Friday, 19 February 2016

How to ascertain that sale of goods has taken place?


 Section 18 of the Sale of Goods Act
postulates that when a contract for sale is in respect of

unascertained goods no property in the goods is transferred to
the buyer unless and until the goods are ascertained. Even
when the contract for sale is in respect of specific or ascertained
goods, the property in such goods is transferred to the buyer
only at such time as the parties intend. The intention of the
parties in this regard is to be gathered from the terms of the
contract, the conduct of the parties and the circumstances of the
case. Even if the motor vehicles were to be treated as specific
and ascertained goods at the time when the sale invoice with all
the specific particulars may be issued, according to Section 21 of
the Sale of Goods Act, in case of such a contract for sale also,
when the seller is bound to do something to the goods for the
purpose of putting them into a deliverable state, the property
does not pass until such thing is done and the buyer has notice
thereof. In the light of circumstances governing motor vehicles
which may safely be gathered even from the Motor Vehicles Act
and the Rules, it is obvious that the seller or the
manufacturer/dealer is bound to transport the motor vehicle to
the office of registering authority and only when it reaches there
safe and sound, in accordance with the statutory provisions
governing motor vehicles it can be said to be in a deliverable
state and only then the property in such a motor vehicle can

pass to the buyer once he has been given notice that the motor
vehicle is fit and ready for his lawful possession and registration.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2446 OF 2007
Commissioner of Commercial
Taxes, Thiruvananthapuram, Kerala …..Appellant
Versus
M/s K.T.C. Automobiles …..Respondent
Dated;January 29, 2016.
SHIVA KIRTI SINGH, J.

1. The Commissioner of Commercial Taxes,
Thiruvananthapuram, Kerala has preferred this appeal against
judgment and order dated 20.3.2006 passed by the High Court
of Kerala in MFA No. 1000 of 2002. The High Court exercising an
appellate power allowed the appeal filed by M/s K.T.C.
Automobiles, the respondent herein and set aside the original
order passed by the Intelligence Officer under Section 45A of the
Kerala General Sales Tax Act (for brevity ‘KGST Act’) imposing a
penalty of Rs.86 lakhs upon the respondent dealer for the
alleged non-maintenance of complete and true accounts during
the period 1.4.1999 to 31.3.2000. The High Court also set aside
the suo-motu order of Commissioner of Commercial Taxes dated
12.8.2002 passed under section 37 of the KGST Act whereby the
Commissioner had set aside appellate order of the Deputy
1Page 2
C.A.No. 2446/07
Commissioner dated 8.1.2002 and had restored the order of the
Intelligence Officer.
2. The undisputed facts disclose that the respondent is in the
business of purchase and sale of Hyundai cars manufactured by
Hyundai Motors Limited, Chennai. As a dealer of said cars, both
at Kozhikode (Calicut), Kerala where their head office is located
and also at Mahe within the Union Territory of Pondicherry
where they have a branch office, they are registered dealer and
an assessee under the KGST Act, the Pondicherry Sales Tax Act
as well as the Central Sales Tax Act. The dispute relates to
assessment year 1999-2000. Its genesis is ingrained in the
inspection of head office of the respondent on 1.6.2000 by the
Intelligence Officer, IB, Kozhikode. After obtaining office copies of
the sale invoices of M/s K.T.C. Automobiles, Mahe (branch office)
for the relevant period as well as some additional period and also
cash receipt books, cash book etc. maintained in the head office,
he issued a show cause notice dated 10.8.2000 proposing to levy
Rs.1 crore by way of penalty under Section 45A by the KGST Act
on the alleged premise that the respondent had wrongly shown
263 number of cars as sold from its Mahe Branch, wrongly
arranged for registration under the Motor Vehicles Act at Mahe
and wrongly collected and remitted tax for those transactions
under the provisions of Pondicherry Sales Tax Act. According to
2Page 3
C.A.No. 2446/07
the Intelligence Officer, the sales were concluded at Kozhikode
and hence the vehicles should have been registered within the
State of Kerala. Therefore, by showing the sales at Mahe the
respondent had failed to maintain true and complete accounts
as an assessee under the KGST Act and had evaded payment of
tax to the tune of Rs.86 lakhs and odd during the relevant
period. The respondent submitted a detailed reply and denied
the allegations and raised various objections to the proposed levy
of penalty. The Intelligence Officer by his order dated 30.3.2001
stuck to his views in the show cause notice but instead of Rs.1
crore, he imposed a penalty of Rs.86 lakhs only.
3. The respondent appealed against that order. Their appeal
was allowed by the Deputy Commissioner by a detailed order
dated 8.1.2002 which has been noted and examined with
meticulous care by the High Court in paragraphs 9 to 11 of the
impugned judgment and later approved. Against the appellate
order in favour of assessee, the Commissioner of Commercial
Taxes initiated a suo-motu proceeding in exercise of power under
Section 37 of the KGST Act and passed a final order on
12.8.2002 setting aside the appellate order and restoring the
original order of penalty passed by the Intelligence officer.
Against this suo-motu order the respondent preferred
Miscellaneous First Appeal before the High Court of Kerala
3Page 4
C.A.No. 2446/07
which was numbered as MFA No. 1000 of 2002 and ultimately
allowed by the impugned order dated 20.3.2006.
4. Mr. K. Radhakrishnan, learned senior advocate for the
appellant made detailed oral submissions on facts as well as law.
The same has been supplemented by way of written submissions
also. The submission on behalf of appellant is that the order
imposing penalty is based upon proper appreciation of all the
facts and circumstances noted by the Intelligence Officer in the
show cause notice as well as in his final order. According to
submissions, there was no other conclusion possible except to
hold that the respondent dealer had created colorable device to
evade sales tax in Kerala by adopting questionable means such
as providing incorrect addresses of buyers for the purpose of
facilitating registration of the motor vehicles at Mahe. According
to Mr. Radhkrishnan, the sales transactions stood concluded in
Kozhikode, Kerala and hence the respondent should not have
given any facilities to residents of Kerala in getting motor
vehicles registered at Mahe. By adoption of such means, the
respondent had derived advantage of paying sales tax in
Pondicherry where the rate was lower and evaded payment of
lawful tax under the KGST Act in Kerala.
5. To elaborate and support the aforesaid factual stance, the
learned senior counsel has highlighted some facts which have
4Page 5
C.A.No. 2446/07
been duly noticed by the authorities under the KGST Act as well
as the High Court. He highlighted that in the “customer booking
registration and necessary fitting instructions” issued from main
office at Kozhikode the respondent gave an unwarranted option
to the customers of registering the vehicle at Mahe. It was
contended on behalf of appellant that such option was not for
lawful purposes of promoting sales at Mahe but an offer to
facilitate registration of cars at Mahe against the provisions of
Motor Vehicles Act and the Rules which require registration at
the place of residence or place of business of the owner of the
vehicle. Some allegations were highlighted to contend that in
some purchase orders the buyers had given Kerala addresses
but the respondent as a dealer raised sale invoices showing
Mahe addresses which were fictitious. This was alleged to be a
deliberate act on the part of dealer to escape tax liability in
Kerala. It was also highlighted that same cash receipt book in
the head office at Kozhikode was at times used for issuance of
cash receipts for transactions where the sale and registration
was shown at Mahe. Letters of few buyers allegedly supported
the allegation that sometimes even the delivery of the vehicle was
given at Kozhikode although it was registered at Mahe.
6. A legal issue was raised on behalf of the appellant that as
per Explanation under Section 45 of the KGST Act, the burden is
5Page 6
C.A.No. 2446/07
on the assessee to show that penalty is not liable to be imposed
on him. It is submitted that the respondent had failed to
discharge such burden imposed by law. Reliance was placed
upon Sections 39 and 40 of the Motor Vehicles Act along with
Rules 46 and 47 of the Rules framed under the said Act, in
support of the contention that in law the obligation to register a
motor vehicle is on the owner and that necessarily implies that
registration under the Motor Vehicles Act is a post-sale event. In
support of this proposition reliance was placed upon a judgment
of Bombay High Court in the case of Additional Commissioner
of Sales Tax v. Sehgal Autoriders Pvt. Ltd., 2011 SCC OnLine
Bom 872 = 43 VST 398 (Bom) and also upon a judgment of this
Court in Association of Registration Plates v. Union of India,
(2004) 5 SCC 364. Paragraph 28 of this judgment is as follows:
“28. Section 2(21-A) defines “manufacturer’
and it means a person who is engaged in the
manufacture of motor vehicles. Section 2(28)
defines “motor vehicles” or “vehicle” and it means
any mechanically propelled vehicle adapted for
sue upon roads. A motor vehicle manufactured
by a manufacturer is sold without a registration
plate. Thereafter the dealer sells the motor
vehicle to a customer again without the
registration plate. This position will be clear
from the proviso to Section 39 of the Act which
says that nothing in the section shall apply to a
motor vehicle in possession of a dealer subject to
such conditions as may be prescribed by the
Central Government. Section 41 also points to
the same position as it enjoins an application on
behalf of the owner of a motor vehicle for its
registration. The question of issuing a certificate
6Page 7
C.A.No. 2446/07
of registration and assigning it a registration
mark arises only after sale of a motor vehicle.
Therefore, until the motor vehicle has been sold
to a person by a dealer, the registering authority
would not come into the picture and there is no
occasion for assigning it a registration mark…..”
7. The aforesaid issue need not detain us any further in view
of cited judgments and combined reading of Section 39 and 41 of
the Motor Vehicles Act, 1988. Section 41 in particular leaves no
manner of doubt that application for registration of a motor
vehicle is required to be made by or on behalf of the owner in the
prescribed form along with prescribed fee within a specified
period. The registering authority after being satisfied with all
statutory compliances, has a corresponding duty to issue a
certificate of registration in the form prescribed by the Central
Government. But even after accepting the proposition that
registration of a motor vehicle is a post-sale event, the question
as to when the property in a motor vehicle actually passes to the
buyer remains to be examined in the light of provisions of Motor
Vehicles Act and the Rules framed there under as well as the
other relevant provisions of law. According to submissions
advanced on behalf of appellant, for deciding the issue as to
when and where sale takes place in respect of motor vehicle
bought by a buyer from a dealer, the relevant provisions of law
are in Article 286(2) of the Constitution of India, Section 4(2)
Central Sales Tax Act, 1956 and Sections 4, 19 and 20 of the
7Page 8
C.A.No. 2446/07
Sale of Goods Act, 1930. For the sake of clarity those provisions
are extracted below:
“Article 286(2) of the Constitution of India –
Parliament may by law formulate principles for
determining when a sale or purchase of goods
takes place in any of the ways mentioned in
clause (1).”
“Section 4(2) Central Sales Tax Act, 1956 – A
sale or purchase of goods shall be deemed to
take place inside a State, if the goods are within
the State –
(a) in the case of specific or ascertained
goods, at the time the contract of sale is
made; and
(b) in the case of unascertained or future
goods, at the time of their appropriation to
the contract of sale by the seller or by the
buyer, whether assent of the other party is
prior or subsequent to such appropriation.
“Sale of Goods Act, 1930-
Section 4 - Sale and agreement to sell
(1) A contract of sale of goods is a contract
whereby the seller transfers or agrees to
transfer the property in goods to the buyer for a
price. There may be a contract of sale between
one part-owner and another.
(2) A contract of sale may be absolute or
conditional.
(3) Where under a contract of sale the property
in the goods is transferred from the seller to the
buyer, the contract is called a sale, but where
the transfer of the property in the goods is to
take place at a future time or subject to some
condition thereafter to be fulfilled, the contract
is called an agreement to sell.
8Page 9
C.A.No. 2446/07
(4) An agreement to sell becomes a sale when
the time elapses or the conditions are fulfilled
subject to which the property in the goods is to
be transferred.
Section 19 - Property passes when intended
to pass
(1) Where there is a contract for the sale of
specific or ascertained goods the property in
them is transferred to the buyer at such time as
the parties to the contract intend it to be
transferred.
(2) For the purpose of ascertaining the intention
of the parties regard shall be had to the terms
of the contract, the conduct of the parties and
the circumstances of the case.
(3) Unless a different intention appears, the
Rules contained in sections 20 to 24 are Rules
for ascertaining the intention of the parties as
to the time at which the property in the goods is
to pass to the buyer.
Section 20 - Specific goods in a deliverable
state
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 the price or the
time of delivery of the goods, or both, is
postponed.”
8. Before evaluating the impact of aforesaid legal provisions
relied upon on behalf of the appellant, it would be appropriate to
notice the arguments advanced and the stand adopted by Mr. K.
Prasaran, learned senior advocate for the respondent.
According to him, the situs of first sale of a motor vehicle by a
9Page 10
C.A.No. 2446/07
dealer is only at the place of registration of the vehicle by the
authority empowered to register motor vehicles under Chapter IV
of the Motor Vehicles Act. This submission is founded upon a
hypothesis that until the vehicle is registered in accordance with
the provisions in Chapter IV of the Motor Vehicles Act read with
the Central Motor Vehicles Rules, it continues to have the
character of an unascertained good. In other words, till the
engine number, chassis number is ascertained by the registering
authority on physical verification of the vehicle and entered into
the prescribed form for showing registration, the vehicle cannot
be identified as one belonging to the purchaser. Only upon valid
registration, as per submissions, the vehicle is appropriated to
the purchaser. In support of this proposition, Mr. Prasaran also
referred to Section 4 of the Central Sales Tax Act already noted
earlier. He also referred to Section 2(xxi) of the KGST Act which
defines sale to include every transfer of the property in goods by
one person to another in the course of trade or business except
transactions of a mortgage, hypothecation, charge or pledge.
Particular emphasis was laid on explanation 4(a)(ii) to this
definition of ‘Sale’. This explanation is more or less similar in
intent and meaning as Section 4(2) of the Central Sales Tax Act,
1956 extracted earlier. It conveys that for the purposes of KGST
Act, the sale or purchase of unascertained or future goods shall
10Page 11
C.A.No. 2446/07
be deemed, if the goods are within the State at the time of their
appropriation to the contract of sale or purchase. Reliance was
also placed on Paragraph 8 of the judgment of this Court in Tata
Engineering and Locomotive Co. Ltd. v. Assistant
Commissioner of Commercial Taxes (1970) 1 SCC 622, which
reads as under:-
“…There had been many instances where the
vehicles had been actually delivered from the
stockyards prior to the issue of the allocation
letter. The vehicles delivered to the dealer from
the stockyard were accounted for against the
allocation over the period. It was the stockyard
incharge who appropriated the required number
of vehicles to the contract of sale out of the
stocks available with him and put down the
vehicle engine and chassis number in the
delivery challan. This was done after a delivery
order had been addressed by the sales office at
Bombay to the stockyard in-charge for delivery of
stated number of vehicles of specified model to a
particular dealer. Till such appropriation of
vehicles through specification of the engine and
chassis numbers, it was always open to the
company to “allot any vehicle to any purchaser or
to transfer the vehicles from the stockyard in one
State to a stock-yard in another State.””
(emphasis supplied)
9. According to the respondent the fact that the vehicles in
question were registered at Mahe, irrefutably leads to the
conclusion of their being produced before the Registering
Authority at Mahe prior to registration, as per requirement of
Section 44 of the Motor Vehicles Act. It was pointed out that
Chapter III of the Central Motor Vehicles Rules deals with
11Page 12
C.A.No. 2446/07
registration of motor vehicles and as per Rule 33, a dealer is
exempted from the necessity of registration even though in
possession of a motor vehicle, if it obtains a Trade Certificate
from the Registering Authority of the area where he carries on
his business. Form 16 under Rule 34 is a form of application for
grant or renewal of Trade Certificate whereas Form 17 contains
the form of Trade Certificate. These forms show that only
general information as to class of motor vehicle is noted for the
purpose of Trade Certificate and not specific particulars of any
vehicle such as engine number or chassis number. Rule 40
places restrictions on use of Trade Certificate by specifying that
it shall be used only by the person to whom it is issued. The
exceptions indicated in this Rule also do not permit use by a
purchaser of a vehicle. Rule 41 enumerates the purposes for
which motor vehicle with Trade Certificate may be used. A
perusal of the purposes reveals that it is permissible for a dealer
only who is holder of a Trade Certificate to use a vehicle with
Trade Certificate for test, repair etc. including for proceeding to
and from any place for its registration. Rule 42 prohibits the
holder of a Trade Certificate from delivering a motor vehicle to a
purchaser without registration, whether temporary or
permanent.
12Page 13
C.A.No. 2446/07
10. On behalf of respondent, reliance was placed upon a
judgment of Bombay High Court dated 17.1.2014 in First Appeal
No. 166 of 2009 (entitled The New India Assurance Co. Ltd. vs.
Clancy Arcanjia Dias). That judgment shows that a temporary
registration number was obtained by the manufacturer of
Mahindera Jeep at Nasik where the vehicle was manufactured
and the manufacturer had also insured the vehicle during its
transit by road from Nasik to Goa. After the vehicle was handed
over to dealer at Goa, as per records, it was covered by a valid
Trade Certificate and also insurance cover in respect of vehicles
with the dealer. It was held that since the road accident leading
to claim for compensation happened before the jeep was
delivered to the purchaser, the liability to pay the compensation
was upon the appellant, which had issued the cover note for
vehicles held by the dealer under the valid Trade Certificate.
11. On facts it has been submitted on behalf of the respondent
that the allegation by the Intelligence Officer that the assessee
has not maintained proper accounts for justifying imposition of
penalty, is based upon a wrong assumption that sales of 263
cars leading to their registration at Mahe were actually sales in
Kerala.
12. According to respondent, when the entire facts, relevant
documents and alleged evidence were before the authorities as

well as the High Court, the burden of proof under Section 45A of
the KGST Act loses its significance. The appeal to the High
Court under Section 40 of the KGST Act is a statutory appeal on
questions of law as well as fact and hence, the finding of facts
returned by the High Court by confirming the findings of the
Appellate Authority, the Deputy Commissioner need no
interference by this Court. According to the respondent, the
Deputy Commissioner and the High Court have come to a
concurrent finding that the materials do not lead to any
conclusive proof that the vehicles in question had been sold at
Kozhikode in Kerala. According to both the authorities, the
materials, at best, raise only some suspicion which can never
take the place of proof which is necessary for imposition of
penalty upon the assessee.
13. From the above submissions and counter submissions of
the parties as well as relevant statutory provisions in the Motor
Vehicles Act, 1988, Central Motor Vehicles Rules, 1989, Section
4(ii) of Central Sales Tax Act, 1956, Sections 4, 19 and 20 of the
Sales of Goods Act and relevant provisions of the KGST Act and
Rules noticed earlier, we find no difficulty in accepting the
submissions advanced on behalf of the appellant that the
application of registration is by law required to be made by or on
behalf of the owner whose name is to be mentioned in the
14Page 15
C.A.No. 2446/07
registration form along with relevant particulars of the vehicle
such as engine number and chassis number and hence,
registration of a motor vehicle is a post-sale event.
14. But this legal proposition does not take the appellant far.
It must be carefully seen as to when the properties, particularly
possession of a motor vehicle passes or can pass legally to the
purchaser, authorizing him to apply for registration. Only after
obtaining valid registration under the Motor Vehicles Act, the
purchaser gets entitled to use the vehicle in public places.
Under the scheme of Motor Vehicles Act, 1988 and the Central
Motor Vehicles Rules, 1989 the dealer cannot permit the
purchaser to use the motor vehicle and thus enjoy its possession
unless and until a temporary or permanent registration is
obtained by him. Only thereafter, the vehicle can safely be said
to be no more under possession of the dealer. Clearly, mere
mentioning of engine number and chassis number of a motor
vehicle in the invoice of sale does not entitle the intending
purchaser to appropriate all the goods, i.e. the motor vehicle till
its possession is or can be lawfully handed over to him by the
dealer without violating the statutory provisions governing motor
vehicles. Such transfer of possession can take place only when
the vehicle reaches the place where the registering authority will
be obliged to inspect for the purpose of finding out whether it is
15Page 16
C.A.No. 2446/07
a roadworthy and register-able motor vehicle and whether its
identification marks tally with those given in the sale invoice and
the application for registration. The possession can lawfully be
handed over to the purchaser at this juncture because law
requires the purchaser as an “owner” to make an application for
registration but at the same time the law also prohibits use of
the motor vehicle by the owner until it is duly registered by the
Registering Authority. Hence, in order to satisfy the requirement
of law noticed above, the dealer can deliver possession and
owner can take possession and present the vehicle for
registration only when it reaches the office of Registering
Authority. With the handing over of the possession of a specific
motor vehicle just prior to registration, the dealer completes the
agreement of sale rendering it a perfected sale. The purchaser
as an “owner” under the Motor Vehicles Act is thereafter obliged
to obtain certificate of registration which alone entitles him to
enjoy the possession of the vehicle in practical terms by enjoying
the right to use the vehicle at public places, after meeting the
other statutory obligations of Insurance etc. Hence, technically
though the registration of a motor vehicle is a post-sale event,
the event of sale is closely linked in time with the event of
registration. Neither the manufacturer nor the dealer of a motor
vehicle can permit the intended purchaser having an agreement
16Page 17
C.A.No. 2446/07
of sale to use the motor vehicle even for taking it to the
registration office in view of the statutory provisions already
noticed. Hence lawful possession with the right of use is
permissible to be given to the intended owner only after reaching
the vehicle to the office of Registering Authority. Thus seen, in
practical terms though sale precedes the event of registration,
in normal circumstances and as the law stands, it is co-terminus
with registration of a new motor vehicle.
15. Article 286(2) of the Constitution of India empowers the
Parliament to formulate by making law, the principles for
determining when a sale or purchase of goods takes place in the
context of clause (1). As per Section 4(2) of the Central Sales Tax
Act, in the case of specific or ascertained goods the sale or
purchase is deemed to have taken place inside the State where
the goods happened to be at the time of making a contract of
sale. However, in the case of unascertained or future goods, the
sale or purchase shall be deemed to have taken place in a State
where the goods happened to be at the time of their
appropriation by the seller or buyer, as the case may be.
Although on behalf of the respondent, it has been vehemently
urged that motor vehicles remain unascertained goods till their
engine number or chassis number is entered in the certificate of
registration, this proposition does not merit acceptance because

the sale invoice itself must disclose such particulars as engine
number and chassis number so that as an owner, the purchaser
may apply for registration of a specific vehicle in his name. But
as discussed earlier, on account of statutory provisions
governing motor vehicles, the intending owner or buyer of a
motor vehicle cannot ascertain the particulars of the vehicle for
appropriating it to the contract of sale till its possession is
handed over to him after observing the requirement of Motor
Vehicles Act and Rules. Such possession can be given only at
the registering office immediately preceding the registration.
Thereafter only the goods can stand ascertained when the owner
can actually verify the engine number and chassis number of the
vehicle of which he gets possession. Then he can fill up those
particulars claiming them to be true to his knowledge and seek
registration of the vehicle in his name in accordance with law.
Because of such legal position, prior to getting possession of a
motor vehicle, the intending purchaser/owner does not have
claim over any ascertained motor vehicle. Apropos the above,
there can be no difficulty in holding that a motor vehicle remains
in the category of unascertained or future goods till its
appropriation to the contact of sale by the seller is occasioned by
handing over its possession at or near the office of registration
authority in a deliverable and registrable state. Only after

getting certificate of registration the owner becomes entitled to
enjoy the benefits of possession and can obtain required
certificate of insurance in his name and meet other requirements
of law to use the motor vehicle at any public place.
16. In the light of legal formulations discussed and noticed
above, we find that in law, the motor vehicles in question could
come into the category of ascertained goods and could get
appropriated to the contract of sale at the registration office at
Mahe where admittedly all were registered in accordance with
Motor Vehicles Act and Rules. The aforesaid view, in the context
of motor vehicles gets support from sub-section (4) of Section 4
of the Sale of Goods Act. It contemplates that an agreement to
sell fructifies and becomes a sale when the conditions are
fulfilled subject to which the properties of the goods is to be
transferred. In case of motor vehicles the possession can be
handed over, as noticed earlier, only at or near the office of
registering authority, normally at the time of registration. In
case there is a major accident when the dealer is taking the
motor vehicle to the registration office and vehicle can no longer
be ascertained or declared fit for registration, clearly the
conditions for transfer of property in the goods do not get
satisfied or fulfilled. Section 18 of the Sale of Goods Act
postulates that when a contract for sale is in respect of

unascertained goods no property in the goods is transferred to
the buyer unless and until the goods are ascertained. Even
when the contract for sale is in respect of specific or ascertained
goods, the property in such goods is transferred to the buyer
only at such time as the parties intend. The intention of the
parties in this regard is to be gathered from the terms of the
contract, the conduct of the parties and the circumstances of the
case. Even if the motor vehicles were to be treated as specific
and ascertained goods at the time when the sale invoice with all
the specific particulars may be issued, according to Section 21 of
the Sale of Goods Act, in case of such a contract for sale also,
when the seller is bound to do something to the goods for the
purpose of putting them into a deliverable state, the property
does not pass until such thing is done and the buyer has notice
thereof. In the light of circumstances governing motor vehicles
which may safely be gathered even from the Motor Vehicles Act
and the Rules, it is obvious that the seller or the
manufacturer/dealer is bound to transport the motor vehicle to
the office of registering authority and only when it reaches there
safe and sound, in accordance with the statutory provisions
governing motor vehicles it can be said to be in a deliverable
state and only then the property in such a motor vehicle can

pass to the buyer once he has been given notice that the motor
vehicle is fit and ready for his lawful possession and registration.
17. In view of discussions made earlier, there is no need to
again traverse the factual matrix, which led the Deputy
Commissioner and the High Court to decide the controversy in
favour of the respondent. However, since we have gone through
the judgment of the High Court carefully, we are in agreement
with the contention advanced on behalf of the respondent that
the allegations and facts made or noted by the Intelligence
Officer no doubt create some doubts but they do not lead to a
conclusive inference that the sales under controversy had taken
place at Kozhikode, Kerala. To the contrary, in view of
propositions of law discussed hereinbefore, the judgment of the
High Court gets reinforced and deserves affirmation. We order
accordingly. As a result, the Civil Appeal is found to be sans
merits and is dismissed as such. In the facts of the case there
shall be no order as to costs.

…………………………………….J.
 [DIPAK MISRA]
…………………………………….J.
[SHIVA KIRTI SINGH]
New Delhi.
January 29, 2016.

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