Badri Prasad Vs. State of Madhya
Pradesh & ANR  INSC 70 (16 March 1965)
16/03/1965 DAYAL, RAGHUBAR DAYAL, RAGHUBAR
GAJENDRAGADKAR, P.B. (CJ) RAMASWAMI, V.
CITATION: 1966 AIR 58 1965 SCR (3) 381
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 timber 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 coupe and paid the first installment of the purchase price
immediately. The appellant stood surety for the payment of the remaining three installments.
The coupe was divided into 4 sections according to the rules 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 installment
which was due on 1st March 1957, and so, on 25th April the appellant 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 amount paid. On 28th April a fire broke cut 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
Since the 2nd respondent had not paid the
later installments proceedings were commenced by the 1st respondent against the
appellant, whereupon he filed a suit for restraining the 1st respondent from
continuing the proceedings. The suit was decreed by the trial court, but
dismissed on appeal, by the High Court.
In his appeal to this Court, the appellant
contended that the 2nd respondent had not been put in possession of the timber
sold, except the portion in 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 installments, the transfer of property in the timber
being a condition precedent to his liability.
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 H] The timber was sufficiently identifiable and was therefore
specified goods and there was nothing in the contract postponing possession
till the other installments have been paid. The fact that the contract was
signed by the Chief 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 contracts plainly take into consideration the lapse of time
between the execution by the lessee and by the competent forest authority, and
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 within the realm of 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 bid by the competent authority. [387
E-H; 388 F; 393 A-B] Williams v. North China Insurance Co., L.R. (1876)1 C.P.D.
Rule 8 of the Forest Contract Rules empowers
the Divisional Forest Officer to stop the removal of the timber on his finding
that the value of the timber already removed exceeded the amount of installments
paid. 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 installments could be considered 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 occasion for the
Government to reserve a right of disposal. The provision in r. 8 is only in
pursuance of the statutory provision in s. 83 of the Forest Act. 1927, which
provides that when any money 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 D]
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. Agarwala, W. S. Barlingay and A. G.
Ratnaparkhi, for the appellant.
M. Adhikari, Advocate General for the State
of Madhya Pradesh, B. sen, M. S. K. Sastri, M. N. Shroff, R. P. Kapur for 1. 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 injunction restraining the State Government, Madhya Pradesh,
defendant respondent 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 Forest Officer, Harda, the cut timber and arkat trees of
coupe No. 9 Eastern, East Kalibhit Range, in Harda Forest 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 installments, according to para 4 of
the deed of contract. Rs. 17,600 were to be paid at once and were so paid. The
other installments were due on March 1, May 15 and December 15, 1957. These installments
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/felled/ 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
The appellant Badri Prasad signed this
certificate as a witness. The work could continue upto June 30, 1958.
Interest was to be charged at 6-1/4 per cent
per annum in respect of the installments 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 deal. 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 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 1 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 in the payment of the second installment
which was due on March 1, 1957 and did not pay that amount till April 25, 1957,
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 the
second installment 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 authorities that no further removal of the forest produce would be
allowed in view of the default of payment of the second installment. The
licence book and the transit pass were taken back by the Government Forester,
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 installments.
The appellant sought to avoid his liability
as surety for the non-payment of the amount inter-alia on the -round 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 installments.
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 installment as
It was only on due payment of each installment
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 and until the licence and the
transit pass were duly checked 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. 1 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 installments
had been paid and that the deed of contract was signed after the fire had taken
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 (1) 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.
387 Chapter XX of Part IV of Vol. 1 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
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 was 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 must have lain, it being presumed that the rules for the
felling of trees were properly complied with by the forest authorities,
The goods sold therefore were specified
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 installments have been paid. The relevant provisions
of r. 18 of the Forest 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 installments 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 section B, C and D till the various installments
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 L/B(N)3SCI-12 388 exigencies of the procedure to be followed
may have to sign after 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 is
authorized under the rules to conduct the auction sale.
The Divisional Forest Officer and respondent
No. 2 thereafter signed the 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 December 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 completed. His
formal signature on the deed of contract relates back the contract to the date
of auction when the bid of respondent 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 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. 11 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 if they had signed
on two different 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 No. 2.
Instruction 10 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 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 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
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
389 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
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 installments
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 1. 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. 1 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. 1,00,000 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
The exercise of this power by the Chief
Conservator and other officers is subject to the rules given in the Government
Notification and rule 1(a) of these rules relating to contracts for forest
"No timber or other forest produce may
be ordinarily sold except on cash payment in full at the time of delivery.
Payment in installments may, however, be considered as payment in full at the
time 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 that time, the Divisional Forest Officer may stop further
removal 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 installments.
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
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 installments already paid by him, the
seller in this case had reserved the right 391 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 1930 applies to the facts of the
case and 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 installments
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 installments is a
concession for the convenience of the contractor and it is provided in the rule
that payment in installments 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 (1)
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
not in pursuance of any terms of the contract between respondent No. 2 and the
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 where 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 of price hand been postponed. In
the present case, as already stated, the payment allowed by installments 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 all 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. 1, 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
This proposition is well-settled in England.
In Williams v. North China Insurance Co.(1)
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.  1 C.P.D. 757.
393 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
ratification. It was within the realm of possibility that the forest produce
might be lost on account of fire or any other risk mentioned in r. 32 of the
Forest Contract Rules before the deed of contract was formally signed by the
Chief Conservator. The contract entered into therefore involved the possibility
of the loss of goods by fire as the basis of the Contracts 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 in essence the basis 'of the 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 installments and cannot be said to be in
default in payment of those installments. 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.