ivil Appeals Nos
3008 3009 of 1984
From the Judgment and Order dated 281183 of the Bombay High Court in Appeal No 880 of 1983
Kapil Sibal Harish Gajtiani Rajiv Datta and Nitin Rout for the appellants
Shanti Bhushan J Makhija Mrs AK Verma and DN Misra for Respondent Nos 3 and 4
GB Sathe and AS Bhasme for Respondent Nos 1 2 and 5
KK Sanghi Brij Bhushan and Anil Kumar Gupta for Respondent No 7
The Judgment of the Court was delivered by PATHAK CJ
These appeals are directed against an order of the Bombay High Court dismissing in limine the appeals filed by the appellants herein against the judgment of a Single Judge dismissing their writ petitions challenging the right of the police authorities to prepare and enforce a roster system for operating launch services between Gateway of India at Bombay and Elephanta Island
828 The appellants are operating launch services for joy rides film shootings etc
from Apollo Pier or Gateway of India to Elephanta Island and respondent No 7 is a cooper ative association of launch owners also engaged in the same activity
It appears that originally the appellants were desirous of acquiring membership of this association but were denied entry and thereafter it was the association which wanted the appellants to join its membership but the appellants declined the offer
The members belonging to the association were operating launch services turn by turn on a voluntary roster system to avoid unhealthy competition
It appears that when the efforts made by the police and the Port Trust Authorities to resolve the differences in the operation of launch services between the association and the appellants failed a roster system was chalked out on the direction of the Deputy Conservator of Bombay Port Trust Respondent No 3 which was sought to be enforced by the police
When some employees working in their launches were arrested for failure to act according to the roster system the appellants filed writ petitions claiming that the police and the Port Trust authorities had no authority to compel them to follow the roster system
The High Court dismissed the writ petitions holding that the Bombay Port Rules con ferred powers upon the Deputy Conservator to give directions for berthing and for mooring and unmooring the vessels in the Port and that apart the police and the Port Trust authorities had adequate powers under the Port of Bombay Passenger Boat Rules 1962 and Section 67 of the Bombay Police Act to regulate the manner in which the launches carried passengers
The only point for consideration in these appeals is whether the Deputy Conservator of Bombay Port Trust andor the police had the power to prepare and enforce the roster system
The Port of Bombay Passenger Boat Rules 1962 have been framed by the Central Government in exercise of powers conferred by Section 61k of the  61 The Government may in addition to any rules which it may make under any other enact ment for the time being in force make such rules consistent with this Act as it thinks necessary for any of the following purposes namely 829 k for licensing and regulating catamarans plying for hire and flats and cargo passenger and other boats plying whether for hire or not and whether regularly or only occasionally in or partly within and partly without any such port and for licensing and regulating the crews of any such vessels and for determining the quantity of cargo or number of passengers or of the crew to be carried by any such vessels and may by such rules provide for the feeds payable in respect of any such license and in the case of vessels plying for hire for the rates of hire to be charged and the conditions under which such vessels shall be com pelled to ply for hire and further for the conditions under which any licence may be revoked Rule 4 of the Port of Bombay Passenger Boat Rules 1962 prescribes that boats plying for hire shall not lay beside the landing place longer than necessary and shall obey orders of the police for regulating the traffic
Rule 6 forbids the tindals and the boatmen to tout for hire near the landing place
Rule 4 of the Bombay Port Rules flamed by the Bombay Port Trust in exercise of powers conferred under the prescribes that all vessels within the port shall be bound to take up such berths as may be appointed for them by the Deputy Conservator and shall change their berths when required by the authorities
Rule 19 thereof provides that all vessels within the port shall moor and unmoor or anchor in accordance with the orders of the Deputy Conservator
Clauses b and c of Section 67 of the Bombay Police Act 1951 provide 67
It shall be the duty of a Police Officer   b to keep order in the streets and at and within public bathing washing and landing places fairs temples and all other places of public resort and in the neighbourhood of places of public worship during the time of public worship c to regulate resort to public bathing washing and land ing places to prevent overcrowding thereat and in public 830 ferry boats and to the best of his ability to prevent the infraction of any rule or order lawfully made for observance by the public at any such place or on any such boat
 It is contended by learned counsel for the appellants that the Deputy Conservator of Bombay Port Trust respondent No 3 is not empowered in law to devise on order of the imposition of a roster
It is urged that this action is beyond the powers conferred by the  the Bombay Ports Rules and the Port of Bombay Passenger Boat Rules
We see no force in this contention
The roster system provides for the regulation of traffic so that each launch obtains an opportunity of access to the landing place
This is not a distribution of business but a distribution of the time for which the landing place can be used and therefore a regulation of the use of the landing place
Rule 4 of the Port of Bombay Passenger Boats Rules 1962 provides that boats plying for hire should not lay along side landing places longer than necessary and must obey the orders of the police for regulating traffic
The boat shall not be laid longer than actually necessary to embark or land passengers and their luggage but must be kept off at a distance of at least 30 metres from the landing place or gangway ladders so as not to obstruct the approach thereto
The licencees or other attendants of the boat are required to obey all orders given to them by the police for the regulation of the traf fic at the landing places or gangways of vessels
Consistent with the provisions of Rule 4 which are plainly intended for the maintenance of order is rule 6 which prohibits tindais and boatmen tout for hire near the landing places to the annoyance of people passing by and rule 7 prohibits them from carrying on the business of a hawker
The roster is intended to give effect to Rule 4 and we see no reason why recourse to a roster system should be considered as unreasonable
The second contention of learned counsel for the appel lants is that the respondent No 3 has purported to act under Rules 4 and 19 of the Bombay Port Rules Rule 4 of the Passenger Boat Rules and section 67 of the Bombay Police Act in having the roster system enforced by the Inspector of Po lice
We have considered those provisions but we are not convinced that the context in which those provisions operate is in any manner inconsistent with the framing of a roster and its imposition for regulating the use of the landing place by the launches
On the contrary they contemplate a situation and provide for just the exercise of power which underlies the adoption of a roster system
The dominant purpose of the regulation of the use of the landing place by the launches is to prevent congestion and a possible breach of peace
831 The submission that the roster has been devised for the purpose of bringing about a distribution of passengers ignores the real purpose that the roster is intended to serve namely to ensure the even flow of traffic at landing places
An attempt has been made to show that the roster was prompted by malice and we are referred to Smt
SR Venka taraman vs Union of India  Anr   but we see nothing to support the plea
We cannot accept that an ulterior motive the regulation of business is behind the roster
Brownells Limited vs The Ironmongers  Wages Board Brownelis Limited vs The Drapers  Wages Board  and Hanson vs Radcliffe Urban District Council  do not help the appellants
It is then urged that the roster has the tendency to prohibit trade and the power to regulate is being misused as a power to prohibit
There is a fallacy in the argument
There is no prohibition of the business at all
All the launch owners have equitable access to the landing place and if the other conditions for plying the launches such as holding of a proper licence are satisfied there is no reason why the launches turn by turn cannot avail of the facility of an equitable opportunity to use the landing place
It is said then that the imposition of the roster is too severe a measure to deal with the simple problem of over crowding and chaos and touting for passengers
This is a matter for the judgment of the authority concerned and ex facie we do not see any ground for holding that the roster system is not reasonable in the circumstances
There is no excessive invasion of the appellants  Fundamental Right to carry on their business
What should be the duration for which the appellants may be allowed to use the landing place and what should be the turn in which such user may be permitted is essentially a matter for the judgment of the authorities concerned
It is not possible for the Court to adjudicate on this point
Learned counsel for the appellants complains that the provocation for devising and imposing a roster was the complaint made by the appellants  trade rivals
The disputes between the parties in relation to the application of the roster is not a matter on which this Court will readily enter
Finally it is contended for the appellants that the roster has been prepared and is being imposed without re course to any statutory provision enabling the third re spondent to devise it and impose it
It seems to us that the imposition of a roster is reasonable and the power to 832 impose a roster can be spelt out from the powers conferred on the authorities under the statutory provisions already referred to
The roster is only one method of regulation
It may be feasible and fruitful in a certain set of circum stances
In another set of circumstances it may be more appropriate to adopt some other principle for resolving the problem of a large number of launches using a limited land ing place
It is apparent that passengers can be invited into the launches only when a boat is standing against the jetty and it would be a matter for the launch owner to ensure that he has a sufficient number of passengers by the time indicated in the roster for berthing his launch at the landing place
It must be remembered that Rule 4 envisages an opportunity to the owner of the boat to embark passen gers
The opportunity is not intended for the purpose of keeping the boat at the landing place for so long a period of time that it can fill up with passengers
The time period is to be determined by the need to keep the traffic moving
The circumstances that the boat may come in and stay no longer than is necessary to pick up the passengers indicates that the emphasis is on the maintenance of orderly traffic and the prevention of congestion at the landing place
We see no substance in these appeals and we are of opinion that they must be dismissed
A number of suggestion were made by learned counsel for the appellants by way of settling the controversy between the parties in regard to the use of the landing place and devising arrangements for securing optimum access for each boat
These suggestions it seems to us can be made before respondent No 3 and it is open to him to consider what would be the most equitable arrangement
In the result the appeals are dismissed but there is no order as to costs
NVK Appeals dismissed


Summary:
The assessee appellants a partnership firm carrying on manufacturing business in Madras entered into an agreement with a company based in Calcutta for sale of their product through the latter s sales organisation in all the States of India
In the said agreement the assessee was referred to as the manufacturer  and the company as the sole selling agents  of the product
The agreement itself was described as an agreement of sale 
It provided inter alia that the stocks left over unsold beyond two years from their receipt with the selling agents could be returned to the appellants who were bound to replace them that the appellants should take all suitable action for recovery of damages from the carriers that they would supply the selling agents with all the necessary publicity material and also advertise at their cost through the media that the selling prices and transfer prices of the product would be mutually agreed from time to time between them and the selling agents that any reduction in price during the currency of the agreement was to be duly reflected in the price of stock lying unsold with the sell ing agents and that on termination of the contract either by the assessee or by the selling agents the unused stock lying with the latter was to be returned to the former
The appellants were assessed to excise duty under the for the period July 1977 to March 1979 on the basis of the price at which the sell ing agents had sold the goods to their customers in the course of the wholesale trade
They however claimed that the assessable value should be the price at which the ex cisable goods were sold by them to the selling agents and sought refund of 783 the excess excise duty thus paid
The Assistant Collector of Excise and the Collector rejected the said claim
The TribUnal took the view that a sine qua non of a sale was that the title to the goods should pass from the seller to the purchaser
When once that were not so then it could not be said that it was an agreement for sale
On an analy sis of the conditions of the agreement in the instant case it found that the title to and the ownership in the goods consigned to the selling agents continued with the appel lants
It therefore concluded that the true character of the agreement was that it was an agreement for sole selling agency and not an agreement for sale
It further held that the selling agents were a related person  as understood under section 44c of the Act and therefore the assessable value of the goods for levy of excise duty must be on the basis of price at which the selling agents ordinarily sold these in the course of wholesale trade less the transporta tion cost and other permissible deductions such as duty of excise and sales tax if any subject to proof
In this appeal under section 35 Lb of the Act it was con tended for the appellants that there were two prices transfer price  and selling price  and there was good deal of difference between these prices which was suggestive of an outright sale that the terms referred to by the Tribunal were merely indicative of the fact that it was an agreement whereby the purchaser upon terms was de scribed as sole selling agents  that the appellants were manufacturing a product which was liable to lose its effica cy and quality after lapse of time and as such a replacement clause was inserted to ensure that the bad quality goods did not go to the market and damage their reputation that the selling agents were not related persons  in terms of section 44c of the Act as there was nothing in common between them and the appellants and that claims like cost of trans portation and other permissible deductions such as duty of excise and sales tax to which they were otherwise entitled to should have been deducted from the value  subject to proof by the appellants
Dismissing the appeal HELD 11 Whether there was an agreement for sale or an agreement of agency to sell must depend upon the facts and the circumstances and the terms of each case
Such facts and terms must be judged in the background of the totality of the circumstances
All the terms and conditions should be properly appreciated
The terminology used by the parties is not decisive of the legal relationship
789F 793D 784 12 The essence of a contract of sale is the transfer of the title to the goods for a price paid or promised to be paid
The transferee in such a case is liable to the trans feror as a debtor for the price to be paid
The essence of the agency to sell is the delivery of the goods to a person who is to sell these not as his own property but as the property of the principal who continues to be the owner of the goods and make over the sale proceeds to the principal
An agent
however could become a purchaser when he paid the price to the principal on his own responsibility
793C 792A 13 In the instant case the most important fact sug gesting agency was the clause which enjoined that the stocks left over unsold beyond two years from their receipt could be returned to the appellants who were bound to replace these
Added to it was the fact that the appellants were to prefer all claims for recovery of damages from the carriers and any reduction in price during the currency of the agree ment was to be duly reflected in the price of stock lying unsold with the selling agents and the obligation that on the termination of the contract by either the appellants or the selling agents unsold stocks lying with the latter were to be returned to the former
793F GH 14 The Tribunal was therefore right in holding that the transaction with the selling agents was not a transac tion of sale but an agreement for agency
If that be so then the first sale was by the selling agents to the custom ers of the market
The price of that sale would thus be the assessable value under section 4 of the Act
In that view of the matter it was not necessary to determine the question wheth er the selling agents were related persons  in terms of section 44c of the Act
795DE WT Lamb  Sons vs Goring Brick Company Ltd  Gordon Woodroffe  Co vs Sheikh MA Majid  Co and Tirumala Venkateswara Timber  Bamboo Firm vs Commercial Tax Officer Rajahmundry  referred to
Though apart from cost of transportation excise duty and sales tax
other charges were not sought to be deducted by the appellants in the appeal and were not canvassed before the Tribunal too nor in the grounds of appeal there was any such claim in the interest of justice they are permitted to have the benefit of other deductions envisaged in Assistant Collector of Central Excise  Ors
vs Madras Rubber Factory Ltd  subject to the order passed in the review matter
795G 796AB 785