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[Landmark Judgement] BSNL V. Union of India (2006)

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Landmark Judgment Law Insider (1)

Published on: February 7, 2024 at 16:07 IST

Court: Supreme Court of India

Citation: BSNL V. Union of India (2006) 

Honourable Supreme Court of India has held that Deemed Sale falls within the ambit of Clause 29A of Article 366 of the Constitution of India. The condition for applicability of the sale of goods under the Sale of Goods Act, 1930 requires that the transfer of possession of the goods to the buyer. It is held that Deemed Sale includes the transfer of the right to use any goods can be for any purpose for cash, deferred payment or other valuable consideration. However, if a person is allowed to use certain goods of the owner, per se, does not results in transfer of the right to use any goods. The contract of Transfer of Right to use the goods will be Deemed Sale or granting mere permission to use the goods without transfer of the right to use the goods does not amounts to Deemed Sale.

75. In our opinion, the essence of the right under Article 366(29-A)(d) is that it relates to user of goods. It may be that the actual delivery of the goods is not necessary for effecting the transfer of the right to use the goods but the goods must be available at the time of transfer, must be deliverable and delivered at some stage. It is assumed, at the time of execution of any agreement to transfer the right to use, that the goods are available and deliverable. If the goods, or what is claimed to be goods by the respondents, are not deliverable at all by the service providers to the subscribers, the question of the right to use those goods, would not arise.

97. To constitute a transaction for the transfer of the right to use the goods, the transaction must have the following attributes:

(a) there must be goods available for delivery;

(b) there must be a consensus ad idem as to the identity of the goods;

(c) the transferee should have a legal right to use the goods—consequently all legal consequences of such use including any permissions or licences required therefor should be available to the transferee;

(d) for the period during which the transferee has such legal right, it has to be the exclusion to the transferor—this is the necessary concomitant of the plain language of the statute viz. a “transfer of the right to use” and not merely a licence to use the goods;

(e) having transferred the right to use the goods during the period for which it is to be transferred, the owner cannot again transfer the same rights to others.

Drafted By Abhijit Mishra