Report No. 30
56. Privity (Combined effect).-On these facts, the Supreme Court observed first, as regards the purchases made by the Bombay party only as agents of the Respondents as follows (Para 21, p. 339, AIR):-
It will be seen that in respect of the purchases (falling under this head), the Bombay party acted merely as the agents of the respondents, privity being established between the latter and the African sellers. The purchases are thus purchases which occasioned the import and therefore come within the exemption.
As regards (the other kind of purchases), the Bombay party are the purchasers and they sell the goods as principals to the respondents at the port of destination by issuing separate delivery orders against payments. No privity being established between the respondents and the African sellers, the respondents' purchases on only be described as purchases from Bombay party of the goods within the State; in other words, they were local purchases and do not come within the exemption."
57. Thus, it is clear that the existence of privity of contract between the Indian buyer and the overseas seller, in the one case, rendered the purchases as purchases in the course of import, while the absence of it in the other case rendered the purchases as not in the course of import. It is obvious, that the Supreme Court by adopting the principle of privity of contract only stressed the necessity of the existence of a contrast between the Indian seller or buyer and the foreign party. The Shorter Oxford English Dictionary gives the meaning of "privity" as any relation between two parties recognised by law, e.g. covenant. Earl Jowitt in his Dictionary of English Law gives the meaning of "Privity of Contract" as follows:-
"Privity of contract is the relation between the immediate parties to a contract as where A agrees with B to pay him £ 100.".
We may now refer to the later decisions of the Supreme Court in which the two Travancore cases have been followed.
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