the other right conferred on him.

1) Rights against the buyer personally: The unpaid seller will have the rights against the
    buyer personally, in addition to his right against the goods. They are:
a) Suit for price (Sec 55)
b) Suit for damages for non – acceptance (Sec 56)
c) Suit for repudiation (withdraw) (come out) of contract before due date (Sec 60)
d) Suit for Interest (Sec 61)


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 Suit for Price: Where the property in goods has passed to the buyer and the buyer
  neglects or refuses to pay the price the seller may sue him for the price of the goods.

 Suit for damages for non – acceptance: If the seller is intended to deliver, but the
  buyer refuses to take delivery, the seller can claim any loss due to refusal to take
  delivery and any reasonable charges for the care and safe custody of the goods.

 Repudiation of contract before due date: The seller may

   Treat the contract as subsisting and wait till the date of delivery.
   The unpaid seller may treat the contract as rescinded or cancelled and sue for
    damages for the breach.

 Suit for interest: Where there is an agreement to get the interest from the due date,
  he can get reasonable rate of interest.

DISTINCTION BETWEEN LIEN (&) RIGHT OF STOPPAGE IN TRANSIT:

1) Right to stoop in transit arises only if buyer becomes insolvent, but the lien can be
   exercised even if the buyer is capable of payment.
2) Right of lien can be exercised only when the goods are in the possession, right of
   stoppage in transit can be exercised only when the goods are with carrier.
3) Right of lien comes to an end when he delivers the possession whereas, right of
   stoppage in transit commences when the goods have lift the seller.
4) The right of lien is to retain the possession, but the right of stoppage in transit is to
   regain possession.


       PERFORMANCE OF CONTRACT (DELIVERY OF GOODS)

The performance of the contract of sale, as regards the seller, is to deliver the goods, as to
buyer, to accept the delivery and pay accordingly – Sec 32

Delivery of goods: Delivery of goods means voluntary transfer of goods from one person
to other. It has to take place according to the terms agreed by the parties. Delivery of
goods must be:
    1) Actual 2) Symbolic or 3) Constructive

1) Actual delivery: Where the goods are handed over by the seller or through his
   authorized agent to the buyer, it is Actual Delivery.

2) Symbolic Delivery: Where the goods re bulky and incapable of actual delivery,
   symbolic delivery will take place e.g., handing over the warehouse keys.


                                          78
3) Constructive Delivery: If the third party is n possession of goods at the time of sale,
   such party signifies or acknowledges to the buyer that the goods are held by him on
   his behalf; it is known as constructive delivery.

This may happen in the following cases:
a) Where the seller agrees to hold the goods on behalf of the buyer.
b) Where the buyer is in a possession of the goods and the seller agrees to the buyer‟s
   holding the goods as owner.
c) If third party holds the goods and acknowledges the buyer that he holds them on hi
   behalf.

RULES AS TO DELIVERY OF GOODS:
1) Mode of delivery.
2) Payment and delivery.
3) Effect of part delivery.
4) Buyer to apply for delivery.
5) Place of delivery.
6) Goods in possession of third party.
7) Time of delivery.
8) Cost of delivery.
9) Delivery of wrong quantity.
10) Installment delivery.
11) Delivery to carrier or wharfing.
12) When acceptance is complete on delivery.
13) Liability of buyer for neglecting or refusing delivery of goods.

1. Mode of delivery (Sec 33): Delivery of the goods sold may be made by doing
   anything which the parties agree shall be treated as deliver or which has the effect of
   putting the goods in the possession of the buyer or his authorized agent. A seller must
   put the goods not only out of his possession but into the possession of the buyer.
   Therefore, a delivery to anyone other than the buyer or his agent is insufficient.
   Delivery may be affected in any of the 3 modes, namely, (1) actual (2) symbolic (3)
   constructive,
Ex: B sells to B, a horse and permits it to be removed from A‟s stables to B‟s. The
removal to B‟s stable is a delivery.

2. Payment and delivery: Unless otherwise agreed, the delivery of goods and payment
of price are concurrent conditions. The seller should be ready and willing to give
possession of good to the buyer and the buyer should be ready and will to pay (Sec 32)

3. Effect of part delivery: A delivery of part of the goods has the same effect as a
delivery of the whole, for the purpose of passing property in the goods, provided such
part delivery is made in progress of the delivery of the whole. But, a delivery of part of
the goods, with an intention of severing it from the whole does not operate it as a delivery
of the remainder (Sec 34).
                                     79
 Ex: A sells 50 bags of rice to B. The rice remains in A‟s warehouse. After the       sale, B
sells to C, 10 bags of rice and A, at B‟s desire, sends the 10 bags to C. This has got the
legal effect of a delivery of the whole.

4. Buyer to apply for delivery: In the absence of an express contract, the seller is under
no obligation to deliver the goods unless the buyer applies for delivery (Sec 35). Where
the goods are subsequently acquired by the seller, he should intimate this to the buyer and
the buyer should then apply for delivery. The buyer can have no cause of action against
the seller, if he has not applied for delivery.

5. Place of delivery: The place at which delivery is to be made will be generally
governed by govt. between the parties. But, where nothing is said about it in the contract,
the rule laid down in sec 36(1) is –
  a) That the goods sold are to be delivered at the place at which they are at the time of
      sale, and
  b) Goods agreed to be sold are to be delivered at the place at which they are at the time
      of the agreement to sell, or
  c) If the goods are not in existence at the time of agreement to sell, i.e., future goods,
      they are to be delivered at the place at which they are to be manufactured or
      produced.

6. Goods in possession of a third party: Unless and until third party acknowledges to
the buyer that he holds them on his behalf, delivery is not complete. If the goods are to be
delivered against Bill of loading, no such consent of third party is necessary.

7. Time of delivery: Delivery of goods must be made within a reasonable time is a
question of fact. Where the seller is bound to deliver the goods with in reasonable time,
the buyer cannot demand delivery before the expiry of that reasonable time.

8. Cost/express of delivery: Unless otherwise stated, all expenses of and incidental to
making of delivery are home by the seller, but all expenses of and incidental to obtaining
delivery are home buy the buyer.

9. Delivery of wrong quantity: Deliver of goods must be of the exact quantity. A
defective delivery entitles the buyer to reject the goods. Sec 37 provides for 3 different
cases.

 Short Delivery: Where the seller tenders a lesser quantity, the buyer may either reject
  all the quantity delivered, or accept all. If he accepts, he has to pay for them.

 Excess Delivery: Where the seller delivers a quantity larger than contracted for the
  buyer can accept or reject the whole, or accept the quantity ordered.



                                         80
 Mixed Delivery: Where the seller delivers to the buyer, the goods he contracted to
  sell mixed with the goods of a different description, the buyer may accept the goods
  which are in accordance with the contract and reject the rest, or may reject the whole.


10. Installment Delivery: In the absence of an agreement to the contract, the buyer is not
bound to accept delivery by installments. The performance of an entire contract cannot be
split up without mutual consent (Sec 38).

Ex: There was a sale of 25 tons of paper to be shipped in November. The seller shipped
20 tons in November and 5 tons in December. The buyer was entitled to reject the whole
25 tons.

11. Delivery to carrier or wharfing: Sec 39 states, it is deemed to be the delivery of
goods to the buyer, for safe custody or for transmission. The carrier or the wharfing,
when entrusted with the goods, becomes in the eyes of law, a bailee of buyer.

12. When acceptance is complete on delivery: Sec 42 provides that the buyer is deemed
to have accepted the goods in the following cases:
     When the intimates to the seller that he has accepted the goods.
     When the goods have been delivered to the buyer and he does any act in relation
       to them which is inconsistent with the ownership of the seller e.g., where he
       resells the goods.
     Where the buyer retains the good beyond a reasonable time without intimation of
       rejection to the seller.

13. Liability of buyer for neglecting or refusing delivery of goods: Incase of rejection
unless and otherwise agreed, the buyer is not bound to send back the goods. It is
sufficient if he refuses and intimates. It is the duty of the seller to take them back.

 If he wrongfully refuses to take delivery, even after the
 Any loss or
 A reasonable charge for the care and safe custody of goods. If it amounts to
     repudiation, he can sue for the price.




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  5. THE CONSUMER PROTECTION ACT, 1986 (COPRA)

     Who are consumers? Who are not consumers?
     Copra act and its objectives? Rights of consumers.
     Consumer disputes Redressal Agency.

1. Consumer: The term “Consumer” is defined in Sec 2() of the consumer protection Act,
1986. According to this section, consumer means any person who:
           1) Buys any goods for a consideration, or
           2) Hires any services for a consideration
The consideration may be either paid or promised or partly paid and partly promised or
under any system of deferred payment.Thus, the Act covers transactions for the supply of
goods and rendering of services.

Who are not consumers: The following persons are not consumers as per this Act.
1) A person who purchased goods for resale.
2) A person who purchased goods for commercial purpose.
3) A person who obtains services without consideration or under a contract of person
   service.

The National commission, in various cases, has decided that the following are not
consumers.
a) Tax payers to municipality b) Contractors c) Applicants for jobs.
Persons who filed suits in courts, etc.

OBJECTS OF THE ACT:
1) Better protection of interest of consumers, by providing for the establishment of
   consumer councils for settlement of consumer disputes.
2) To promote and protect the rights of consumers under this Act.
3) Establishment of consumer protection council to achieve the above objects.
4) Establishment of Quasi – Judicial machinery for speedy and simple redressal to
   consumer disputes.

CONSUMER DISPUTES REDRESSAL AGENCIES:

For the purpose of speedy and simple settlement of “consumer disputes”, Sec 9 of the Act
provides for the establishment of the following 3 consumer disputes redressal agencies:

1) A „Consumer Disputes Redressal Forum‟ to be known as „District Forum‟.
2) A „consumer Disputes Redresal Commission‟ to be known as „State Forum‟.
3) A “National Consumer Disputes Redressal Commission‟ to be known as „National
   Commission‟.


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Consumer Disputes Redressal Forum (District Forum) (Sec 10-15):
Establishment: Establishment by state govt. by notification in each district of the
concerned state. Sometimes, more than one forum can be set up if it deems to be fit.

Membership: Each district Forum shall consist of:
a) A president, a person who is or has been or is qualified to be s District Judge.
b) Two other members, who shall be the persons of having experience and knowledge
   and business, commerce, industry, etc.

Term of Office: Every member shall hold the office for a period of 5 years for up to the
age of 65 years, which ever is earlier. He shall not be eligible for re – appointment.

Jurisdiction: (Sec 11) It entertains the complaints where the value of goods and services
and the compensation, if any, claimed does not exceed Rs.5 lakhs.

A complaint can be filed either at the place where the opposite party resides or carry on
business or at the place where the cause of action arises.

Powers of District Forum:

 The summoning and enforcing attendance of any defendant or witness and examining
  the witness on oath.
 The discovery and protection of any document or other material which is evidence.
 The reception of evidence on affidavits.
 Issuing of any order for the examination of any witness; and
 Any other matter which may be prescribed.

Consumer Disputes Redressal Commission (The State Commission):
Membership:
a) President: A person who is or who has been a judge of a High Court appointed by the
   stat govt. in consultation with chief justice of the high court.
b) Two other members: One among them, a woman, appointed by the state govt. on the
   recommendation of the selection committee consisting of the president as chairman.

Every member shall hold office for a term of 5 years or up to the age of 65 years,
whichever is earlier.
Jurisdiction:
a) To entertain complaints where the value of the goods or services and compensation if
    any claimed, exceeds Rs.5Lakhs but does not exceed Rs.20lakhs.
b) To entertain appeal against the orders of any District Forum with the state, and
c) To call for the records and pass appropriate orders in any consumer dispute, which is
    pending before, and has been decided by any District Forum with in the state.
Enforcement of orders: The orders of a state commission are enforceable in the manner of
an order or decree made by a civil court in a civil suit.

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National Consumer Disputes Redressal (Justice) Commission (The National
Commission): To exercise the powers conferred by the consumer protection Act, the
central govt. established a National Consumer Disputes Redressal Commission to be
known as „The National Commission‟ by notification.

Composition/Membership: According to Sec 20(1) of the Act, the National Commission
shall consist of:
a) A person, who is or has been judge of the Supreme Court, he shall be appointed by
    the central govt. he shall be its president.
b) Four other members, they shall have adequate experience of or should have capacity
    in dealing with problems relating to economics, law, commerce, accountancy,
    industry etc one of them shall be a woman.

 A sitting judge of the Supreme Court can be appointed only after consulting the chief
justice of the Supreme Court.

Jurisdiction of the National Commission:
1) It can entertain complaints where the value of the goods or services, and
     compensation, if any claimed, exceeds Rs.20lakhs.
2) It can entertain appeals against the orders of any state commission and it can call for
     the records and pass appropriate orders in any consumer dispute, pending before or
     has been decided by any state commission.

CONSUMER PROTECTION COUNCILS:
To promote and protect the interests of the consumer, the consumer protection Act
provides for the establishment of consumer protection councils, both at central and state
level.
The central consumer protection council (Sec 4-6): Sec 4 of the COPRA Act empowers
the central govt. to establish a council to be known as the central consumer protection
council or central council.
Membership: According to rule 3 of the consumer protection rules, 1987, the central
council shall consist of the following 150 members, namely:
a) The minister in – charge of consumer affairs in the central govt. who shall be the
     chairman of the central council.
b) The minister of stat (where he is not holding independent charge) or Deputy minister
     in the department of civil supplier who shall be the vice – chairman of the central
     council,
c) The ministers of food and civil supplier or ministers in-charge of consumer affairs in
     states;
d) 8 members of parliament, 5 from the lok sabha and 3 from the rajya sabha;
e) The commissioner for scheduled castes and scheduled tribes,
f) Representatives of the central govt. department, autonomous organizations
     concerned with the consumer interest, not exceeding 20;
g) Representatives of the consumer organizations or consumer, not less than 35;
h) Representatives of women – not less than 10;
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i)  Representatives of farmers, trade and industries – not exceeding 20.
j)  The secretary in the dept. of civil supplies shall be the member secretary of the
    central council.
 The term of the council shall be 3 years.
Any member may by writing under his hand to the chairman of the central council, resign
from the council.
Procedure for meetings (Sec 5): With a minimum of one meeting in a year, it shall meet
as and when necessary. It shall meet at such a place, in such a time, as chairman may
think fit.

Objects of the central council (Sec 6):
1) To protect against marketing of goods and services which are hazardous to life and
   property.
2) To protect against unfair trade practices by informing about the quality, quantity,
   potency, standard and price of the goods and services.
3) To see that consumer interest will receive due consideration at appropriate forums, by
   providing a right to be heard.
4) To provide variety of goods and services at competitive price.
5) To provide consumer education.

The state consumer protection councils (Sec 7-8): [state or council]
The state govt. may establish state consumer protection council by notification. It consists
of a chairman. (The concerned minister in-charge of consumer affairs of the concerned
state.)It shall meet at such a place and in such a time as the chairman may think fit.
The objectives of the state consumer protection councils are same as that of the central
council.

RIGHTS OF CONSUMER UNDER CONSUMER PROTECTION ACT:
 The consumer protection Act, 1986 seeks to promote and protect the following rights of
consumers.
1. Right of protection against hazardous goods: The consumer has a right to be
    protected against the marketing of goods which are hazardous to life and property.
Ex: The adulterated goods which are dangerous to life and weak cement which is
dangerous to life as well property. The consumer is assured by this Act that if he has been
victimized, he will have a speedy, simple and effective remedy under the hierarchy
constituted under the Act.

2. Right to information: The consumer has been given the right to be informed by the
producer about the quality, quantity, potency, purity, standard and price of the goods he
buys. This is intended to save the consumer from unfair practices like false and
misleading description about the nature and quality of the goods and exaggerated
statements about their power and potency. In all such cases, the consumer would have the
option of either applying to the monopolies commission under the monopolies and
restructive trade practices Act, 1969 as the Redressal Agencies under the COPRA Act.
                                    85
3. Right of access to variety: The consumer has been given the right to be assured,
wherever possible, access to a variety of goods at competitive prices. The central council
constituted under this Act has been charged with the responsibility of bringing about the
organization of markets and market practices in such a way that all dealers are supplied
with a variety of goods for he benefit of consumers and that the goods with a variety are
being offered at competitive price.

4. Right to due attention at appropriate Forums: The consumer has been given to right
to be assured that consumer‟s interest will receive due consideration at appropriate
forums. The central council is charged with the responsibility of assuring the consumers
that they would be heard as of right of the appropriate forums and the consumer will
receive due attention and consideration from such forums.

5. Right to seek redressal: The consumer has been given the right to seek redressal
against unfair trade practices or unscrupulous exploitation. 3 redressal agencies have been
established to provide simple and speedy redressal to consumer disputes. These agencies
have been empowered to give relief of specific nature and to award compensation to
consumers. They will observe the principles of natural justice. These orders are final
unless appealed.

6. Right to consumer education: The consumer has been given the right of education by
the sec 6 of COPRA Act, 1986. The central council has been charged with the
responsibility to provide to the people proper education in terms of their remedies under
the Act.

        6. ESSENTIAL COMMODITIES ACT, 1955
The essential commodities Act was passed in the year 1955. There is no general
definition of essential commodities, but sec 2() states that the following are essential
commodities.
1) Cattle fodder including oil cakes and other concentrates,
2) Coal including coke and other derivatives,
3) Component – parts and accessories of automobiles.
4) Cotton and woolen textiles.
5) Drugs.
6) Food stuffs including edible oil seeds and oils.
7) Iron and steel, including manufactured products of iron and steel.
8) Paper, including newsprint, paper board and strawboard.
9) Petroleum and petroleum products.
10) Raw-cotton, whether ginned or unginned and cotton seeds.
11) Raw-jute.
12) Any other commodity which the central govt. may, by notified order, declare to be
     an essential commodity.

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Aims and objectives of the Act: This Act has been enacted with the following
objectives.

1) To provide in the interest of the general public, for the control of production, supply
   and distribution of and trade and commerce in certain commodities specified in the
   Act.
2) To check the inflationary trend in prices of essential commodities as defined in the
   Act.
3) To ensure equitable distribution and availability at fair price.

Powers of the govt. to central production, supply and distribution of essential
commodities:
 Power to issue orders [Sec 3(1) and (2)]
 Power to fix the price to be paid [Sec 3(3)]
 Power to appoint authorized controller [Sec 3(4)]
 Power to recover certain amounts as arrears of land revenue [Sec 7A]

 1. Power to issue orders [Sec 3(1) & (2)]: The Act empowers the central govt. to
    issue orders for regulation of production, supply and distribution of essential
    commodities.
a) For maintaining or increasing the supply of any essential commodity, or
b) For securing their equitable distribution and availability at fair prices, or
c) For securing any essential commodity for the defense of India or the efficient conduct
   of military operations.

Contents of the order: The order issued by the govt. may provide for all or any of the
following:

1) Regulating by licenses, permits or otherwise, the production or manufacture of any
   essential commodity.
2) Bringing under cultivation any waste land for the growing of food crops generally of
   specified food crops.
3) Controlling price at which an essential commodity may be sold.
4) Regulating by licenses, permits or otherwise, the storage, transportation, distribution,
   etc, of any essential commodity.
5) Prohibiting from with holding from sale of any essential commodity ordinarily kept
   for sale.
6) Requiring a person, stockiest, producer, dealer, etc. of any essential commodity to
   sell the whole or part of the quantity held in stock to the govt. or its agent.
7) Regulating or prohibiting any commercial or financial transactions which are likely to
   be detrimental to public interest.
8) Requiring producers or dealers to maintain and produce for inspection such books,
   account and records as may be specified.
9) The entry, search and seizure, etc. and confiscation of commodity.

                                       87
Thus, in particular, the powers of the govt. shall include.
    Power to grant licenses and permits and exercising control on prices, storage,
       sales etc.
    Power to determine and fix price.
    Power to prevent boarding.
    Power to appoint authorized dealers.
    Power to seize and confiscation of essential commodity.

However, the power of the central govt. should not result in violation of any fundamental
right granted by the constitution of India. The Supreme Court has observed in chinta
lingam (vs.) govt. of India that there are 2 conditions precedent to execise of powers
under Sec 3. These are:
1) The govt. or the authorized office must have formed an opinion that it was necessary
    to take the impugned action, and
2) The opinion formed must be bonafide.

 2.Power to fix the price to be paid [Sec 3(3)]: The various modes of fixing prices to be
paid for essential commodities clearly stated in Sec 3 of the Act are as follows:

 Fixing sale price of essential commodities sold under govt. order [Sec 3(3)]: If the
   govt. orders for sale of any essential commodity (E.C) to the central or state govt. or
   its officer or agent or a state owned corporation or any other person, the price will be
   fixed as follows:
Agreed price, if it is consistent with the controlled price, or
a) Controlled price, if any, for such commodity, or
b) In absence of the agreed price or control price, the market price prevailing in the
    locality at the time of sale.

 Fixing price of sale of food products to central/state govt. etc: Something, the
  central govt. may feel that it is necessary to control rise in prices, or prevent the
  boarding of any food stuffs in any locality. In such a case, it may, by notification in
  the official gazette, direct that the price at which the food-stuffs shall be sold in the
  locality to the central state govt. their agent, etc. shall be regulated in accordance with
  the provision of Sec 3. Such notification shall remain in force for such a period (not
  exceeding 3 months) as may be specified in the notification.
The price will be fixed as follows:

a) Agreed price, if it is consistent with the controlled price, if any
b) Controlled price, if there is no agreed price.
c) In the absence of agreed and controlled prices, the price calculated with reference to
   the average market rate prevailing in the locality during the period of 3 months
   immediately preceding the date of notification.



                                      88
 Fixing price of food grains, edible oil seeds or edible oils: According the Sec 3(3B)
   of the Act where any person sells food grains, edible oil-seeds or edible oils to the
   central/state govt. or to the agent of the govt. or a corporation owned by such govt. he
   shall be paid procurement price determined. In determining the procurement price,
   the following factors shall be taken into consideration:
a) Controlled price, if any, fixed under Sec 3 of the essential commodity Act or under
    any other law for the time-being in force for such food grains.
b) The general crop prospects.
c) The need for making such grade or variety of food grains edible-oils etc. available to
    the vulnerable section of the consumers and
d) The recommendations, if any, of the agricultural prices commission relating to the
    price of such food grains etc.

 Fixing sale price of sugar: A producer of sugar who is required to sell any kind of
   sugar to the central/state govt. or to an officer or agent of such govt. etc. shall be paid
   at the rate prescribed by the central govt. by taking the following into consideration:
a) The minimum price, if any, fixed for sugarcane by the central govt. under Sec 3
b) The manufacturing cost of sugar.
c) The securing of a reasonable return on the capital employed in the business of
    manufacturing sugar.

3.Power to appoint authorized controller [Sec 3(4)]: If the central govt. feels it
necessary, it may appoint an authorized controller to exercise certain functions for
maintaining or increasing the production and supply of an essential commodity. These
functions may be with respect to the whole or any part of any such undertaking in the
production and supply of the commodity as may be specified in the order.

The undertaking act in accordance with the instruction issued by the authorized
controller. He has to exercise his functions in accordance with the instructions given to
him by the central govt. The manger of such undertaking shall comply with any such
directions.
Contravention of this direction shall be punishable with imprisonment which shall not be
less than 3 months and may extend to 7 years along with fine.
Order to be laid before parliament: Every order made under Sec 3 by the central govt. or
by any officer or authority of the central govt. shall be laid before both houses and
parliament, as soon as may be, after it is made [Sec 3(6)]

4.Power to recover certain amounts as arrears of land revenue (Sec 7A): A person
may be liable to
a) Pay any amount in pursuance of order made under Sec 3, or
b) Deposit an amount to the credit or any A/c or fund. Constituted by or in
c) Pursuance of any order made under Sec3.

                                          89
 If any person makes any default in payment of such amount, shall be recovered by the
govt. together with simple interest at the rate of 15% p.a. from the date of such default to
the date of recovery of such amount, as arrears of land revenue or as a public demand.

CONFISCATION OF ESSENTIAL COMMODITY:
Under Sec 6 – A of the essential commodities Act, the caution can confiscate the seized
commodity on contravention of any provisions of the order notified under Sec 3. An
essential commodity may be seized in pursuance of an order made under Sec 3 of the
Act. Where any essential commodity is seized, a report of such seizure must be made,
without any delay, to the collector of the area. The collector, on receipt of the report may
at this discretion, require the production if seized commodity for inspection before him. If
he is satisfied that there has been a contravention of the orders, he may pass the order of
confiscation of:
a) the essential commodity, so seized,
b) any package covering in which such commodity is found and
c) Any animal, vehicle, vessel or other conveyance used in carrying such essential
     commodity.
However, confiscation cannot be ordered in the following cases.
 In case of food-grains or edible oil seeds seized from a producer there of provided the
seized food grains or edible oil – seeds have been produced by him.
1) In the case of any animal, vehicle, vessel or other conveyance used for the carriage of
     goods or passengers for hire, if the owner has paid the required fine.
      Procedural steps before passing confiscation order:
The following are the steps:
 Issue of show cause notice: According to Sec 6 – B of the Act, before an order of
     confiscation is passed the owner of the goods or the person from whom the goods are
     seized must be given a notice in writing, informing him of the grounds on which
     confiscation is proposed to be made.
 Opportunity of making representation: The owner of the goods or the person from
     whom the goods are seized must also be given an opportunity of making a written
     against the grounds of confiscation.
 Opportunity of being heard: A reasonable opportunity of being heard in the matter
     must also be given to the person from whom the commodity is seized.
 No confiscation can be made where an essential commodity has been carried without the
knowledge of the owner, or the person in charge of the animal, vehicle, vessel or other
conveyance.
 Provisions of Act to prevent and punish a person from giving false statement:
Sec 9 of the essential commodities Act makes a person liable for imprisonment up to
5years or fine or with both, in the following circumstances:
When, on being required to make any statement or furnish any information, he makes a
statement or furnishes any information which is false in any material particulars or which
he knows.
1) He makes any statement as stated above in any book account, record declaration,
     return or other document which he is required by any order to maintain or furnish.
                                       90

				
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