P.S.N.S. Ambalavana Chettiar v. Express Newspapers Ltd. (AIR 1968 SC 741)

Two paper dealers adjusted their earlier deal. After the change on 26 November 1951, the seller (Express Newspapers Ltd.) was to supply any 300 tons of newsprint in sheets out of a larger stock of 415 tons. No exact 300 tons were picked or set aside. Later, the seller resold the remaining sheets and claimed resale rights.

The Supreme Court held: property in the 300 tons had not passed to the buyers (P.S.N.S. Ambalavana Chettiar & Co.) because the goods were not ascertained or appropriated to the contract. Therefore, the seller could not rely on Section 54(2) to justify a statutory resale, but could claim damages as the difference between the contract price and market price on the breach date.

• Did the property in the 300 tons of newsprint in sheets pass to the buyers before resale?
• If not, could the seller invoke Section 54(2) (resale by unpaid seller)?
• What is the correct measure of damages on buyer’s refusal without a fixed time of acceptance?

1. Effect of 26 Nov 1951 variation: It undid the earlier passing of property in the full 415 tons. From that date, the entire 415 tons again belonged to the seller.
2. No appropriation: No specific 300 tons were set aside with buyer’s consent. Therefore, under Section 18, property did not pass to the buyers.
3. No Section 54(2) resale right: Since property had not passed, the seller could not rely on the statutory resale power under Section 54(2).
4. Damages: Seller entitled to the difference between contract price and market price on the date of breach (buyer’s refusal), as no time for acceptance was fixed.

For unascertained goods, property passes only on ascertainment and appropriation with consent. A contract allowing supply of “any 300 tons out of 415” does not identify the goods. Without appropriation, title stays with the seller. Hence, Section 54(2) (resale by unpaid seller) does not apply. The remedy is market difference damages on breach.

• Clarifies Section 18 for bulk goods and partial withdrawals.
• Separates title-based resale under Section 54(2) from damages-based recovery under contract law.
• Guides drafting: insert clear appropriation steps and consent triggers.

Mnemonic: “Pick–Pass–Power”

1. Pick: Specific goods must be picked (ascertained & appropriated).
2. Pass: Only then does property pass under Section 18.
3. Power: Without passing, seller lacks the Section 54(2) resale power.

Unascertained Goods

Goods not yet identified for a specific buyer or contract share.

Appropriation

A clear act that identifies and sets aside the exact goods for the contract with consent.

Unpaid Seller’s Lien

Right to hold goods until payment where property has passed.