Judgement

CHANDRA REDDY, C. J.:-

This is an appeal against the order of the Subordinate Judge, Visakhapatnam, accepting an application to add the legal representatives of the second judgment-debtor in O.S. No.80 of 1933.

2. It arises in the following circumstances. In execution of a decree obtained by the present respondents against three persons including the predecessors-in-interest of the appellants, some of the properties be longing to the three judgment-debtors were brought to sale on 16-8-1954 and were purchased by the decree-holders themselves. The sale was confirmed on 20-9-1954 sometime later, the decree-holder auction-purchasers filed a petition in the District Munsifs Court, Rajam, for delivery of possession of these properties making all the judgment-debtors parties to that application. It may be mentioned here that the decree was transferred to the District Munsifs Court, Rajam for execution, as the properties of the judgment-debtors were situate within the jurisdiction of that Court. It is for that reason that the application for delivery was presented in that Court Meanwhile, the second judgment-debtor seems to have died. The auction-purchasers coming to know of it filed the petition in the Sub-Court that passed the decree which has given rise to the present appeal, for adding the appellants as the legal representatives of the deceased second judgment-debtor under Sec.50 of the Civil Procedure Code.

3. This was opposed by the judgment-debtors on the ground that Sec.50 C.P.C. is inapplicable to the instant case.

4. The trial Court negativing this contention allowed the petition and ordered the legal representatives of the second judgment-debtor to be brought on record. It is this judgment that is now under appeal.

5. The argument presented by Sri Dikshitulu, learned counsel for the appellants, is that as the application to bring the legal representatives on record was not filed within three years of the death of the judgment-debtor the relief prayed for ought not to have been granted. It is urged by the learned counsel that as no period of limitation is prescribed for delivery of possession of the properties, the residuary article i.e., Art.181 of the Limitation Act governs such a case and .since in this case the application for delivery impleading the proper persons as parties thereto was not filed within the time contemplated by Art.181, it should have been reject-ed. The fact that the application for delivery was made in the District Munsifs Court, Rajam, against a dead person would be of no avail to the auction-purchasers as, in law, it does not amount to an application for delivery, and it is only when the legal representatives of the deceased judgment-debtor are brought on record that the petition under Art.181 must be deemed to have been presented, proceeds the argument of Sri Dikshitulu.

6. We are not persuaded that this objection is substantial. It may be that Art.181 governs applications of this kind. But the only requirement of that article is that it should be preferred within three years. It does, lot contemplate as to who should be impleaded as parties hereto. It is not disputed that the application for deli-very of possession was filed within three years of the confirmation of sale, impleading all the judgment-debtors, one of whom died by that time.

7. What we have now to consider is whether this is fatal to the application. The provision of law which deals with the addition of legal representatives of a deceased party is Order 22 C.P.C. That order lays down that if the legal representatives are not brought on record within the time specified therein, the proceedings would abate. A perusal of that order reveals that it applies only to suits and appeals and is inapplicable to proceedings in execution of a decree or order.

8. Sri Dikshitulu maintains that the fact that O.22 Rule 12 C.P.C. takes an execution application out of the pale of Order 22 C.P.C. does not help the respondents for the reason that an application for delivery of possession of-property is not one in execution of a decree. Even so, how does it help the appellants? As we have already remarked, O.22 C.P.C. governs only suits and appeals and does not come into play in regard to other proceedings. If there is no other law which compels a party to bring on record the legal representative within a particular time, it cannot be posited that an application to bring the legal representatives on record in proceedings other than suits or appeals abates or lapses. The legal representatives have to be brought on record in such proceedings before final orders are passed, so that the orders might be binding on them. It is only for that purpose the present application was brought. It is to be borne in mind that after the sale is confirmed the title to the property covered by the sale vests in the auctiton-purchasers and nothing remains in the judgment-debtor. That being so, there is nothing for the judgment-debtor to urge by way of answer in an application for delivery of that property. Consequently, it is of necessary to issue notice to the judgment-debtor in such an application, if it is unnecessary to serve the judgment-debtors with notice, it is equally so even with rgard to their legal representatives because they could oppose such an application only on grounds which were open to the judgment-debtors. So, possession could be obtained without notice to them or even without formally brining them on record.

9. This view of ours gains support from the judgment of the Madras High Court in Pethaperumal v. Chidambaram, ILR (1954) Mad 1206. It was ruled by a Division Bench of the Madras High Court consisting of Rajamannar C.J., and Rajagopala Ayyangar J. that there was no legal obligation on the part of a decree-holder to implead the legal representatives of a deceased judgment debtor at the stage of taking delivery of possession of property and the proceedings taken under O.XXI, R.96, without impleading them could not be held to be void. The argument of Sri Dikshitulu, in this behalf is that this proposition is unsound and should not be accepted by us. We are not persuaded that the rule as started by the learned Judges in that case is incorrect. On the other hand, we are firmly of opinion that it is in consonance with the general principles of law.

10. There is also the decision of a Division Bench of this Court in Sudarsanam Abbanna v. Deity of Sri Gopalaswamivaru of Nelaturu, 1955 Andh WR 632 which reinforces our view. There, it was laid down that if a deceased judgment-debtor was mentioned in an execution petition under O.21, R.11 C.P.C. under the mistaken impression that he was alive, an application could be presented to bring the legal representative of the decease judgment-debtor on record even after three years without incurring the penalty of dismissal of the execution petition as being barred by limitation. The learned Judges, remarked that it was only correcting the name of the person against whom execution was taken out. Sri Dikshitulu seeks to distinguish this case on the ground that it dealt only with an execution petition and so the principle underlying it should not apply to an application for delivery of possession of property, as it cannot be described as an application for execution. We are not convinced that this distinction is real. The principle is the same. If the delay in seeking to bring the legal representatives on record is not detrimental to an execution petition, we fail to see how it affects the validity of an application of this kind. On the other hand, we feel that the present is an a fortiori case. An application to bring on record the legal representatives is nothing more than one for correcting the cause title in the petition for delivery of possession of property.

11. Sri Dikshitulu, learned counsel for the appellants then urges that 1955 Andh WR 632, does not embody the correct law and it requires reconsideration. We do not think that we can give effect to this argument. This view has been consistently taken by the Madras High Court and has also been followed by the Calcutta and Patna High Courts for a number of years. It is now too late to question its correctness.

12. For all these reasons, we find it difficult to uphold the objections raised by the learned counsel for the appellants.

13. In the result, the order under appeal is confirmed and the appeal is dismissed with costs.

Appeal dismissed. AIR 1962 ANDHRA PRADESH 522 (V 49, C 135) "Associated Cement Co. Ltd. v. State of A. P."

ANDHRA PRADESH HIGH COURT

Coram : 2 SATYANARAYANA RAJU AND VENKATESAM, JJ. ( Division Bench )

Associated Cement Companies Ltd., Petitioner v. State of A. P. per Deputy Commissioner of Commercial Taxes, Guntur, Respondent.

Tax Revn. Case No.56 of 1961, D/- 16 -4 -1962.

Constitution of India, Art.286 (1), Expln. (before amendment by Constitution (6th Amendment) Act.1956) - SALE OF GOODS - INTER-STATE TRADE/SALE - Delivery to carrier within state is delivery to buyer - It is not outside sale - Interstate trade - Essentials.

Sale of Goods Act (3 of 1930), S.39(1).

To be an outside sale in order to attract the exemption contemplated by the Explanation to Art.286(1) it is not enough that the goods were for the purpose of consumption outside the state. The further requirement is that the goods should have actually been delivered outside the State. (Para 9)

If under the terms of the contract, the goods are actually delivered to the buyers within the limits of the State, there could not possibly be a further delivery of the same goods again at the places of destination outside the State. (S) AIR 1955 Mad 502, Ref. (Para 10)

Where the goods were delivered to a carrier (Railway) within the State the carrier is constituted an agent of the buyer for accepting delivery of the goods on his behalf with the result that the goods are actually delivered within the state. (Para 13)

The terms of sale of cement provided that delivery of the cement was free on rail at the siding of the works of the seller-Company (assessee). The railway receipts were made out in the name of the purchasers. The foot-note to the despatch advice sent by the assessee-company also made it clear that the responsibility of the seller ceased from the time delivery was made by the Works to the carriers and a railway receipt obtained for the goods. According to the contract any claim for loss, shortage or damage was to be made against the railway company concerned, and not against the sellers. The works siding was within the State.

Held that having regard to the course of business followed by the assessee company with their purchasers and the specific terms of the contract of sale it was difficult to hold that the sales took place outside the State or that the goods were actually delivered by the assessee company outside the State. It was clear that not only the sales were intended to be inside sales but as a matter of fact all the essential ingredients of sale were completed within the State. The property in the goods passed within the State and possession was delivered unreservedly inside the State. The delivery of these goods at works siding was delivery to the

" purchasers and the transport of the goods to destinations outside the State was really by or on behalf of the buyers who had taken delivery of the goods at the factory site. If the delivery had"

taken place within the State then the assessee company could not invoke the benefit of the exemption embodied in the Explanation.

Held further that in order that a sale or purchase might be inter-state within meaning of Art.286(2) it was essential that there must be transport of goods from one state to another under the contract of sale or purchase. (S) AIR 1955 SC 661, Rel. on. (Para 18)

On a consideration of the material terms of the contract and the course of dealings between the parties, there was little difficulty in holding that there was no contract between the parties that the assessee-company had to deliver the goods at a place other than the factory site. The terms left no room for doubt that the moment the goods were consigned to railway wagons, the assessee had no further responsibility either for loss or damage during the course of transit. Under the circumstances the common carrier was constituted the bailee of the buyers and not of the seller. After the goods were consigned to the railway wagons, the sale was complete within the State. Therefore the transactions in question did not constitute interstate trade or commerce, which would come within the prohibition contained in Article 286(2) of the Constitution. (Paras 19, 20)

Cases Referred : Courtwise Chronological Paras

(55) (S) AIR 1955 SC 661 (V 42) : 1952-2 SCR 603, Bengal Immunity Co. Ltd v. State of Bihar 18

(55) (S) AIR 1955 Mad 502 (V 42) : 1955-6 STC 230, Mohammed Ishok v. State of Madras 10

N. Narasimha Iyyangar, for Petitioner; Third Government Pleader (P. Ramachandra Reddi), for Respondent.

Judgement

SATYANARAYANA RAJU, J.:-

This Revision Case arises out of an order of the Sales Tax Appellate Tribunal, Hyderabad, and raises the question whether certain sales effected by the Associated Cement Companies Limited (hereinafter referred to as the assessee" Company) are outside sales within the Explanation to Article 286 (1) (a) of the Constitution, and in any case, whether they are sales in the course of inter-state trade or commerce within the meaning of Article 286(2).

2. The assessee-company, who have their registered office at Bombay, are the biggest among the companies in India, which manufacture cement They own a number of cement factories at different places in India and Pakistan. They have a cement factory at Tadepalli in Guntur District, within the limits of the State of Andhra Pradesh. The factory is known as the Krishna Cement Works. The Cement Marketing Company of India are the Sales Managers of the assessee company. That company though separately registered under the Companies Act, as a joint stock company, is a subsidiary of the assessee company.

3. The period covered by the assessment now in dispute is 1st April, 1956 to 30th June, 1956. The transactions of sale involved in the case comprise an aggregate turnover of Rs.1,72,085-12-7 representing sales effected by the assessee-company from the Krishna Cement Works to buyers outside the State. Out of the total turnover, a sum of Rs.38,587-13-0 represents sales of cement arranged by the Cement Marketing Company of India through their offices at Banglore and Secunderabad to private consumers, and Rs.1,33,497-15-7 represents the value of cement supplied to Government Departments outside the State under a rate contract made with the Director-General of Supplies and Disposals, Government of India.

4. Before dealing with the contentions raised before us, it will be convenient to consider the nature of the transactions between the assessee company and their purchasers. It is common ground that the assessee-company had supplied cement to the purchasers pursuant to the directions received from the Marketing Company. The terms of the contract as embodied in the specimen -contract form are as follows:

"5. Delivery: cement will be delivered F.O.R works siding in full wagonloads. All conditions of the R.R. shall be binding on the buyers. The period and details of delivery mentioned in the buyers order are to be treated as a general indication of the buyers requirements, but the Company does not guarantee delivery in terms thereof. Actual supplies or despatches against the order may be made in whole or in parts at our (sic) after the time/period indicated in the order at the sole discretion of the Company.

6. Destination (Stations outside Andhra).

7. Price:

(a) Packed in jute bags Rs.....net per ton in full wagonloads F.O.R. destination.

(b) The above price is subject to change without notice. The F.O.R. destination price ruling on the date of despatch will be payable by the buyer.

(c) Freight Rise: In the event of there being an increase in railway freight or any surcharge thereon after the date of the contract and during the period of delivery, the buyer shall pay the additional freight or surcharge as may be introduced by the sellers to meet such increase from time to time on such portion of the supply as may be effected.

8. Transit Risk: Even though the price is F.O.R. destination (and not Ex-works or F.O.R. works) the goods shall be nevertheless at the buyers risk from the time delivery is made by the Works to carriers and a Railway Receipt obtained for the goods as per clause No.5 above.

9. Taxes/Duties and C: All sales tax / taxes, cesses, levies, imposts, octroi, town duty, excise duty and/or other duties etc., of any kind or nature whatsoever levied by the Central and/or any other State Government or by any local authorities and whether existing at date of order and/or levied thereafter will be payable by the buyers.

10(a): Freight: All consignments whether sold F.O.R. destination or otherwise will be booked freight to pay and the railway freight shall be paid by the buyers to the railway on behalf of the company, and the amount thus advanced shall be credited to the buyer, subject to the conditions laid down in 7 d. above. But siding or other charges at destination will be on account of and payable by the buyer."

5. There is a note which is in the following terms:

"Although the prices are on F.O.R. destination basis, our responsibility for any loss, shortage, damage or delay in transit or at destination ceases, once the goods are delivered to the Carriers (Railway etc.) and a receipt is obtained. All claims on these accounts should be preferred against the Carrier concerned."

6. From a consideration of the above terms and conditions of the contract of sale, it is manifest that the liability of the sellers ceases the moment the cement is delivered F.O.R. Works siding in full wagonloads.

7. In his letter to the Commercial Tax Officer, dated 5th May, 1957, the Manager, Krishna Cement Works has explained the course of dealings as follows:

"The terms of sale in these cases were:

(a) Delivery of Cement was made free on rails at the siding of Krishna Factory.

(b) Railway receipt was made out in the name of the purchasers residing outside Andhra State Pradesh.

(c) The goods were at the purchasers risk from the time delivery was made by the Kistna Factory to the carrier and the railway receipt obtained for the goods.

(d) Price was quoted as F.O.R. destination for public and Ex-works for indentors taking supplies under Rate contract of Government of India."

8. Before us the learned counsel tor the assessee Company has contended that the sales in question are covered by the Explanation to Article 286(1) (a). The Article and the Explanation are in these terms:

"286(1):- No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place :

(a) outside the State, or

(b).....................

Explanation:- For the purposes of subclause (a), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State."

9. It is no doubt, true that the purchase of cement by the private consumers and the public authorities covered by the disputed turnover were for the purpose of consumption outside the State. But it may be observed that it is not sufficient to attract the exemption contemplated by the Explanation. The further requirement is that the goods should have actually been delivered outside the State. It is argued by the learned Counsel for the assessee Company that all the sales were F.O.R. the places of destination outside the State, that the seller undertook to book the goods and obtain the railway receipt, and having regard to these factors, the delivery must be treated as having taken place outside the State, which would, therefore, attract the Explanation. It is further contended that the cement despatched from Tadepalli by railway wagons did eventually reach places outside the State at the end of the journey where the goods were delivered as a direct result of the sale, and therefore the exemption embodied in the explanation is attracted.

10. As was pointed out by a Division Bench of the Madras High Court in Mohammad Ishok v. State of Madras, 1955-6 STC 230 at p.234 : ((S) AIR 1955 Mad 502 at p.503) the crucial fact which has to be established before the exemption could be claimed is that there should be an actual delivery of the goods outside the State. If under the terms of the contract, the goods are actually delivered to the buyers within the limits of this State, there could not possibly be a further delivery of the same goods again at the places of destination outside the State.

11. It is argued that the delivery of the goods to the common carrier does not amount to physical or actual delivery of the goods to the buyer.

12. Under Section 39(1) of the Sales of Goods Act, it is provided:

"Where, in pursuance of a contract of sale the seller is authorised or required to send the goods to the buyer, delivery of goods to carrier, whether named by the buyer or not for the purpose of transmission to the buyer or delivery of the goods to a wharfinger for safe custody is prima facie deemed to be a delivery of the goods to the buyer."

The following passages from Benjamin on Sale of Goods (8th Edition) at page 211 and at page 737, are apposite:

"It is well settled that the delivery of the goods to a common carrier, a fortiori to one specially designated by the buyer, for conveyance to him or to a place designated by him, constitutes an actual receipt by the buyer. In such cases, the carrier is, in contemplation of law, the bailee of the person to whom not of the persons by whom, the goods are sent, the seller employing the carrier, being considered as an agent of the buyer for the purpose."

13. The carrier was thus constituted an agent of the buyer for accepting delivery of the goods on his behalf with the result that the goods have actually been delivered within the State.

14. Having regard to the course of business followed by the assessee-company with their purchasers and the specific terms of the contract of sale mentioned above, it is difficult to hold that the sales took place outside the State or that the goods were actually delivered by the assessee-company outside the State. It is clear that not only the sales were intended to be inside sales but as a matter of fact all the essential ingredients of sale were completed within the State. The property in the goods passed within the State and possession was delivered unreservedly inside the State.

15. The liability of the seller ceased the moment the cement is consigned to the carrier at the works siding of the factory of the assessee-company. The terms of sale provide that delivery of the cement is free on rail at the siding of the Kistna Cement Works. The railway receipts are made out in the name of the purchasers. The foot-note to the dispatch advice sent by the assessee-company also makes it clear that the responsibility of the seller ceases from the time delivery is made by the Works to the carriers and a railway receipt obtained for the goods, and any claim for loss, shortage or damage must be made against the railway company concerned, and not against the sellers.

16. Under the circumstances, on the terms of this contract, we are of opinion that the delivery of these goods at Tadepalli was delivery to the purchasers and the transport of the goods from Tadepalli to destinations outside the State was really by or on behalf of the buyers who had taken delivery of the goods at the factory site. If the delivery has taken place within the State - as we hold it to be - then there is no question of the assessee-company invoking the benefit of the exemption embodied in the Explanation.

17. It is then contended that the purchases of cement were made in the course of inter-state trade and that the imposition of sales tax thereon, is in consequence ultra vires. The provision applicable is Article 286(2), as it stood prior to the sixth amendment, and it ran as follows:

"Except in so far as Parliament may by law otherwise, provide, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase takes place in the course of inter-State trade or commerce."

18. It is contended on behalf of the assessee-company that the goods were purchased in the, course of inter-State trade and that the levy of sales tax on the turnover in question was prohibited by Article 286(2). In order that a sale or purchase might be inter-State, it is essential that there must be transport of goods from one State to another under the contract of sale or purchase. In the Bengal Immunity Co. Ltd. v. State of Bihar, AIR 1955 SC 661 at p.734 their Lordships of the Supreme Court made the following observations :

"A sale could be said to be in the course of inter-state trade only if two conditions concur: (1) A sale of goods, and (2) a transport of those goods from one State to another under the contract of sale. Unless both these conditions are satisfied there can be no sale in the course of inter-state Trade."

19. The question then is: Whether there was a contract between the parties that the assessee-company, should deliver the goods at a place other than the factory site? On a consideration of the material terms of the contract and the course of dealings between the parties, there is little difficulty in holding that there was no contract between the parties that the assessee-company had to deliver the goods at a place other than the factory site. The terms already extracted leave no room for doubt that the moment the goods were consigned to railway wagons, the assessee had no further responsibility either for loss or damage during the course, of transit. There is a specific condition which provides that the buyer should make all claims for damage or loss against the common carrier. Under the circumstances, the common carrier was constituted the bailee of the buyers and not of the seller.

20. Having regard to the finding reached by us that there was no contract between the parties that the cement purchased by the several consumers, both private and public, should be delivered at a place other than factory site, we hold that after the goods were consigned to the railway wagons, the sale was complete within the State. On this conclusion, it follows that the transactions in question do not constitute inter-state trade or commerce, which would come within the prohibition contained in Article 286(2) of the Constitution.

21. As a result of the foregoing conclusions, this Revision case must fail and. is accordingly dismissed with costs. Advocates fee Rs.100/-.

Revision dismissed.