Section 55 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 55 opens Chapter VI, "Suits for breach of the contract". It gives the seller a suit for the price in two cases: the property in the goods has passed to the buyer and the buyer wrongfully neglects or refuses to pay; or the price is payable on a day certain irrespective of delivery and the buyer wrongfully neglects or refuses to pay it, even though the property has not passed. This article follows the text of the Act consulted (latest amendment shown: Act 28 of 1993); amendments after that should be checked in the official text.
The seller may sue for the price where (1) under a contract of sale the property in the goods has passed to the buyer and the buyer wrongfully neglects or refuses to pay according to the terms of the contract; or (2) the price is payable on a day certain irrespective of delivery and the buyer wrongfully neglects or refuses to pay, although the property has not passed and the goods have not been appropriated to the contract. The section says nothing about limitation periods or the measure of any other relief.
Section 55(1): property has passed and the buyer does not pay
"Where under a contract of sale the property in the goods has passed to the buyer and the buyer wrongfully neglects or refuses to pay for the goods according to the terms of the contract, the seller may sue him for the price of the goods."
There are four conditions:
- there is a "contract of sale" (see section 4, and our article on the difference between sale and agreement to sell);
- "the property in the goods has passed to the buyer";
- the buyer "wrongfully neglects or refuses to pay for the goods"; and
- non-payment is "according to the terms of the contract", that is, the buyer is in default of the payment terms the contract sets.
The consequence is a suit "for the price of the goods"; our recovery suit service covers that stage. The word "wrongfully" matters: a buyer who is entitled to withhold payment is outside the sub-section.
Property in goods is dealt with in sections 18 to 24. The time at which it passes depends on the intention of the parties; see our articles on passing of property and on property in specific goods. Section 2(11) defines "property" as the general property in goods, and not merely a special property.
Example (our own, not from the Act): Varghese Plastics sells a specific consignment of granules to Kulkarni Moulders under a contract that says property passes when the contract is made, with payment 45 days after delivery. After the 45 days, Kulkarni Moulders refuses to pay without any ground allowed by the contract. Property having passed, sub-section (1) allows Varghese Plastics to sue for the price. If the contract instead said that property would pass only on payment, sub-section (1) would not apply on its own words.
Section 55(2): price payable on a day certain
"Where under a contract of sale the price is payable on a day certain irrespective of delivery and the buyer wrongfully neglects or refuses to pay such price, the seller may sue him for the price although the property in the goods has not passed and the goods have not been appropriated to the contract."
The sub-section applies where:
- the price is "payable on a day certain irrespective of delivery";
- the buyer wrongfully neglects or refuses to pay on that day; and then
- the seller may sue "although the property in the goods has not passed and the goods have not been appropriated to the contract".
This makes the day of payment, not the passing of property, the foundation of the suit. The Act does not define "day certain" beyond these words. Whether a given payment clause is payable "irrespective of delivery" depends on the contract. Appropriation is dealt with in section 23; see our article on unascertained goods and appropriation.
Example (our own): Gupta Engineering agrees to sell machine parts to be made and delivered in six months. The contract says the price is payable on 1 March irrespective of delivery. On 1 March the buyer, Haldar Works, refuses to pay though the parts have not been made. The sub-section lets Gupta Engineering sue for the price although the property has not passed and the goods are not appropriated to the contract.
The two limbs side by side
| Point | Sub-section (1) | Sub-section (2) |
|---|---|---|
| Property in goods | Has passed to the buyer | Need not have passed |
| Appropriation to the contract | Not mentioned | Need not have occurred |
| Time of payment | "according to the terms of the contract" | "payable on a day certain irrespective of delivery" |
| Buyer's default | "wrongfully neglects or refuses to pay" | "wrongfully neglects or refuses to pay such price" |
| Seller's remedy | Suit "for the price of the goods" | Suit "for the price" |
What section 55 does not say
- No limitation period. The Act states none here. Time limits are in a separate law; our site has a post on the Limitation Act, 1963 articles on the price of goods sold and work done, and it should be read for itself.
- No interest rate. Interest is dealt with in section 61; see our article on interest and special damages.
- No procedure. The section says the seller "may sue"; it prescribes no forum, form or court fee. For commercial disputes, our site has posts on the meaning of a commercial dispute under the Commercial Courts Act, 2015 and on its determination of specified value; this article states nothing from them.
- Other remedies. If the seller does not sue for the price, sections 56 and 57 deal with damages for non-acceptance and non-delivery; see our article on damages for non-acceptance and non-delivery.
- Small suppliers. For a buyer's liability to pay a supplier covered by a separate statute, our site has a post on section 15 of the MSMED Act, 2006; that is a separate law and nothing is taken from it here.
Practical points
- Check when the property passes before choosing the limb. Sub-section (1) depends on it; sub-section (2) does not.
- State the payment day in the contract. Sub-section (2) rests on a "day certain irrespective of delivery".
- Keep the paper. Purchase order, invoice, challan, acceptance note, ledger and reminders are the evidence of the price and of the buyer's neglect or refusal.
- Send a demand first. A written demand fixes the amount and the date.
Need help recovering the price of goods you have sold?
If a buyer has taken the goods or has agreed to pay on a fixed day and has not paid, we can assess which limb of section 55 fits your facts and prepare the papers for a recovery suit.
Key takeaways
- A seller may sue for the price where the property has passed and the buyer wrongfully neglects or refuses to pay according to the contract.
- He may also sue where the price is payable on a day certain irrespective of delivery, even though the property has not passed and the goods are not appropriated.
- "Wrongfully" is part of the test.
- The section states no limitation period, interest rate or procedure.
Read next
- Sections 56-57 of the Sale of Goods Act, 1930: damages for non-acceptance and non-delivery
- Section 61 of the Sale of Goods Act, 1930: interest and special damages
- Sections 18-19 of the Sale of Goods Act, 1930: passing of property
- Section 73 of the Indian Contract Act, 1872: compensation for breach of contract and remoteness of damage
Disclaimer: Based on the consolidated text of the Sale of Goods Act, 1930 consulted on 2 October 2026, whose latest amendment shown is Act 28 of 1993. It explains the words of the statute only; later amendments and the way courts apply these sections should be checked. This article is general information, not legal advice; check the official text before acting.