The judgment of the Supreme Court in ‘Indian Steel and

Solution

A sale is necessarily a consensual transaction and if the parties have no volition or option to bargain, there can be no sale, the limitations on the normal rights of dealers and consumers to supply and obtain the goods, the obligations imposed on the parties and the penalties prescribed by the control order did militate against the position that eventually the parties must be deemed to have completed the transaction under an agreement by which one party bound itself to supply the stated quantity of goods to the other at a price not higher than the notified price and the other party consented to accept goods on the terms and conditions mentioned in the permit or the order of in its favor by the concerned authority. In case of statutory transaction, this transaction is not necessarily a consensual transaction the limitations on the normal rights of dealers and consumers to supply and obtain the goods, the obligations imposed on the parties and the penalties prescribed by the control order converts the contract of sale in to statutory transaction thus leaving no scope for parties to make terms and conditions for themselves and thus eradicating the principle of contractual liberty. Indian steel and wire products Ltd V. State of Madras:- The supreme was concerned with the iron and steel ( control of production and distribution) order 1941. Under the said order, steel products were supplied to various persons iin the state of madras pursuant to the directions of the steel controller. The court there observed that although the area within which there could be bargaining between the prospective buyer and an intending seller was greatly reduced, the company could supply goods in question at its convenience . Audit was open to the company to agree with the customers as to the date on which the goods were to be supplied. The orders booked were subject to the company’s terms of business and general understanding in force at the time of booking the orders and dispatch the goods . It was also open to the company to fix any mode of payment of the price. The court held that due to change in political outlook and as a result of economic compulsions, the freedom of contract was being confined gradually to narrower and narrower limits . So long as mutual assent was not completely excluded in any dealings in law ,it was a contract. The courts held that transaction was sale.