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CA Foundation · Business Laws · The Sale of Goods Act, 1930

Dev sold 50 bales of jute to Iqbal on credit, and Iqbal obtained delivery of the bales from Dev. Iqbal has not paid and is now insolvent. Dev finds the bales in Iqbal's own warehouse. Dev claims the right to take them back. What is the position?

Dev cannot recover the bales through lien or stoppage. Lien requires the seller to hold the goods, and stoppage requires the goods to be in transit. Once Iqbal took delivery into his own warehouse, both ended, leaving Dev to sue for the price.

  1. ADev has no lien or stoppage rights because transit has ended and possession has passed to IqbalCorrect
  2. BDev can stop the goods in transit because Iqbal is insolvent
  3. CDev can exercise a lien because he remains the unpaid seller
  4. DDev can recover the goods only if Iqbal agrees

Explanation

Lien needs the seller's possession, and stoppage needs goods in transit. Here the buyer has taken delivery and the goods are in his own warehouse, so transit is over and possession has passed. Dev is left with his personal remedies, such as a suit for the price.

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