Most of us have forgotten that Chapter VII of Indian Contract Act, 1872, (Sections 75 to 123) dealt with provisions relating to Sale of Goods. The subsequent chapters dealt with Indemnity and Guarantee (Chapter VIII, Sections 124 – 147), Chapter IX was on Bailment with Sections 148 – 181 and Chapter X was on Agency with Sections 182 – 238. Interestingly, Chapter XI dealt with partnership (in sections 239 -266) which was replaced by the Partnership Act, 1932.

The story of how the Sale of Goods Bill was finalised in Shimla by four of the then most eminent lawyers is interesting. Before the passing of the Indian Contract Act, 1872, there was extreme uncertainty about the application of these principles in the presidency towns and in the mofussil. To remedy this unsatisfactory state of affairs, the Law Commission prepared a draft in July 1866. This underwent important changes at the hands of Sir Henry Maine and Sir James Stephen and finally became the Indian Contract Act, 1872. The object of preparing and codifying the law relating to contracts was to ensure that it was easily understood “both by English and Native Government Servants without extrinsic help from English law libraries”. The Contract Act of 1872 also provided clear guidance to the judges and magistrates who did not have ready access to a law library.

In England, the law relating to sale of goods had undergone drastic changes and the old rules of mercantile law had to be discarded. Finally, this law was codified in 1893, with the enactment of the English Sale of Goods Act.

In India as well, it was noted that mercantile transactions had undergone substantial changes because of new methods of doing business and trade dealings. It was, therefore, decided to prepare a Bill for an Indian Sale of Goods Act, broadly based on the English Act of 1893. However, the draft Bill took note of the conditions prevailing in India. At the same time, the intention was to keep the Bill as uniform as possible with similar laws in other parts of the then British Empire.

The Government of India then constituted a Special Committee that consisted of four of the most eminent lawyers at that time, namely:

1. Sir Brojendra Lal Mitter as Chairman;

2. Mr DF Mulla as Member;

3. Mr MR Jayakar as Member; and

4. Mr Alladi Krishnaswamy Ayyar, as Member. (He was knighted later)

Sir Mitter was an eminent barrister from Calcutta who was the Advocate General of India from 1935 to 1945. Mulla remains the most outstanding and prolific writer on various Indian laws. Few authors have covered such a broad range of topics that include not only statutory enactments like contracts, partnership and transfer of property, but also complex subjects such as insolvency and Muslim law. This was combined with his busy practice at the Bombay High Court. He has rightly been honoured with an impressive statue in the compound of the Bombay High Court. Jayakar was also a very eminent lawyer from Bombay. Sir Ayyar was the Advocate General of Madras from 1929 to 1944 and, as a member of the Constituent Assembly, played a major role in the drafting of the Indian Constitution.

These eminent men met in Shimla from April 29, 1929 and continued their deliberations till May 9, 1929. The report of this Special Committee of four eminent lawyers is contained in the Statement of Objects and Reasons and has been reproduced in the AIR Manual, 6^th Edition, Volume 42 at pages 45-48. This report is important and makes interesting reading. 

This Special Committee examined the Sale of Goods Bill, clause by clause, for 11 days and made important changes. The Bill provided that in a contract for sale of goods, the passing of property must be determined by the intention of the parties to the contract. The Bill then provided for rules for when property would pass, when such intention was either not clear or the parties had failed to express it. It also clarified that for a contract of sale to be complete, neither payment nor delivery was a necessary condition. The Special Committee noted the lack of clarity in the English law relating to warranty, delivery to carriers, auction sales and made suitable provisions in the Bill. It anxiously considered the retention of illustrations which were present in the Contract Act, 1872. An interesting departure was the decision to delete illustrations, which were a part of several laws: Contract Act, Succession Act and the Evidence Act, to name a few. The Special Committee decided to leave it to the courts to construe the sections as they stood.

This Committee, thus, completed its work in 11 consecutive days in the wonderful climate of Shimla. Eventually, the Sale of Goods Bill became the Act in 1930.

The Special Committee Report shows the extreme care that went into the consideration of the law in England, both prior to and after 1893. The Committee mentioned that it was not unmindful of the needs and exigencies prevailing in India and any provision that was not suitable to Indian conditions was rejected. An important example is the deletion of the provisions relating to “market overt”. Thus, special conditions that existed in India were taken note of while finalising the Act.

It is almost 100 years since the Sale of Goods Act was enacted and 150 years since the Contract Act became law. The clarity of the provisions and their suitability to changing commercial conditions is evident from the fact that both these laws have hardly required any amendment. The essential principles embodied in these Acts have stood the test of time and remain relevant from the industrial age to the digital era.

Arvind P Datar is a Senior Advocate.