Agency, not sale, governs co-operative cotton transactions where the society acts only for members and bears no proprietary risk.

Transactions between a co-operative society and its members were examined to determine whether unginned cotton supplied by members, then ginned, crushed and sold by the society, amounted to sales and purchases. The bye-laws showed that the society acted only on behalf of its members, did not acquire property in the goods, and any loss from the transactions was borne proportionately by the members. That structure was treated as consistent with agency and inconsistent with a sale. The society's registration also carried a condition against dealing on its own account, and there was no breach of that condition. The arrangement was therefore characterised as agency, not sale.

---

---

Issues: Whether the transactions by which members and nominal members supplied unginned cotton to the co-operative society, which thereafter ginned the cotton, crushed the cotton-seeds and sold the resultant products, constituted sales and purchases between the society and its members.

Analysis: The bye-laws of the society were found to be materially similar to those considered by the Supreme Court in the earlier ginning and pressing society case. On that basis, the activity of the society was held to be one undertaken for and on behalf of the members, and the terms of the arrangement had to be gathered from the bye-laws. A further significant factor was that any loss from the overall transactions was borne proportionately by the members, which was consistent with an agency arrangement and inconsistent with a sale. The society was also registered subject to a condition that it would not carry on purchase and sale on its own account, and there was no breach of that condition.

Conclusion: The transactions did not constitute sales and purchases; the society acted as an agent of its members, including nominal members, and the reference was answered in favour of the dealer-opponent.

Ratio Decidendi: Where the bye-laws of a co-operative society show that it acts only on behalf of its members, does not acquire property in the goods, and any loss is borne by the members, the arrangement is one of agency and not a sale.

---