Report No. 8
6. Section 2.-
Suggestions have been received in regard to some of the definitions contained in section 2.
With reference to the definition of "documents of title to goods" in sub-section (4), it has been pointed out that there is a conflict of decisions with regard to the effect of endorsement on a railway receipt. One view is that the endorsement of a railway receipt, which is a mercantile document of title, invests the endorsee with a right to maintain a suit on the basis thereof. This view has been taken by the Punjab1 and Allahabad2 High Courts and a Division Bench of the Bombay High Court.3
On the other hand, there is a decision of a Single Judge of the Bombay High Court4 wherein he has expressed the opinion that though a railway receipt is a document of title to goods, mere endorsement of the receipt by itself is not enough to constitute the endorsee either a bona fide pledgee for value or a bona fide transferee for value of the goods represented by the railway receipt.
This can hardly be said to be a conflict of judicial opinion which would justify a clarification of the law, for the view taken by the Single Judge is contrary to an earlier decision of a Division Bench of that High Court, and the decisions of some other High Courts as well.
1. Jalam & Sons v. G.G.-in-Council, AIR 1949 East Punj 190.
2. Sheo v. Prasad v. Dominion of India, AIR 1954 All 747.
3. Dolatram Dwarkadas v. B.B. & C.I. Railway Co., AIR 1914 Bom 178.
4. Shamji Bhanji & Co. v. North Western Railway, AIR 1947 Bom 169.
7. It has been suggested that the definition of "goods" in clause (7) of section 2 should include electricity, gas and water.
Pollock and Mulla in their Commentary on the Indian Sale of Goods Act,1 have expressed the view that it is doubtful whether the Act is applicable to such things as gas, water and electricity. The Calcutta High Court shares this doubt at least as regards electricity.2
In England also, the position is uncertain. In (1909) 2 KB 604,3 the case was argued on the assumption that electrical energy was to be considered "goods" for the purposes of the law relating to sale of goods, but it was expressly stated that the point was not being decided and might have to be considered later. As regards water, it was held in 11 QBD 214 that water supplied by a water company to a consumer and standing in his pipes, may be the subject of a larceny at common law. According to the decision in (1829) 4 C&P 87,5 an agreement for the supply of water by a water company comes within the exemption of 'contract for sale of goods' under the Stamp Act. Gas has been held to be goods by the Privy Council.6
However, in the United States of America, it has been held that a contract to supply power is a contract of sale.1 Thus, electricity has been held to be personal property, capable of sale.7
In India, according to section 39 of the Indian Electricity Act, electrical energy can be the subject-matter of theft. Article 287 of the Constitution which prohibits a State Legislature from imposing a tax on 'the consumption or sale of electricity' shows that there can be a sale of electricity.
2. Rash Behari v. Emperor, AIR 1936 Cal 753 (766).
3. Country of Durham Electrical Power Distribution Co. v. Commissioners of Inland Revenue, (1909) 2 KB 604.
4. Ferens v. O'Brien, (1883) 11 QBD 21.
5. West Middlesex Water Works Co. v. Suwerkrop, (1829) 4 C&P 87.
6. Erie Country Natural Gas & Fuel Co. Ltd. v. Carroll, 1911 AC 105.
7. Volume XLVI, American Jurisprudence, p. 216.
8. In view of the fact that contracts with regard to the supply of electrical energy and water are common, we think that the matter should be placed beyond doubt and an amendment should be made in section 2(7) so as to include power in the shape of electrical energy, water and gas within the definition of "goods".
9. The Stock Exchange, Bombay, has suggested that "stocks and shares" which are included in the definition of "goods" should be regarded as actionable claims instead of "goods" as at present. We are unable to accept this suggestion, as section 82 of the Companies Act, 1956 has treated "shares or other interest of a member in a company" as movable property and the existing definition of "goods" is in accord with that section. We have carefully examined the reasons given by the Stock Exchange but we do not think that they justify the proposed change.
10. It has been suggested that in the definition of "property" in clause (11) of section 2, the words "special property" should be substituted by the words "special interest", on the ground that there is only one kind of property, viz., general property, and that special property is merely a misnomer for special interest in goods. But the use of the expression 'special property' is so well-established that we think it undesirable to alter the definition.