Works contract classification turns on substance, not passing of property, for railway coach body-building arrangements.

Contracts for body-building railway coaches on railway-supplied underframes were works contracts because the agreements required construction to drawings and specifications under close supervision, with controls on materials, time, inspection, rectification, labour and wages. The dominant object was the application of labour and skill to produce a specified result, not the sale of coaches as chattels. The incidental passing of property in the finished coaches did not convert the arrangement into a sale of goods. The contracts were therefore works contracts, not contracts for sale of goods.

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Issues: Whether the contracts for body-building of railway coaches on underframes supplied by the railway administration were contracts for sale of goods or works contracts.

Analysis: The real nature of the arrangement was gathered from the terms of the contracts and the surrounding circumstances. The contracts were framed as undertakings to build coaches to prescribed drawings and specifications on railway-supplied underframes, under close supervision, with stipulated standards of materials, time-bound execution, security deposit, liability for delay, inspection and rectification, restrictions on sub-letting, and controls over labour and wages. The contracts did not contemplate sale of coaches as chattels; rather, they showed that the dominant object was the supply of labour and skill to produce the desired result. Mere passing of property in the finished coach did not convert the arrangement into a sale, because the subject of the agreement was not the transfer of the very goods as goods within the meaning of the law of sale.

Conclusion: The contracts were works contracts and not contracts for sale of goods.

Ratio Decidendi: Where the substance of the agreement is the performance of work and the application of labour and skill to achieve a specified result, the incidental passing of property in the finished article does not make the transaction a sale of goods.

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