# BADRI PRASAD v. STATE OF MADHYA PRADESH AND ANOTHER

- **Citation:** [1965] 3 S.C.R. 381
- **Court:** Supreme Court of India
- **Decided:** 1965-03-16
- **Case number:** Civil Appeal No. 672 of 1964
- **Bench:** P. B. Gajendragadkar, Raghubar Dayal, V. Ramaswami
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/badri-prasad-v-state-of-madhya-pradesh-and-another-3497
- **Pages:** 13

## Headnote

Sale of Goods Act (3 of 1930), s. 20-Auction of cut timber of
forest-Delivery-Destruction by fire before removal-Formal contract signed by competent authority later-If property in timbe1"
passed.
The 2nd respondent purchased on 24th December 1956, at a
public auction sale held by the Divisional Forest Officer, the cut
timber of a couP€ and paid the first instalment of the purchase price
immediately. The appellant stood surety for the payment of the
remaining three instalments. The coupe was divided into 4 sections
according to the r11les which were deemed to be part of the contract and the boundary certificates was furnished to the 2nd respondent on 5th February 1957. He began operations in the 1st section
on the last week of February, but defaulted in the payment of the
2nd instalment which was due on 1st March 1957, and so, on 25th
April the apP€llant and 2nd respondent were informed by the forest
authorities, that no further removal of the timber would be allowed,
as the value of timber already removed exceeded the a-mount paid.
On 28th April, a fire broke out and the timber sold to the 2nd respondent ceased to exist. On 3rd May 1957, the formal deed of contract, which was signed by the 2nd respondent and the Divisional
Forest Officer on 24th December, was signed by the Chief Conservator of Forests, as required by the rules. Since the 2nd respondent had
not paid the later instalments proceedings were commenced by the
1st respondent against the appellant, whereupon he filed a suit for
restraining the 1st respondent from continuing the proce.edings. The
suit was decreed by the trial court, but dismissed on appeal, by the
High Court.
In his appeal to this Court, the apP€llant contended that the 2nd
respondent had not been put in possernion of the timber sold, except
the portion on the 1st section of the coupe, that there was no transfer of property in the timber and therefore he was not liable to pay
the amounts due on the other 3 instalments, the transfer of property in the timber being a condition precedent to his lfability.
HELD:
There was an unconditional contract for the sale of
specific goods in a deliverable state, the property in the timber
passed to the 2nd respondent when the contract was made on 24th
December 1956 under s 20 of the Sale of Goods Act, 1930, and possession was also given on 5th February 1957. Therefore, the appellant's
suit was rightly dismissed by the High Court (391 HJ
The timber was sufficiently identifiable and was therefore specified goods and there was nothing in the contract postponing possession till the other instalments have been paid.
The fact that the
contract was signed by the Chi€f Conservator, after fire had broken
out has no effect on the validity of the contract, or on the question
of delivery of possession or on the passing of property in the timber.
The instructions in the Forest Manual about execution of contra<·ts
plainly take h1to
the lar:se of time br;.
... ,,,,.
.. ,, ·:>
382
SUPREME COURT REPORTS
[1965] 3 S.C.11.
tion by the lessee and by the competent forest authority, and
A
therefore, the date on which the Chief Conservator signed had not
any real effect on the actual date on which the sale of the timber
took place. It was also with'n the realm c.f possibility that the timber
might be lost on account of fire or other risk, before the contract
was formally signed. The sale of the timber to the 2nd respondent
was therefore final on 24th December, the date of sale, subject to
the acceptance of his b'.d by the competent authority. [387 E-H;
B
388 F; 393 A-BJ
Williams v. North China Instlrance Co., L.R. (1876)! C.1".D. 757,
applied.
Rule 8 of the Forest Contract Rules empowers the Divisional
Forest Officer to stop the removal ·of the timber en his finding that
the value of the timber already removed exceeded the amount of
instalments pa'd, But, that would not amount to reserving a right
of disposal in the State, because, the rules provide that though ordinarily the timber should

## Text

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BADRI PRASAD
v.
STATE OF MADHYA PRADESH AND ANOTHER
March 16, 1965
381
[P. B. GAJENDRAGADKAR, C. J., RAGHUBAR DAYAL AND V. RAMASWAMI, JJ.J
Sale of Goods Act (3 of 1930), s. 20-Auction of cut timber of
forest-Delivery-Destruction by fire before removal-Formal contract signed by competent authority later-If property in timbe1"
passed.
The 2nd respondent purchased on 24th December 1956, at a
public auction sale held by the Divisional Forest Officer, the cut
timber of a couP€ and paid the first instalment of the purchase price
immediately. The appellant stood surety for the payment of the
remaining three instalments. The coupe was divided into 4 sections
according to the r11les which were deemed to be part of the contract and the boundary certificates was furnished to the 2nd respondent on 5th February 1957. He began operations in the 1st section
on the last week of February, but defaulted in the payment of the
2nd instalment which was due on 1st March 1957, and so, on 25th
April the apP€llant and 2nd respondent were informed by the forest
authorities, that no further removal of the timber would be allowed,
as the value of timber already removed exceeded the a-mount paid.
On 28th April, a fire broke out and the timber sold to the 2nd respondent ceased to exist. On 3rd May 1957, the formal deed of contract, which was signed by the 2nd respondent and the Divisional
Forest Officer on 24th December, was signed by the Chief Conservator of Forests, as required by the rules. Since the 2nd respondent had
not paid the later instalments proceedings were commenced by the
1st respondent against the appellant, whereupon he filed a suit for
restraining the 1st respondent from continuing the proce.edings. The
suit was decreed by the trial court, but dismissed on appeal, by the
High Court.
In his appeal to this Court, the apP€llant contended that the 2nd
respondent had not been put in possernion of the timber sold, except
the portion on the 1st section of the coupe, that there was no transfer of property in the timber and therefore he was not liable to pay
the amounts due on the other 3 instalments, the transfer of property in the timber being a condition precedent to his lfability.
HELD:
There was an unconditional contract for the sale of
specific goods in a deliverable state, the property in the timber
passed to the 2nd respondent when the contract was made on 24th
December 1956 under s 20 of the Sale of Goods Act, 1930, and possession was also given on 5th February 1957. Therefore, the appellant's
suit was rightly dismissed by the High Court (391 HJ
The timber was sufficiently identifiable and was therefore specified goods and there was nothing in the contract postponing possession till the other instalments have been paid.
The fact that the
contract was signed by the Chi€f Conservator, after fire had broken
out has no effect on the validity of the contract, or on the question
of delivery of possession or on the passing of property in the timber.
The instructions in the Forest Manual about execution of contra<·ts
plainly take h1to
the lar:se of time br;.
... ,,,,.
.. ,, ·:>
382
SUPREME COURT REPORTS
[1965] 3 S.C.11.
tion by the lessee and by the competent forest authority, and
A
therefore, the date on which the Chief Conservator signed had not
any real effect on the actual date on which the sale of the timber
took place. It was also with'n the realm c.f possibility that the timber
might be lost on account of fire or other risk, before the contract
was formally signed. The sale of the timber to the 2nd respondent
was therefore final on 24th December, the date of sale, subject to
the acceptance of his b'.d by the competent authority. [387 E-H;
B
388 F; 393 A-BJ
Williams v. North China Instlrance Co., L.R. (1876)! C.1".D. 757,
applied.
Rule 8 of the Forest Contract Rules empowers the Divisional
Forest Officer to stop the removal ·of the timber en his finding that
the value of the timber already removed exceeded the amount of
instalments pa'd, But, that would not amount to reserving a right
of disposal in the State, because, the rules provide that though ordinarily the timber should be sold for cash payment in full, payment
in instalments could be cons'dered as payment in full, if a right in
accordance with r. 8 is reserved. When a contractor is deemed to have
paid in full the price, there could be no occas'on fer the Government
to reserve a right of d'sposal. The proviscon in r. 8 is only in pursuance of the statutory provision in s. 83 of the Forest Act. 1927, which
provides that when any mcney is payable for or in respect of any
forest produce, the amount thereof shall be a first charge. on such
produce, and that such produce may be taken possession of by a
Forest Officer, until such amount has been paid. [390 H-391 DJ
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 672 of
1964.
Appeal by special leave from the judgement and decree dated
October 1962 of the Madhya Pradesh High Court in First Appeal
No. 8 of 1960.
C. B. Agarwa/a, W. S. Bar/ingay and A. G. Ratnaparkhi, for
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the appellant.
F
M. Adhikari, Advocate General f!•r the State of Madhya
Pradesh, B. Sen, M. S. K. Sastri, M. N. Shroff, R. P. ·Kapur for
I. N. Shroff, for the respondent No. 1.
The judgment of the Court was delivered by
Raghubar Dayal, J. This appeal, by special leave, arises
out of a suit instituted by the appellant for a declaration that he
was not liable to pay a certain amount originally due from defendant-respondent No. 2 and for the issue of a permanent injuction
restraining the State Government, Madhya Pradesh, defendantresp·ondent No. 1 from continuing the proceedings for the recovery
of the amount or for starting any fresh proceedings. The suit was
decreed by the Trial Court but, on appeal, the High Court reversed the decree and dismissed the appellant's suit.
The admitted facts of the case are that on December 24, 1956,
respondent No. 2 purchased at the public auction sale held by the
Divisional F.orest Officer, Harda, the cut timber and arkat trees
of coupe No. 9 Easterri. East Kalibhit Range, in Harda Forest
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llADRI PRASAD v. STATE OF MADHYA PRADESH (Raghubar !Jay1d, J.)
383
Division, for Rs. 70,200. The appellant stood surety for the purchaser, viz., respondent No. 2. The purchase price was to be paid
in four instalments, according to para 4 of the deed of contract.
Rs. 17 ,600 were to be paid at once and were so paid. The other
instalments were due on March 1, May 15 and December 15, 1957.
These instalments were not paid by respondent No. 2 and hence
respondent No. 1 took proceedings against the appellant for the
recovery of the amount.
According to the terms of the contract, the contractor, respondent No. 2, was to commence his work of collecting and removing the cut timber within 1 month after furnishing a copy of
the boundary certificate. This certificate, Exhibit D-1, was furnished on February 5, 1957 and stated that the respondent No. 2 had
clearly understood the boundaries of the areas covered by the
lease and that he had taken possession of the standing I felled I
collected material in the ·aforesaid coupe as announced at the
auction and described. in the said lease and that he was satisfied
that the quantity delivered to him agreed substantially with that
announced at the auction.
The appellant Badri Prasad signed this certificate as a witness.
The work could continue upto June 30, 1958.
Interest was to be charged at 6;!: per cent per annum in respect of the instalments not paid on the due dates. The removal of
the forest produce purchased from the contract areas was to be
according to specified routes and, after they had been examined
at the depots specified in clause 5 of the contract dee!. Clauses
5A and 5B of the contract made it incumbent on the forest contractor respondent No. 2 to set apart certain timber for certain
purposes to the agriculturists and the residents of the villages till
three months before the expiry of the contract. The Forest Contract
Rules were deemed to be part of the contract entered into between
respondent No. 2 and the State, by clause 6 of the contract.
The formal deed of contract was signed by the Chief Conservator of Forests on May 3, 1957 and the preamble of the deed
gives the date of the making of the contract to be May 3, 1957.
The First Schedule to the Contract states :
"The forest produce sold and purchased consists of:
All standing trees bearing hammer mark of marginally
shown device at base and breast height. All felled trees
marked at the butt end and stumps with the device shown
in the margin''.
This is signed by the contractor, respondent No.
2 and by the
Divisional Forest Officer, Harda Division, dated December 24,
1956. The trace of the coupe sold was signed by respondent No. 2
and the Divisional Forest Officer on November 29, 1956, prior to
the actual auction sale. The Third Schedule relating to the out-
384
SuPREME COURT REPORTS
tl965) :i S.C.llo
turn register was also signed by respondent No. 2 and by the appellant who stood surety and the Divisional Forest Officer, on
December 24, 1956.
The security bond was signed by the appellant on December
29, 1956 and by the Divisional Forest Officer on March 30, 1957
and.was countersigned by the Chief Conservator on May 3, 1957.
The entire coupe whose cut timber was sold to the respondent
was divided into four sections A, B, C and D. This was done in
accordance with r. 18 of the Forest Contract Rules. This rule provides that the operations carried out in the contract area under a
forest contract for the sale of standing trees are divided into two
stages (a) cutting and (b) carting. Cutting operations include felling
and all processes of conversion etc. without removing it further
from the place where it was felled than may be necessary to carry
out such processes. Carting operations include all operations for
the removal of a felled tree, or its converted products from the
place where the tree was felled, whether such removal be to a
depot or to a saw mill or other destination. Sub-r. (2) of r. 18
authorizes the Divisional Forest Officer to divide the contract area,
shortly termed a coupe, into such number of sections, not exceeding eight, as he may· think fit. The Divisional Forest Officer can
regulate and confine the operations of the forest contract in accordance with the provisions mentioned in clauses (a) to (c) of that
sub-rule. Clause (b) provides that a forest contractor can be allowed to carry out cutting operations first in sections I and 2 of the
coupe only and as soon as he begins cutting operations in section
3 he shall be deemed to have surrendered all his rights to the standing trees in section 1 and similar would be the result on his beginning cutting operations in section 4 and so on, till all the sections
of the coupe are completed. Clause (c) authorises the forest contractor to begin carting operations from the sections whose trees
he has begun to cut and provides that his rights to the forest produce in section 1 cease when he starts cutting operations in section
4, and so on.
The provisions of r. 20 apply to contracts where the trees
have been felled by the Forest Department and the felled trees
only were sold to the forest contractor. Sub-r. (3) makes rules 18
and 19 applicable to such contracts in so far as they be applicable.
Sub-r. (2) of r. 20 provides that a forest contractor who has purchased felled trees shall remove all the trees purchased by him
under his contract.
·
Respondent No. 2, the contractor, began his operations in
section A. of the coupe in the last week of February, 1957. He
· defaulted m the payment of the second instalment which was due
on March 1, 1957 and did not pay that amount ;u, April 25, 1957,
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llADRI
v.
OF MADlt YA PRADESH (Raglwbar Dayal, J.)
385
though it was demanded several times from him. On March 23,
1957 a notice, Exhibit P4, was issued to him. It stated:
"You are being informed through this notice that the
removal of goods from the coupe by you is already in
excess of the amount deposited by you in the treasury.
So please send the challan of lhe second instalment as
soon as possible by the return load carrier, otherwise
your removal of goods would be stopped and a report
would be made to the higher authority within two days".
This was duly served on respondent No . 2.
On April 25, 1957 the appellant was told by the forest auth0;
rities t\lat no further removal of the forest produce would be
allowed 'in view of the default of payment of the second instalment.
The licence book and the transit ·pass were taken back by the
Government Forester, Madanlal Pagare.
Fire broke out in the forest and the cut timber sold to respondent No. 2 was burnt. The report about the loss from fire is
Exhibit D2 dated April 29, 1957 and is signed by the contractor
and Sheoprasad Parashar, the Forest Guard. As a result of the fire
the goods purchased by respondent No. 2 and not removed by
then, ceased to exist. He did not pay the amounts due for the 2nd,
3rd and 4th instalments.
The appellant sought to avoid his liability as surety for the
non-payment of the amount inter-alia on the ground that the contractor respondent No. 2 had not been put in possession of the
cut timber sold to him except of such timber which had been in
section A of coupe No. 9, that therefore there had been no transfer
of property in the timber sold to him and that he was therefore
not liable for paying the amounts due on the 2nd, 3rd and 4th
instalments. It was averred by the appellant in paragraph 5(A) of
the plaint:
"Thus it was clearly understood on both sides and also
explained by the Forest Department officials of defendant
No. 1 and which has been all along implicit in the contract
as per usual practices of the forest department that the
possession of the goods of each respective section will be
delivered to the Contractor on payment of each instalment
as stated above. It was only on due payment of each instalment that the contractor was to become entitled to
remove the goods in pursuance of the licence book supplied to him by the forest department of defendant No.
1 ".
In paragraph 5(B) it was stated:
"That the contractor or his licensee had no right to
remove the goods until the same was duly hammer marked by the representative of the said forest
department
386
SUl>REME COURT REPORTS
[1965] 3 s.c.R.
and until the licence and the transit pass were dulychecked and signed by the Coupe Guard or such other
representative as may be present on the spot",
Para 5(C) mentioned:
"That the contractor or his men were further liable to
carry the forest produce for check and examination of
forest Depot-officers of Ziri, Rahetgaon and Timarni established for that purpose and after the cut wood was
checked by the Depot Officers, the same. used to be
marked with a special hammer mark, and unless
that
was done it was not lawful for any person to remove timber
brought to the depot".
/
Respondent No. I admitted what was stated in paras 5(B) & (C)
of the plaint. It denied the understanding as averred in para 5(A)
and what was alleged in para 5(D) to the effect that it was after
the processes mentioned earlier that delivery of the goods was
deemed to be given to the forest contractor and was to be at his
. disposal.
The main question urged before us is that the property in the
cut timber sold and existing in sections B, C and D of the coupe
had not passed to the contractor before the fire broke out in the
last week of April 1957 and this contention is based on the facts
that the goods sold were not specific goods as they had not been
hammer-marked, that the goods in sections B, C and D could not
be delivered till the 2nd, 3rd and 4th instalments had been paid
and that the deed of contract was signed after the fire had taken
place.
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We may now consider the points urged in support of the
contention that the property in the timber of sections B, C and D
had not passed to respondent No. 2.
·
The first schedule to the contract describes
the
property,
forest produce sold and purchased, thus:
"All standing trees bearing hammer mark of marginally shown device at base and breast height. All felled trees
marked at the butt end and stumps with the device shown
in the margin".
It is the case of the plaintiff-appellant that cut trees timber or cut
trees were sold. Para 2(A) of the plaint describes the property
purchased as 'the cut timber and arkat trees of coupe No. 9'.
Clause (i) of para 2 of the statement of the case filed on behalf of
the appellant makes this further clear as
it is stated therein
that the contract was for the purchase of 'the cut-timber and cutarkat trees'. It appears therefore that the expression about 'all
standing trees bearing hammer mark' in the description of forest
produce sold was inadvertently omitted to be struck out from the
deed of contract though there was no sale of standing trees to
respondent No. , 2.
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BADRI PRASADV. STATE OF MADHYA PRADESH (R;,ghubar
J.)
Chapter XX of Part IV of Vol. I of the Central Provinces &,
Berar Forest Manual (hereinafter shortly termed Forest Manual)
gives the rules for the disposal of forest produce. Rule 5 states that
before forest produce is disposed of it shall be properly marked.
The standing trees are marked with hammer at two places, at the
butt end and at the lower part, a little above the stem. The trees
are to be felled so as to leave the lower hammer mark in the
un-cut portion. The felled tree sold is subject to further processes
of cutting etc. The portions so cut have to be hammer marked
as only one such portion will have the hammer mark which W.ts
first put at the butt end of the tree. A second special hammer mark
is placed on these cut portions at the time of checking at the depot.
The two hammer marks necessary to be put on the cut portions
of the felled tree before they could be actually taken away from
the forest area were not made on the cut timber existing in sections
B, C and D and sold to respondent No. 2, as the felled trees in
those areas had not been cut further by the contractor. The omission to put such marks does not make the goods sold unascertained.
The felled trees sold to the respondent No. 2 had a butt mark at
the butt end. A similar hammer mark existed on the stem near
which the felled tree rhust have Jain, it being presumed that the
rules for the felling of trees were properly complied with by the
forest authorities, mentioned above. The goods sold therefore were
specified goods.
There is nothing in the contract that possession would not be
delivered over the cut timber in 'Sections B, C and D till the 2nd,
3rd and 4th instalments have been paid. The relevant provisions
of r. 18 of the
Contract Rules, extracted earlier, do not
contain any such restriction. It only provides that the operations
necessary to be conducted by the contractor had to start with
section A or the first section and that the rights of the contractor
to the material purchased would be deemed to be surrendered in
certain circumstances. This has nothing to do with the payment of
the instalments by the contractor. He can proceed to operate on
the entire property purchased, according to his inclination in
accordance with the procedure, as regulated by the rules. There
is therefore no force in the submission that there could have been
no delivery of possession over the produce sold and existing in
liection B, C and D till the various instalments had been paid.
The fact that the contract was signed by the Chief Conservator of Forests on May 3, 1957, after fire had broken out has
no effect on the question of delivery of possession of the produce
sold and consequently on the passing of property in the goods to
the contractor respondent No .. 2. The Chief Conservator who was
the proper authority for entering into. the contract of sale of property worth over Rs. 70,000 /- had necessarily to sign the deed of
contract subsequent to the actual auction sale and in view of the
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8UPREMll COURT REPORTS
(1965) 3 S.C.B.
exigencies of the procedure to be followed may have to sign after
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a substantial period of time.
The bid of respondent No. 2 at the auction sale had been
provisionally accepted by the Divisional Forest Officer who ls
authorized under the rules to conduct the auction sale. The Divi·
visional Forest Officer and respondent No. 2 thereafter signed the
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deed of contract· on December 24, 1956 the date on which the
auction sale took place. The appellant, as surety, also signed the
third schedule on December 24, and the security bond on Decem·
ber 24. Practically all the formalities necessary for the execution
of the deed except for the signatures of the Chief Conservator,
authorised to enter into a contract of this magnitude, had been
0
completed. His formal signature on the deed of contract relates
back the contract to the date of auction when the bid of respon·
dent No. 2 was provisionally accepted and he and the Divisional
Forest Officer signed the contract.
In this connection, reference may be made to certain rules
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and the instructions issued by Government to the various officers
for complying with those rules. Executive instructions on the preparation of forest contract agreements are printed at p. 125 of
Vol. II of the Forest Manual. Instruction No. 9 provides that if
the parties have signed the deed on the same date, that date should
be entered in the preamble, but ifthey had signed on two different
E
dates, then the later of those two dates should be entered in the
preamble. It was in accordance with this instruction that May 3,
1957, the date on which the Chief Conservator signed the contract
was mentioned in the preamble of the contract deed. That date
therefore had not any real effect on the actual date on which the
sale of the forest produce took place in favour of respondent
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No. 2.
Instruction IO directs that the dates in clause 2 of the prescribed deed of contract should be very carefully entered as they
have an important bearing on the deed and show the period during
which the contract will remain in force. Such a period in the deed
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of contract Exhibit D is the period 'from the date the forest contractor furnishes the necessary coupe boundary certificate after
inspection of the contract area to the 30th day of June 1958, both
days inclusive'. The coupe boundary certificate was furnished on
February 5. 1957. It follows that the period for the operation of
the contract was from February 5, 1957 to June 30, 1958. This is
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a clear indication that the date in the preamble has no real effect
and that the contract, after its being duly signed by the competent
authority, relates back to the date of sale.
Instruction 16 deals with the execution of the deed of contract.
Clause (i) provides for the drawing up of the contract· in triplicate.
Clause (iii) requires the Divisional Forest Officer to initial the
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BADBi P1WW> 11. STA.TE Of lolAI>llY.l l.'JW>llllH (Ragilubar Dayal, J,)
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contract after checking it before the lessee is asked to sign it.
Clause (iv) provides that where the Divisional Forest Officer himself
is empowered to execute the agreement he and the lessee should
execute it together and clause (v) provides that where the .Divisional Forest Officer is not empowered to. execute the agreement,
it should be executed by the lessee and his signature .should be
attested and that the ·agreement should then. be sent as soon as
possible to the Forest Officer empowered to execute it, for his
signature and attestation.
These instructions about the execution of the deed of contract
plainly take into consideration the lapse of ·time between the execution by the lessee and by the competent forest authority.
Instructions Nos .. 38 to 48 are with regard to the auction of
forest contracts. It is the Divisional Forest Officer who is directed
to take certain steps. Instruction No. 45 provides that Divisional
Forest Officers should ordinarily allow themselves more than one
day for the conduct of' the auction sales. Instruction No. 47 provides that where the agreements are ·to be signed by the Conservator or higher authority, the first instalments must still be paid
and the duplicate agreements signed by the contractor and his
surety, if any, and sent to the Conservator immediately. The Conservators should sign the duplicate agreements in token of acceptance and return them to the Divisional Forest Officers as soon
as possible. The reason for this is that it is obviously only fair to
a forest contractor that he should be in possession of his signed
agreement before he starts work on his contract, i.e., before July I.
In case the Conservators are not competent to sign the contract
deeds such deeds will have to be sent by them to the Chief Conservator who is competent in view of r. 102A of Vol. I of the
Forest Manual (under Chapter XIX) and the relevant ·orders of
the Government to execute contracts for the sale of forest produce
upto an amount of Rs. J,00,000 when payment is received in full
at the time of delivery and upto Rs. 10,000 or upto Rs. 50,000
with the previous sanction of the Provincial 'Government when
payment is not received in full at the time of delivery.
The exercise of this power by the Chief Conservator and
other officers is subject to the rules given in the Government Notification and rule !(a) of these rules relating to contracts for forest
produce reads:
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"No timber or other forest produce may be ordinarily
sold except on cash payment in full at the time of delivery. Payment in instalments may, however, be considered
as payment in full at the tifi1e of delivery provided that
there is a clause in the agreement to the effect that when
Divisional .Forest Officer considers that the value of any
forest produce removed by the purchaser equals or exceeds the amount of purchase money paid by him upto
390
SUPREME COURT REPORTS
(1965] 3 S.C.11.
that time, the Divisional Forest Officer may stop further
removaf until the purchaser has paid such further sum,
as in the opinion of the Forest Officer, may be sufficient
to cover the excess value of the forest produce removed ,
or to be removed"
In view of this rule it would be deemed that the payment of the
purchase price had been made in full at the time of delivery,
though the actual payment was to be made in four instalments.
We are therefore of opinion that the sale of the forest produce to respondent No. 2 was finalised on the date of sale subject
of course to the acceptance of his bid by the competent authority,
· the Chief Conservator of Forests and that the fact that the Chief
Conservator signed the deed on May 3, 1957, does not make the
sale effective from the date of his signature. His signatures do not
ratify any action of the Divisional Forest Officer which he took
beyond his competence, but simply completes the execution of the
deed of contract and relate back its execution to the. date on which
the sale took place and the contractor and the Forest Officer had
signed the document.
We may now refer to the approach of the High. Court to this
question of the deed of contract operating from the date of its
execution by respondent No. 2. It was of opinion that respondent
No. 2, and the Divisional Forest Officer, had made the contract
in December 1956 long before April 28, 1957 and even if the
Divisional Forest Officer was not competent to enter into the contract, his act had been subsequently ratified by the competent
authority and that therefore the ratification related back to the
date of the contract and had the same effect as if the Divisional
Forest Officer had performed the act by the authority of the Chief
' Conservator of Forests. With respect, we do not consider this
approach to be correct. The Divisional Forest Officer had authority under the statutory rules for holding the auction and for provisionally accepting the bid. All that he did was within his authority. He did not actually enter into the contract with respondent
No. 2. He simply signed the standard form ·of the contract for the
satisfaction of the competent authority to the effect that its accepting the bid and entering into the contract would be correct as is
the usual official procedure where subordinates have to put up
or forward papers to the superior officers for approval, sanction
or orders. The right view of the entire procedure adopted in the
case has been already stated by us above.
The other point urged by Mr. Agarwala, for the appellant,
·is that in view of r. 8 of the Forest Contract Rules which empowered the Divisional Forest Officer to stop the removal of forest produce sold on his finding that the value of the forest produce already
removed by the contractor exceeded the amount of the instalments
· already paid by him, the seller in this case had reserved the right
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BADRI PRASAD v. STATE Oii' llUDHYA PRADESH (Raghubar Dayal, J.)
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of disposal of the forest produce until certain conditions were
fulfilled and that therefore s. 25(1) of the Indian Sale of Goods
Act, 1930 (Act III of 193'0) applies to the facts of the case andi
that therefore, notwithstanding delivery of the forest produce to
respondent No. 2 in February 1957, the property in it did not
pass to respondent No. 2 until the conditions imposed by the
seller were fulfilled. There is nothing in the deed of contract or
in the Forest. Contract Rules which reserved such a right of disposal in the State. Right given to the Government under r. 8 is
the right to stop the removal of forest produce when the value of
the forest produce already removed exceeded the amount of the
instalments paid. This is to regulate the. compliance with the conditions of the auction one of which was that ordinary forest
produce was to be sold on payment in full at the time of delivery.
The contractor had therefore to pay full price he had bid at the
date of the sale or any day prior to the delivery of the goods to
him in February 1957. The provision for allowing payment by
instalments is a concession for the convenience of the contractor
and it is provided in the rule that payment in instalments may
however be considered as payment in full at the time of delivery
provided there be a clause in the agreement in accordance with
the provisions of r. 8 of the Forest Contract Rules.
Reference may here be made to the provisions of s. 83 of the
Indian Forest Act, 1927 (Act XVI of 1927). Subsection (I) provides that when any money is payable for or in respect of any forest
produce, the amount thereof shall be deemed to be a first charge
on such produce, and such. produce may be taken possession of
by a Forest Officer until such amount has been paid. Rule 8 of
the Forest Contract Rules is therefore in pursuance of the statutory provisions of s. 83 of the Forest Act which creates a lien on
forest produce for the money payable to Government. Action
which the Divisional Forest Officer can take for stopping the
removal of the forest produce sold is in pursuance of the statutory
authority conferred on him and n·ot in pursuance of any terms of
the contract between respondent No. 2 and the Government.
When a contractor is deemed to have paid in full the price
there could be no occasion for the Government to reserve a right
of disposal of the property even when its delivery had been made
to the purchaser. As already stated, it is s. 20 of the Sale of Goods
Act which will apply to this case. This section provides that whrre
there is an unconditional contract for the sale of specific goods
in a deliverable state, the property in the goods passes to the buyer
when the contract is made and it is immaterial whether the time
of payment of price or the time of delivery of the goods or both
is postponed. The contract was unconditional, the goods sold were
specific. They were in a deliverable state and therefore the property in the goods did pass at the time when the contract was
made. This section would have applied even if the time of payment
392
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[1965] 3 s.o.a.
of price had been postponed. In the present case, as already
stated, the payment allowed by instalments is to be deemed payment in full at the time of the delivery of the goods sold.
The last contention raised for the appellant is that as the
contract was signed by the Chief Conservator about a week after
the goods lying in sections B, C and D had been burnt by fire,
the contract must be deemed to have been not made at al! by the
Chief Conservator who could not have contracted to sell goods
which .did not exist. The contention really is that there could be
no ratification of the act of the Divisional Forest Officer, who had
no authority to enter into the contract, after the goods had ceased
to exist and reliance is placed in support of this contention on what
is stated at para 415 at p. 177 of Halsbury's Laws of England,
Vol. I, III Edn. It is stated there:
"As to the time within which ratification may take
place, the rule is that it must be either within a period
fixed by the nature of the particular case, or within a
reasonable time, after which an act cannot be ratified to
the prejudice of a third .person".
This is the general proposition and will not be applicable to this
case as no third person is being prejudiced on account of the signing of the contract by the Chief Conservator on May 3, 1957, a
week after the fire had destroyed certain goods purchased. Further,
it is stated in the same paragraph:
"But by an anomalous rule limited to marine insurance
a contract of marine insurance made by an agent on the
principal's property may be ratified by the principal after
notice of Joss".
This proposition is well-settled in England. In Williams v. North
China Insurance Co.(') this proposition was sought to be reviewed.
Cockburn C.J. said at p. 764:
"The existing authorities certainly show that when an
insurance is effected without authority by one person on
another's behalf, the principal may ratify the insurance
even after the loss is known. Mr. Benjamin asked us, as
a Court of Appeal, to review those authorities ...... Where
an agent effected an insurance subject to ratification, the
loss insured against is very likely to happen before ratification, and it must be taken that the insurance so effected
involves that possibility as the basis of the contract. It
seems to me that, both according to authority and the
principles of justice, a ratification may be made in such
a case".
These observations would fully apply to the facts of the present
case, even if we were of the view that the Chief Conservator ratified the unauthorised act of the Divisional Forest Officer on May
(1) L.R. [1876] I C.P.D. 757.
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BADlll PRASAD v. STATE OF MADHYA PRADF.SH (Raghubar Dayal, J.)
395
3; 1957, after the fire had taken place. The provisional acceptance
of the bid and the signing of the deed by the Divisional Forest
Officer must, in the circumstances, be held to be subject to ratifi·
cation. It was within the realm of possibility that the forest
produce might be lost on account of fire or any other risk men·
tioned in r. 32 of the Forest Contract Rules before the deed of
contract was formally signed by the Chief Conservator. The
tract entered into therefore involved the possibility of the loss of
goods by fire as the basis of the contract.
Lastly, reference may be made to r. 32 of the Forest Contract
Rules which provides that a forest contractor shall not be entitled
to any compensation whatever for any loss that may be sustained
by reason of fire etc. This is not a suit for compensation by the
contractor respondent No. 2, but iii essence the basis of tlie suit
is that the forest contractor did not get possession of the forest
produce in sections B, C and D, that such produce was lost by
fire and that therefore he was not to pay the second, third and
fourth instalments and cannot be said to be iii default iii payment
of those instalments. The loss of such goods by reason of fire
therefore does not in any way give support to the claim of the
appellant.
We are therefore of opinion that the appellant's suit has been
rightly dismissed by the High Court. We accordingly dismiss the
appeal. There will be no order as to costs.
Appeal dismissed.