1980 PLP 525 (CLC)

Dates of hearing : 15th and 16th January 1979. MUSHTAK Au KAZI, 1.-This first appeal arises from a judgment of 1st Class Civil Judge, Hyderabad dismissing the suit of the plaintiff/appellant, namely, Province of West Pakistan, instituted against defendants/respondents for recovery of Rs. 71, 772.65 being the balance of the auction price of the fruits of Government Farm, Mirpurkhas for the year 1964-65.

2. The defendants respondents as the highest bidders obtained the right to pluck the fruits mainly consisting of mangoes but including citrus, bananas, chikoos etc. The defendants/respondents I and 2 appointed defendant No. 3 as their attorney and manager. The defendants had deposited Rs. 18,400 as earnest money and also paid Rs. 61,334 on getting possession of the garden. The first instalment of the balance price was payable on 20-6-1964. Under the terms of the agreement the harvest of the fruit under the contract had to be weighed by the staff of the fruit farm. The picking of mangoes was to start from first of June and continue till 31st August, 1964. Dates were also fixed for picking of citrus grapes, bananas, dates, jaman, chikoos and guava. Guava picking was to continue until 31st March, 1965. It was provided in the contract that if the contractor failed to observe any of the conditions laid down in the agreement bond the Director of Agriculture, Tando Jam would have the power to re-auction the whole orchard at the risk of the contractor. The contractor started picking the earliest variety of Sindhri mangoes from 1st June, 1964. Unexpectedly there was storm of high veracity accompanied by torrential rains which hit the farm on the night between 12th and 13th June, 1964. The mangoes trees or the branch which were heavy with fruit fell down or broke off. The mango fruit also dropped into the flood of water blow and most of the fruit was thus damaged and the fruit which had fallen became useless. The result was that the first instalment of the balance price which fell due on 20th June, 1964 could not be paid by the defendants/respondents contractors. Under the provision in the contract with the approval of the Director, the Horticulturist of the fruit farm re-auctioned the fruits of the orchard which still remained on 23-7-1964 for Rs. 25,500 at the risk of the defendant/respondents. Since the amount realised for the orchard fruits came to Rs. 112,227.35, the defendant/respondents were held liable for the balance of Rs. 71,772.65. On their failure to pay this amount a suit for recovery of the amount` was filed against them.

3. The defendant /respondents in their written statement contended that they had actually plucked the mango fruit only for 12 days from 1-6-1964 to 12-6-1964 when the part of the country was hit by devastating storms and rains causing serious damage to the trees and crops in the entire districts of Tharparkar and Hyderabad. That- as a result of this calamity 80 % of the fruit was destroyed or lost. That before the delivery of the fruit could be taken on the due dates the fruit had thus been lost. The defendants at once informed the authorities and called upon them to have the loss assessed, but the fruit orchards were re-auctioned and thus they were prevented even from collecting whatever fruit had remained. That they had removed fruit worth Rs. 25,773.49 only whereas they had already paid Rs. 79,734 to the plaintiff 'appellant. They accordingly filed their counter claim for recovery of the balance amount of Rs. 53,960.51.

4. After hearing the parties, recording their evidence the learned Civil Judge found that the fruit had been extensively damaged due to storm and rain. That 90 % of the fruit consisted of the mangoes and it was claimed that 80 % of the mango fruit had been destroyed. However, neither the plaintiffs nor the defendants had been able to produce sufficient evidence of the fruit already harvested before the rain-storms. Under the terms of the agreement the plucked fruit had first to be weighed by the Management of the fruit farm before allowing the contractor to take delivery of it but the facts and figures of the plucked fruit had not been produced by the plaintiff. Nor had the contractor been able to produce his account books showing the quantity of suit of which delivery had been taken or the quantity that had teen gold. The learned Civil Judge accordingly came to the conclusion that extensive damage had been caused to the subject-matter of the contract on account of the natural calamity.

5. The learned Civil Judge also found that the subject-matter of the contract being fruits the contract was one for sale of future goods. There fore, the risk had not passed to the buyer- and they were not liable if the goods were meanwhile destroyed. That the re-sale had been effected with due notice to the buyers, therefore, the balance of the price could not be recovered from them. The learned Civil Judge accordingly dismissed the suit of the plaintiffs. Regarding the counter-claim of the defendants it was observed that the defendants had not produced sufficient documentary evi dence and it was not shown how much of the fruit had actually been plucked. The counter-claim of the defendants was also dismissed. The parties were required to pay their own costs.

6. It has been argued by Mr. Hasnain on behalf of the plaintiff/ appellant that this was not an executory contract but it was an executed contract regarding sale of fruit and the defendants/respondents were thus absolutely liable to pay the balance of the purchase price and they had to bear the loss, if any, on account of the storm and rain. According to Mr. Hasnain the risk in respect of the goods had passed to the buyer and there was no question of any force majure or natural calamity rendering the contract to be void.

7. It has on the other hand been argued by Mr. Matin on behalf of the defendant/respondents that admittedly the sale was in respect of future goods. That storm and rain had destroyed these goods before they could be delivered. The subject matter of the contract had thus been partly destroyed by act of God.

8. There can be no doubt that the contract in question was for sale of future goods as goods include growing crops and things attached to or. forming part of the land which are agreed to be severed before sale or under the contract of sale. Thus corn, grain, potatoes, can form .subject-matter of contract for sale of goods. The things attached or forming part of the land thus include fructus narurales. These things are treated as goods where the parties agree that they shall be severed before sale or under contract of sale. They are the natural products of the soil in particular grass, trees and fruits growing on trees. Where timber forming the subject matter of contract of sale had to be cut and severed the property in such timber, it was held, passed on severance. `Specific goods" means goods identified and agreed upon at the time a Contract of sale is made. Normally delivery of goods under a contract of sale evidences the intention of the parties that property shall pass to the buyer. That rule, however, is not invariable. Property might pass before delivery or it may be retained by the seller although the goods are delivered to the buyer. The question of passing of the risk with the passing of the property would thus depend on the intention of the parties which has to be gathered from the circumstances. Where there is a contras; for sale of unascertained or future goods by description and goods of than description and in a deliverable state are unconditionally appropriated to, the contract either by the seller with the assent of the buyer or by the buyer with the assent of the seller the property in the goods thereupon passes to the buyer. Thus the passing of the property depends solely on "inner fact" namely, intention of the parties and it is not always easy to ascertain the exact moment when the property passes.

9. Under section 2 of the Sale of Goods Act the definition of goods includes growing crops, grass and things attached to or forming part of land which are agreed to be severed before sale or under the contract of sale. Under the same section `future goods' have been defined as goods to be manufactured or produced after the making of the contract of sale. the word 'produced' in the definition of future goods has reference to agricultural .products. Under section 4(1) of the Sale of goods Act where under the con tract 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 conditions thereafter to be fulfilled the contract is called an agreement to sell under section 6(3) where by a contract of sale the seller purports to effect a present sale of future goods the contract operates as an agreement to sell the goods, though the seller may purport to effect the present "sale" of future goods, the transaction is not a sale but is merely an "ogre. men" to sell. The reason is that a man cannot in equity, no more than at law, assign what is not in existence. But a man can `agree' to assign property which is to come into existence in the future. Such a contract at law creates only a personal obligation to pass the property. It does not create any real right or jus in rem. As regards the risk the general rule is that the goods remain at the seller's risk until the property therein is transferred to the buyer the goods are at buyer's risk whether delivery has been made or not.

10. Thus ordinarily an auction sale is a complete 'sale' "after the fall of the hammer. But where the goods are not in a deliverable state such transaction would also amount merely to an agreement to sell. In the words of Lord Westbury the terms "sale" and "agreement to sell" are distinguish able. A man cannot sell what he has not got but he can agree to sell property which he expects to acquire, and then when the property is acquired the agreement to sell attaches; where there is a contract purporting to be a present sale of future goods the property in the goods is transferred to the buyer when the buyer takes possession of them. Where, however, the future goods are such as have at the date of the contract "a potential existence" the property in them is prima facie transferred to the buyer when they came into existence so as to be capable of identification without any further act of appropriation. Regarding the things attached to land severable by buyer, the law is well defined. Under the contract for the sale of specific thing which is attached to or forms part of land at the time of contract, and which is to be severed by the buyer, the property in the thing passes to the buyer on his severance of the thing from the land.

11. The above proposition of law is based on various decisions in the English cases. Even otherwise if the seller has not passed the property absolutely to the buyer but reserved to himself the control over the goods or the delivery is subject to certain conditions then in that case too the property in the goods does not pass to the buyer at the time of the agreement to sell. 12. 1n the present case the contract clearly shows that the buyer would not be allowed to pluck the fruits except according to the schedule annexed giving the various dates for plucking of fruit. Under the terms "no mango shall be harvested earlier than 1st June" shall be harvested after 1st July, 1964, 8th July, 1964 and Ist August, 1964. Immature fruits shall not be harvested by the contractor. This Schedule started from 1st June, 1964 and ended by 31st March, 1965. Therefore looking, to the nature of the contract some of the fruits like chikko, guava etc. would not be in existence at the time of the alleged auction while others would be in the state and not in a deliverable state at all. The buyer would not have the right to pluck the fruits when he liked but he had to abide by the condition regarding the dates of harvest and even after plucking these fruits they had to be weighed by the Horticulturist or his staff. It was thus definitely an agreement to sell future goods since the goods were non-existent at the time of the auction. The property in such goods could not pass to the buyer until the fruit became ripe and was actually plucked or harvested. In case of an agreement to sell. the risk would remain with the seller until the fruit had been plucked or severed from the trees attached to the land. In Kursell v. Timber Operators & Contractors Limited (1927 L R I K B D 298) by a contract the vendors agreed to sell and the purchasers to purchase all the merchantable timber growing in the forest of Luhde in the Republic of Latvia. After the contract Latvian Assembly passed an agrarian law by which the forest became the property of the State. The purchasers had, however, paid 30 % to the vendors covering the first six months. It was held that the contract was not a contract for the sale of specific goods in a deliverable state. That the timber was not in a deliverable state until the purchaser, had severed it and accordingly that the property in the timber had not passed under section 18, rule 1 of the Sale of Goods Act; 1893 and, therefore, the timber was not at the risk of the purchasers. It was held by Scrutton, L. J. that even if the property in the timber had passed, so much remained to be done under the contract that the doctrine of frustration would apply. The earlier decision in James Sons v. Earl of Tankeerille ((1909) 2 Ch. 440) was relied upon. In that case it was held by parkar, J., that in a contract for sale of specific timber growing on the vendor's property, on the terms that such timber was to be cut and carried away by the purchaser, the purchaser had a licence to enter and cut the timber, so that as soon as the purchaser had severed the amber the legal property in the severed trees became vested in him. The ratio decidendi in these decisions was, that the articles sold could not be said to be goods in a deliverable state. At the time of the contract the goods were neither identified nor were they specific. For the purpose of passing of actual property in the goods, as distinguished from a right to ultimately clam a title to the goods as against the vendor, there must be a transfer of the right to rem and not merely of the right ad rear.

13. Thus where the risk does not pass with property in agreements for the sale of goods, and subsequently the agreement becomes impossible on performance due to perishing of the goods, the doctrine of frustration will become applicable to the case was from the time the goods are destroyed or cease to exist. Under section 56 of the Contract Act, a contract to do an ac on which after the contract is made becomes impossible, or by reason of some event which the promisor could not prevent becomes unlawful, becomes void when the act becomes impossible or unlawful. The frustration may be a partial frustration. In that case under section 65 of the Contract Act adjustment is to be made between the parties so that if a party has received any advantage under the contract it is bound to restore it to the other party. Formerly in England where the contract became impossible of performance by the destruction of the subject-matter, the parties were excused from further performance and acquired no rights of action so that each of the panic; had to hear any less or expense already incurred and could not recover hack payments made in advance. Contrary to the old English decisions at Common Law, each party, is now bound to return any advantage tip the other party, so that none of them may unnecessarily incur any loss because of the unforeseen event.

14. In the present case the destruction caused to the agricultural produce in the Tharparkar district on account of the unprecedented storm and rain is a circumstance admitted by both the parties, The reports published in Daily Jang of 17th June, 19154 were to the effect that the destruction in Tharparkar was a unique example in the history. The important crop of cotton was destroyed. Mango crop had finished and loss of crores of rupees had been sustained. Mr. Ahmad Pasha Jagirdar Horticulturist of Mirpurkhas fruit farm himself admitted in his deposition that on 12th June, 1964 the fruit farm was hit by Aorist storm and heavy rains in our history. It has also been admitted that about 1.000 maunds of mangoes had fallen on the ground doe to storm and rain, "Chat some of the trees had fallen. In other cases the branches bearing the fruit had broken down. The respon dent contractor had sent telegrams to the authorities promptly for assessing the damage but no such report has been produced by the appellant. The appellant had to maintain account of the mangoes actually plucked and sold by the contractor but no such account has been produced. It has only been stated that the respondent harvested 2,665 maunds of mangoes before the storm out of the total yield of about 4,000 maunds. According to the respondent contractor, however, the fruit that had been plucked was hardly 20%. The total quantity removed was about 125 maunds before the storm and 150 to 175 maunds after the storm. The expected yield being 5,000 to 6,000 maunds. Thus there is word against word and the actual position cannot be accurately ascertained, Under these circumstances any further adjustment between the parties is not possible and each party must be content with the loss suffered against any advantage that may have been gained.

15. In the result the judgment and decree of the lower Court is affirmed and the appeal as well as the cross-objections' are dismissed. The parties will bear their own costs. M. Y. M Appeal dismissed.