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Section 99: Sections 76 to 123 [Repealed by the Indian Sale of Goods Act, 1930]

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Act 1872
Section 98 All 266 Sections of Indian Contract Act Section 100

Legal Commentary & Landmark Judgments: Section 99

Historical Section 99 of the Indian Contract Act, 1872 codified the equitable mercantile doctrine of stoppage in transit (stoppatio in transitu), entitling an unpaid seller who had parted with custody to resume possession of goods while in the custody of an intermediary carrier or bailee, upon discovering the buyer's insolvency. Codified in Section 50 of the Sale of Goods Act, 1930, this right constitutes an extraordinary possessory remedy bridging contract law and commercial maritime jurisprudence.

  • Unpaid Status and Surrender of Possession: The right arose only where the seller was unpaid and had surrendered physical possession to an independent carrier or bailee for transmission to the buyer.
  • Intervening Commercial Insolvency of the Buyer: The essential condition precedent was the buyer's insolvency—defined as inability to pay debts in the ordinary course of business, regardless of formal bankruptcy adjudication.
  • Resumption of Possessory Status: Stoppage did not rescind the contract of sale; it merely restored the seller to his pre-transit position of possessory lien until full payment was tendered.
Key Landmark Precedents:
  • Lickbarrow v. Mason (1787) 2 TR 63: The foundational common law precedent on stoppage in transit, establishing that the right of an unpaid seller to stop in transitu is an equitable right arising upon insolvency, subject only to the rights of a bona fide transferee of a bill of lading for valuable consideration.
  • Booth Steamship Co. Ltd. v. Cargo Fleet Iron Co. Ltd. [1916] 2 KB 570: Recognized across Indian mercantile benches as the definitive authority holding that the exercise of stoppage in transit imposes an immediate legal obligation on the carrier to redeliver the goods to the seller, who becomes liable for freight charges.
Courtroom Practice & Strategic Litigation Guidance:

The moment commercial insolvency of a consignee is discovered, immediately serve a formal notice of stoppage on both the carrier's local agent and headquarters before the consignee presents the bill of lading or railway receipt. Plead Section 50 of the Sale of Goods Act read with general contract law to prevent delivery.

Section 98 All 266 Sections of Indian Contract Act Section 100