1

DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

CONTRACT LAW - II
PROJECT
ON
SECTIONS .30 OF SALE OF GOODS ACT AN EXCEPTION TO NEMO DAT QUOD
NON HABET RULE.
BY
K.S.S. HARSHA, 201256, 3RD SEMESTER.

DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY
VISKHAPATNAM





2

Damodaram Sanjivayya National Law University
Certificate
I, Mr/Miss __________________________________________ with Reg. No
__________________of _____ Semester prepared the Project on
________________________________________________________________
_________________
In partial fulfilment of his/her semester course in the subject
__________________________________
During the academic year 2012-2013 under my supervision and Guidance

Signature of Faculty












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INDEX
1. INTRODUCTION AND SALE DEFINITION.4
2. NEMO DAT QUOD NON HABET RULE5
3. SALE BY NON- OWNERS5
4. PROVISIONS OF THE ACT..6
5. SALE BY SELLER IN POSSESSION AFTER SALE7
6. SALE BY BUYER IN POSSESSION AFTER SALE.10
7. HIRE PURCHASE AGREMENTS..12
8. CONCLUSION..13
BIBLIOGRAPHY
TABLE OF CASES















4

INTRODUCTION:
In a certain circumstances, the Nemo Dat Quod Non Habet does not apply. It is the
situation where the buyer still get the title of owner even seller was not the ultimate owner or
do not have authority at all to sell. The exception of Nemo Dat Quod Non Habet is
estoppel. Where the owner conduct makes it appear to the buyer that the person who sells the
gods has his authority to do and the buyer relies on that conduct, the buyer obtains a good
title because the owner is precluded by his conduct from denying the sellers authority to sell.
SALE DEFINITION:
The dictionary meaning of the word sale is defined as an agreement or contract in which
property is transferred from the seller to the buyer for a fixed price in money paid or agreed
to be paid by the buyer.
The actual legal definition has been explained in the Section. 54 of the Transfer of Property
Act, 1882.
SALE: Sale is a transfer of ownership in exchange for a price paid or promised or part-paid
and part- promised.
1

A sale of an immovable property is the transfer of ownership and after the sale all the rights
and liabilities of the owner transfer into the vendee. A sale conveys a legal title to the
purchaser because absolute interest of the vendor passes to the vendee. A sale requires a
compulsory registration where the sale is of tangible immovable property of Rs.100 or more.
Where according to a memorandum of understanding MOU between parties, the plaintiffs
paid the price and in return they were promised by the defendant owner the rights and
interest in the property to be developed by them and to be sold by them in the open market.
The plaintiffs were also given the right to collect rent from tenants and also to provide
permanent alternative accommodation for defendant and her tenants; it was held that it was
not mere development agreement but agreement of sale.




1
Sec .54 of the transfer of property Act,1882.
5

NEMO DAT QUOD NON HABET RULE:
The general rule expressed in the maxim Nemo Dat Quod Non Habet that no one can give
that which he has not is that a buyer of goods cannot obtain a better title than what the seller
had; this was found in the repealed Section.108 of the Indian contract Act as:
No seller can give to the buyer of goods a better title to those goods than he has himself.
The proposition protected the true owner, since the buyer cannot acquire a better title than
what the seller had. For example, if the seller had a life interest in the goods or was say a
pledgee or mortgagee of the goods, then the buyer would be protected to the extent to which
the seller has got a right. But in no case, would buyer get a better right than what the seller
had.
SALE BY NON-OWNERS:
Title is different from property in the sense of ownership. Property is a right or bundle or
rights. Salmond points out that every legal right has a title that is to say, certain facts or
events by reason of which the rights has become vested in the owner. The title is the De
facto predecessor of which the right is the De jure consequent. In passing of ownership as
between the seller and the buyer, we have been so far proceeding on the assumption that the
seller was the owner of the goods and as such, competent to transfer the ownership from
himself to the buyer. The issue arises where the seller is not in fact the owner and a person
buys the goods from such person believing in good faith the seller to be real owner.
2

If the seller is solvent person for the true owner of the goods can recover the damages from
him, for a wrongful sale or buyer can recover damages for breach of warranty of title. When
the true owner of the goods realises that his goods have been sold to third parties, a dispute
arises as between the true owner and the bona fide purchaser as to the ownership in the
goods. The has difficult task in lying down rules for protecting and adjusting the conflicting
rights between a true owner whose goods are wrongfully sold away by fraudulent persons,
and a bona fide innocent purchaser, who might have purchased the goods for value believing
the seller to be the owner having the right to sell .The English law to attempt a compromise

2
T.S.Venkatesa IYERS, The law of contracts and tenders,S.Gogia & company, 10 th edition volume 1, pg. 1047.
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laying down a general rule in favour Of the true owner and protecting the innocent buyer by a
series of exceptions to the rule is Nemo Dat Non Quod Habet.
3

PROVISIONS OF THE ACT:
The concerned provisions related to the maxim Nemo Dat Quod Habet is explained in the
Sale of Goods Act, 1930 .Sections 27 to 30 and Section54 under these Act are the provisions
were the person not the owner of the goods may dispose of the goods as if he was the owner.
The following procedures would fall under this class:
Section .27 where a person without title to the goods sells them with the authority or
consent of the owner.
Section .27 where the owner is by his conduct precluded from denying the sellers
authority to sell.
Section .28 where the sale is by one of several joint owners of goods having sole
possession with the consent of the other co owners.
Section .29 Where is sale is by person in possession under voidable contract.
Section. 30 (1) Where the sale is by one who has already sold the goods but continues
in possession thereof.
Section. 30 (2) Sale by a buyer who has obtained possession of the goods before
property in the goods has passed to and vested in him.
4

Sections 27 to 30 lay down the circumstances and limitations under which persons will be
deemed capable to transfer good title to the buyer without him having the title or authority
from the owners to pass title.
Section .54 (3) Where an unpaid seller who has exercised his rights of lien or stoppage in
transit resells the goods, the buyer acquires a good title thereto a s against the original buyer,
notwithstanding that no notice of the re-sale has been given to the original buyer.
Here in the project explains the Section.30 (1) and 30(2) as an exception to the Nemo Dat
Quod Non Habet rule:



3
T.S.Venkatesa IYERS, The law of contracts and tenders,S.Gogia & company, 10 th edition volume 1, pg. 1048
4
Bare Act, The Sale of Goods Act,1930 , universal law publishing.co
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SALE BY SELLER IN POSSESSION AFTER SALE:
The exception relates to cases of a seller who having sold the goods but continuing in
possession either of the goods or of documents of title to goods, sells or pledges the same
either by himself or through a mercantile agent to a person who acts in good faith and without
notice of the previous sale.
SECTION. 30(1) OF GOODS ACT:
The section 30 (1) explains where a person, having sold goods, continues or is in possession
of the goods or of documents of title to the goods , the delivery or transfer by that person or
by mercantile agent acting for him, of the goods or documents of title under any sale, pledge
or other disposition thereof to any person receiving the same in good faith and without notice
of the previous sale, shall have the same effect as if the person making the delivery or transfer
were expressly authorised by the owner of the goods to make the same. And to corresponding
this Section 30(1) is Section 25(1) of the English Act.
5

The main ingredient to be notes that the possession of the seller must be as seller and not
hirer or bailee .But it has been reversed by the Privy Council in the case of
PACIFIC MOTOR AUCTIONS PVT.LTD V. MOTOR CREDITS HIRE FINANCE
LTD
6
:
In the case before the privy council it was held that the words continues in possession refer
to the continuity of physical possession in the seller regardless of any private transaction
between the seller and the buyer which might alter the legal title under which possession was
held and in absence of any break in the continuity of possession , for delivering the goods to
the buyer or to some other person the sub section would not cease to apply simply because
the seller has attorney to the buyer as bailee.
CITY FUR MANFACTURING .CO V FUREENBOND LTD
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:
In this case one H purchased a large quantity of fur at an auction asked the auctioneer L who
was acting also a broker to pay for and retain the, .Subsequently H agreed to sell the fur to the
plaintiffs obtained money thereof but without paying the sum due to L went to the defendants

5
T.S.Venkatesa IYERS, The law of contracts and tenders,S.Gogia & company, 10 th edition volume 2, pg. 814.
6
1965 AC 867.
7
1937 1 ALL ER 799.
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and agreeing to pledge the fur borrowed 178 the amount due to L and gave a delivery order
addressed to When L was paid the defendants obtained possession of the goods as a pledge
for advance made by them. Plaintiff sued to recover the goods, and the court held that Ls
possession was on behalf of H and Hs pledge to defendants was valid as H was a seller in
possession and may be possession by an agent, warehouseman or mercantile agent.
Possession includes possession by another on behalf of the person whose possession is
material.
The term delivery means voluntary transfer of possession and transfer under the section
must be a voluntary transfer. A delivery or transfer pursuant to a decree of court is not
voluntarily and as such is not within the section.Section.30 (1) does not require that the seller
must in actual physical possession of the goods. It enough that he should have such control
over the goods as to transfer possession by making over documents of title. Nor does the
section require that the seller should continue to be in possession of the goods or documents
of title with the consent of the buyer.
It is necessary that there should not have been any delivery or transfer of possession to buyer
or pledgee. NICHOLSON V. HARPER
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where a seller having sold the goods, which were
in a warehouse, pledged the same to the warehouseman, it was held that the pledge was not
valid, as there was no delivery or transfer either of the goods or documents.
Section.30(1) would come into play only when property right is transferred to the transferee
.In a hypothecation has nothing more than an equitable charge to have his claim realised by
the sale of the goods hypothecated he is not entitled to the protection under Sec.30(1 )
The words other disposition thereof in section 30(1) must be understood EJUSDEM
GENERIS or sale or pledge the transfer of property or right to property for a consideration.
They may include a mortgage. Anew interest in the property must be effectually created.
PRAMATHA NATH V. MAHARAJA PROBIRENDRA M.TAGORE
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:
This is a suit to establish title in six items of movables said to be of great artistic value, for
possession thereof and for damages. The said goods are old curios originally belonging to the
defendant Maharaja. On June 25, 1960 and on July 25, 1960 the plaintiff claims to have
purchased the same from the Maharaja along with a number of other goods for Rs. 33,650

8
1895 2 CH 415.
9
AIR 1966 CAL. 405.
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and Rs. 24,150. These goods at the dates of sale were lying in the Durbar Hall of the Tagore
Castle belonging to the Maharaja defendant. The delivery of the goods was to be given on or
before December 31, 1960. All the goods sold were taken delivery of by the plaintiff from
time to time except the six items which are the subject matter of this litigation. It is alleged
that shortly after the sale on September 17, 1960 the defendant Maharaja purported to have
hypothecated a number of artistic goods lying in the same Durbar Hall to the defendant
Madhodas Mundra. The plaintiff's case is that the movables sold to the plaintiff were not
hypothecated to the defendant Madhodas Mundra. Be that as it may, the plaintiff's further
case is that a suit was brought by Madhodas Mundra being suit No. 309 of 1961 against the
defendant Maharaja on the said hypothecation, that the suit was decreed by consent on
November 28, 1961 and that pursuant to and in terms of the said decree the hypothecated
goods were sold by Mr A. K. Panja, the Receiver appointed in the said proceeding to the
defendant Chow-ringhee Sales Bureau (Private) Ltd. It is pleaded that the goods sold as
aforesaid included the six items of artistic goods previously sold by the defendant Maharaja
to the plaintiff. It is alleged that all the defendants acted in fraud and collusion and the suit,
decree and orders in that suit are all tainted with Fraud and collusion. It is further alleged that
the defendant Mundra and the other defendants had full notice that the plaintiff was the
owner of the said goods having purchased them previously. It is stated in the plaint that the
goods are of great artistic value and damage assessed at Rs. 1 lac has been claimed. Reliefs
claimed are a declaration of title, possession, Injunction and alternatively for damages
assessed at Rs. 1 lac: against all the defendants except the defendant Panja. The defendants
impleaded are the Maharaja, who is the seller, Madhodas Mundra, the said hypothecate, the
Chowringhee Sales Bureau, the purchaser from the Receiver as also the Receiver. In the facts
of this case, the plaintiff will pay only the costs of the Receiver. The plaintiff will get costs
from the defendant Maharaja on undefended scale. Save as aforesaid, the parties will bear
their own costs: certified for two counsels. An injunction has been issued by this Court. The
injunction will stand dissolved after six weeks.
The requirements of Section 30(1) will not be satisfied where the seller sells the goods
pursuant to decree order of court. Such a sale whether by the seller or a receiver in an action
by the hypothecate of the goods is not within Section.30 (1).


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SALE BY BUYER IN POSSESSION AFTER SALE:
Similarly, where a buyer who having bought or agreed to buy the goods and being with the
consent of the seller in possession of the same or of documents of title to the same, sells or
pledges them himself or through a mercantile agent, the buyer who acts in good faith and
without notice of lien or of any right of the owner gets a good title.
SECTION.30 (2) OF GOODS ACT:
Where a person having bought or agreed to buy goods, obtain with the consent of the seller,
possession of the goods or the documents of title to the goods the delivery or transfer any that
person or by a mercantile agent acting for him, of the goods or the documents of title to the
goods, the delivery of transfer by that person or by a mercantile agent acting for him, of the
goods or documents of title under any sale ,pledge or other disposition thereof to any person
receiving the same in good faith and without notice of any lien or other right of the original
seller in respect of the goods shall effect as if such lien or right did not exist.
10

Section.29 (2) is designed to protect an innocent purchaser who has received the property in
good faith and without notice of lien or other right of the original seller in respect of the
goods. It is based on public policy and the larger interests of society. The sub- section
assumes that the owner can pledge the goods by transfer of the relevant documents of title .It
embody a statutory exception to the general rule that a person cannot confer on another a
higher title than he possesses.
MORVI MERCANTILE BANK.LTD V. UNION OF INDIA
11
:
Certain goods were consigned with Railways to self from Bombay for transit to Okla. The
consigner endorsed the railway receipts to the appellant bank against an advance of Rs.20,
000. The goods having been lost in transit, the bank as an endorsee of the railway receipts
and pledgee of the goods sued the railways for the loss of the goods which worth Rs.35, 500.
The trial court rejected the action. The Bombay high Court allowed up to Rs.20, 000 .There
were cross- appeals against this decision. The Supreme Court was called upon to decide
whether a railway receipt could be equated with the goods covered by the word goods for
the purpose constituting delivery of goods. The delivery of railway receipts was the same
thing as delivery of goods the pledge was, therefore, valid and the pledgee was entitled to sue

10
T.S.Venkatesa IYERS, The law of contracts and tenders,S.Gogia & company, 10 th edition volume 2, pg. 815
11
AIR 1965 SC 1954.
11

for the loss. In the vast country where goods are carried by railways over long distances and
remain in transit for long days the railway receipt is regarded as the symbol of goods for all
purposes for which a bill of lading is so regarded in England. The court held that pledgee was
entitled to recover the full value of the goods lost and not merely the amount of advance.
Even where the buyers voidable title has been avoided, the buyer may yet be a person
having brought within the Section.30(2)and though the property has reverted to the seller he
may be able to pass a good title to a third party bona fide purchaser. In NEWTONS OF
WEMBLEY LTD.V.WILLIAMS
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a buyer managed to obtain the goods by fraud .The
seller having rescinded the contract and avoided the buyers title .Nevertheless, inasmuch a
she had bought the goods and was in possession thereof it was held that he could pass a good
title to a bona fide third party buyer.
To enable a buyer in possession to pass a good title:
There must be possession of the goods or documents of with the consent of the
seller.
The goods must have been delivered to the buyer or the documents of title transferred
to him.
There must be good faith and absence of the original sellers lien or other right in
respect of the goods on the part of the second buyer.
MARTEN V. WHALE
13
:
Where B agrees to buy a car if his solicitor approved and having obtained possession of the
car, sold the same to C but the solicitor subsequently disapproved of the transaction, it was
held that the title has passed to C the buyer
CAHN V. POCKETS BRISTOL CHANNEL STEAM POCKET CO
14
:
The buyer received from the seller a bill of lading along with a bill of exchange for the price
.He did not accept the bill, but nevertheless transferees the bill of lading to a bona fide sub
purchaser dealing in good faith, without notice of his vendors want of authority. The court
held that as the buyer had physical custody of the bill of lading with the consent of the owner
the sub- purchaser obtained a good title.

12
1965 1 QB 560.
13
1917 2 KB 480.
14
1899 1 QB 643.
12

The consent of the seller is a material requirement .If the seller has in fact consented to the
buyers possession it is immaterial that the goods were obtained by fraud or in circumstances
amounting to theft. The Supreme Court has held that the consent in Section.30 (2) means,
agreeing on the same thing in the same sense and not free consents. Here again a bona fide
purchaser or pledgee will not protected it the fraud, etc.; committed is of such a character as
would preclude the existence of any consent at all on the owners part to give possession of
the goods or of documents of title, as for instance where the fraud induces an error as to the
identity of the person to whom or the property in respect of which possession is given.
This section is clearly available only to persons who have either bought the goods or agreed
to buy the goods. A person who has got merely an option to purchase the goods as in hire
purchase agreements cannot transfer title to sub- buyer though acting bona fide.
HIRE-PURCHASE AGREEMENTS:
The hirer under a hire purchase agreement is not a person who has agreed to buy goods
within the meaning of sub section (2) unless he has bound himself to buy .A mere option to
purchase is not sufficient. Where in the below case a piano taken on a hire purchase
agreement was pledged , it was held that the owner could recover from the pledgee, a s there
was no agreement to buy.
15

HELBY V. MATHEWS
16
:
In this case Lord Herschel had delivered the judgement as:
If there was no such legal obligation to buy there, in my opinion, properly be said to have
been an agreement to buy. Where is any such legal obligation to be found? Brewster might
buy or not just a she pleased. He did not agree to make 36 or any number of monthly
payments. All that he undertook was to make the monthly payment of 10s.6d.So long as he
kept the piano. He had an option, no doubt to buy it buy it by continuing the stipulated
payments for a sufficient length of time. If he had exercised that option he would have
become the purchaser. I cannot see, under these circumstances, how he can say either to have
bought or agreed to buy piano. The terms of the contract did not upon its execution bind him
to buy but left in free to do so or not as he pleased , and nothing happened after the contract
was made to impose that obligation.

15
H.S.Pathak, Mulla, Sale of Goods Act and Indian Partnership Act, LEXIS Nexis, 9
th
edition, pg.72.
16
1895 AC 471.
13

Whether the contract between the parties amounts to an agreement to buy or only an option to
purchase depends on the construction of the contract and not on the terminology used by the
parties .So where a person though styled a hirer, has really agreed to buy, he is competent to
give a good title to purchase or pledgee acting in good faith.
Where the hirer is under the contract bound to keep the chattel in repair, he has implied
authority to employ a repairer who will ordinarily have a lien on the article as against the
owner, except in cases where he has had notice of the hirers want of authority.
CONCLUSION:
As to the above explained sections related to the sale of goods and the transfer of immovable
and movable goods in the Indian aspect. As the Maxim Nemo Dat Quod Non Habet rule is
explained as transfer of property who was not the owner of the property or actual title holder
of that goods. Whereas the certain exceptions to this rule is mentioned the sale can be done
by them there are by the mercantile agent, has the consent of the owner to sell, under
voidable agreements and the important buyer or seller in possession after sale. These are the
certain exceptions the property can be transferred to the transferee with a good title. The
burden of proof lies on the actual buyer in the case of these exceptions. The statues related
are the Indian Goods Act and strict legislations to be implemented in the case of these
transfers.
A clear legislation should be implemented in regard of the benami transactions in India.
Which was major issue related to the property issues in India. As half of the transactions in
India are benami transactions which are leading to the loss of transferee and which results in
the lots of the property cases in the Indian courts and pending cases in litigations. Therefore
legislations should be implemented against the sale by the Non- Owners in the Sale Of Goods
Act.





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TABLES OF CASES:
PACIFIC MOTOR AUCTIONS PVT.LTD V. MOTOR CREDITS HIRE
FINANCE LTD 1965 AC 867
CITY FUR MANFACTURING .CO V FUREENBOND LTD 1937 1 ALL ER
799
NICHOLSON V. HARPER 1895 2 CH 415.
PRAMATHA NATH V. MAHARAJA PROBIRENDRA M.TAGORE AIR 1966
CAL. 405
MORVI MERCANTILE BANK.LTD V. UNION OF INDIA AIR 1965 SC 1954.
NEWTONS OF WEMBLEY LTD.V.WILLIAMS 1965 1 QB 560.
MARTEN V. WHALE 1917 2 KB 480
CAHN V. POCKETS BRISTOL CHANNEL STEAM POCKET CO 1899 1 QB
643.
HELBY V. MATHEWS 1895 AC 471.












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BIBLIOGRAPHY:
ONLINE SOURCES:
T.S.Venkatesa Iyers, The Law of Contracts & Tenders , S.Gogia & company, 10
th

edition, volume 1.
T.S.Venkatesa Iyers, The Law of Contracts & Tenders , S.Gogia & company, 10th
edition, volume 2.
H.S.Pathak, Mulla, Sale of Goods Act and Indian Partnership Act, LEXIS Nexis, 9th
edition.
WEB SOURCES:
www.westlawindia.com
www.legalsutra.org
www.lawkhoj.com
www.scribd.com
www.legalservicesindia.com