Skip to content


Hurmukhrai Amoluckchand Vs. Narotamdass Gordhandass - Court Judgment

LegalCrystal Citation
SubjectContract
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 512 of 1904
Judge
Reported in(1907)9BOMLR125
AppellantHurmukhrai Amoluckchand
RespondentNarotamdass Gordhandass
Excerpt:
indian contract act (ix of 1872), section 30- wagering contracts-elements determining the nature of such contracts.;what the court has to do when it has to decide questions as to whether the transactions in a suit are genuine mercantile transactions or mere agreements by way of wagers is not simply to look at the transactions as they appear on the face of them but to go behind and beyond them and ascertain the true nature of dealings between the parties by probing inio surrounding circumstances and minutely examining the position of the parties and the general character of the business carried on by them. the court must be careful not to he misled by the mere rectitude of the documents evidencing the transaction or the mere protestation of one of the parties as to his real intention. the.....davar, j.1. the plaintiffs arc a firm of merchants who carry on an extensive business in bombay and in about fifteen other centres of trade in india. they deal in cotton, seed, wheat and other produce, on their own account and act as shroffs and commission agents for a large number of constituents residing both in bombay and up country. the defendants are the sons of one gordhandass raghunathji who during his lifetime carried on business in piece-goods in the name of his father raghunathji tarachand. the said gordhundass raghunathji was a member of a joint and undivided hindu family and the piece-goods business, which he was carrying on jointly with his father, was a family business. besides the piece-goods business, which appears to be the principal business of the family, gordhundass.....
Judgment:

Davar, J.

1. The plaintiffs arc a firm of merchants who carry on an extensive business in Bombay and in about fifteen other centres of trade in India. They deal in cotton, seed, wheat and other produce, on their own account and act as shroffs and commission agents for a large number of constituents residing both in Bombay and up country. The defendants are the sons of one Gordhandass Raghunathji who during his lifetime carried on business in piece-goods in the name of his father Raghunathji Tarachand. The said Gordhundass Raghunathji was a member of a joint and undivided Hindu family and the piece-goods business, which he was carrying on jointly with his father, was a family business. Besides the piece-goods business, which appears to be the principal business of the family, Gordhundass during his life-time carried on another business in coloured cloth in his own name in partnership with other persons. The family firm of Raghunathji Tarachand was continued after the death of Gordhandass, which occurred on the 28th of March 1904, for the benefit of the defendants. The first defendant was a minor at the time of his father's death and also at the time this suit was filed. The second defendant is a posthumous son of Gordhandass and was born on the 21st of April 1904. It is common ground between the parties to this suit that the family of the defendants was joint and undivided and that the cloth business carried on in the name of Raghunathji Tarachand always was and is the business of the family.

2. The plaintiffs allege that at the request of Gordhandass their Bombay firm acted as Pakki Adut agents and shroffs for his firm of Raghunathji Tarachand and as such agents they in 1903 registered his orders for the sale and purchase of linseed and rapeseed for forward delivery-that at the death of Gordhandass contracts for the purchase by him of 100 tons of linseed and 100 tons of rapeseed had remained open-that the delivery of linseed under the contracts was to be given by them in May 1904 and that of rapeseed in April-May 1904-that they were ready and willing to deliver all these goods to the defendants' firm and they actually tendered delivery of all but 25 tons of raposeed--that the defendants' firm repudiated Gordhandass' transactions and refused to take delivery-that they thereupon sold the goods on the defendants, account and that the said sales resulted in a loss to them of Rs. 3,985-7-9. This sum together with the sum of Rs. 252-8-6 which they claim to be due to them for their commission, brokerage and charity allowance they seek to recover from the defendants and they pray that the defendants either as surviving co-parceners or as heirs of Gordhandass may be ordered and decreed to pay to the plaintiffs the said two sums of money.

3. The defendants by their written statement put the plaintiffs to strict proof of almost all the allegations in the plaint. They contend that dealing in rapeseed and linseed was no part of the family business and that if Gordhandass entered into these transactions they were the private speculations of Gordhandass and were not entered into by Gordhandass as manager of the joint family or on behalf of the family and that they are not liable in respect thereof. They end up by pleading that the transactions set out in the plaint were gaming and wagering transactions and are therefore void and not binding on them. They repudiate all liability in respect of these transactions and pray that the suit may be dismissed with costs.

4. Although the defendants seem to have had inspections of the principal documents and the books of account of the plaintiffs, before the hearing commenced, they chose at the hearing to adhere to the attitude adopted by them in the written statement and the plaintiffs were compelled to prove every detail of their case. Before entering on the really contentious portion of the case therefore it would be useful to consider at the outset what in my opinion is proved by the evidence before me. It is conclusively proved before the Court by the evidence furnished by the books of account of the firm of Raghunathji Tarachand that during the life-time of his father Raghunath, Goverdhandass commenced to deal in, amongst other things, linseed and rapeseed. For the purposes of this case it is sufficient at present to notice that in 1903 he employed a firm of brokers named Mithunlal Bankilal to enter into contracts for him in the bazar. He then gave written orders signed by himself to his broker Amichand, a partner in Mithunlal Bankilal, addressed to the plaintiffs' firm requesting them to register his soda as set forth in each of the said orders. All such sodas registered by the plaintiffs at the request of Gordhandass are set out in Ex. A to the plaint. They were registered by the plaintiffs on receipt of the orders sent to the plaintiffs by Gordhandass through his broker Amichand, These orders are Exs. A, B, C, D, E and F. They are all signed by Gordhandass and all signed in the name of his firm Raghunathji Tarachand. Each of these orders says to the plaintiffs:- ' Do you enter this as a Pakki Adut transaction in my account.' In the face of this statement in the orders and in the absence of any evidence to the contrary it would be difficult to hold that Gordhandass was not fully conversant with the incidents of Pakki Adut system as it prevailed in the Bombay market., By these six orders he directed the plaintiffs to register his contracts for the purchase of 150 tons of linseed for May 1904 delivery and sale of 50 tons of linseed for the 'same delivery and contracts for the purchase of 100 tons of rapeseed for delivery in April-May 1904. Exhibits G, H, I, J, K and L are entries in the plaintiffs soda vahi showing that Gordhandass' contracts were registered by the plaintiffs in their books as soon as his orders were delivered to them by his broker Amichand.

5. Exhibit M are collectively eight contracts which the plaintiffs entered into with other shroffs and merchants in connection with some of Gordhandass' orders. It Gordhandass had lived till the duo dates for the carrying out of these contracts probably no difficulty would have arisen, for he seems on previous occasions to have received his profits and paid his losses without raising any dispute. Gordhaudass unlortunately died on the 28th of March 1904. The plaintiffs' Moonim Misrilal soon alter Gordhandass' death went and saw the defendants' Moonim who said he knew nothing about these transactions and stated that they did not appear in the firm's books. The plaintiffs, on the 16th of April 1904, commenced correspondence through their attorneys Messrs. Bicknell, Merwanji and Motilal. In their first letter (Ex. N) they set out the transactions and expressed their readiness to deliver the goods under the contracts that had remained open. Setting off the sale of 50 tons of linseed under the order of the 10th of August 1903 (Ex. 13) against the purchase of 50 tons of linseed for the same delivery under the order of the 27th of July, 1903 (Ex. A) there remained 100 tons of linseed and 103 tons of rapeseed to be delivered by the plaintiffs to the delendants This obligation on their part the plaintiffs said they were ready and willing to carry out. The defendants by their pleader's letter of the 18th of April 1904 (Ex. O), written under instructions from the defendants' Moonim Moolchand Nanji, say that there are no entries of these transactions in their firm's books-that the Moonim knew nothing about the plaintifis' claim and that the transactions appeared to be wagering contracts. From what has transpired in the evidence of this Moonim Moolchand himself, I find it very difficult to believe that Moolchand knew nothing about these transactions entered into by Gordhandass. From the letters that follow Exs. P, Q, R, S and T it is abundantly clear to my mind that the plaintiffs were in a position to deliver the whole of the goods purchased by Gordhandass. by their letter of the 10th of May 1904 (Ex. P) they tendered delivery of 25 tons of rapeseed and 25 tons of linseed. They sent with their attorney's letter a Railway receipt covering 25 tons of rapeseed. The defendants did not accept the Railway receipt nor paid 90 per cant of the price of the goods as they were bound to do against the receipt. They kept the delivery order for 25 tons of linseed but never applied for or took delivery of the linseed covered by that order. With their attorney's letter of the 17th of May 1904 (Ex. Q) the plaintiffs sent another delivery order for 25 tons of linseed but here again the defendants refused to take delivery of the goods. With their attorney's letter of the 19th of May 1904 (Ex. S) the plaintiffs tendered two more delivery orders for 25 tons of linseed each but the defendants refused to take delivery. Lastly with their attorney's letter of the 27th of May 1904 the plaintiffs tendered two more delivery orders for 25 tons of rapeseed each but again the defendants failed and refused to take delivery of the goods. The whole correspondence is most eloquent in the plaintiffs' favour on the question as to whether the plaintiffs were ready and willing or able to give delivery of the goods under the contracts which remained open on Gordhandass' death. The plaintiffs did not go through the formality of tendering a delivery order or Railway receipt in respect of the remaining 25 tons of rapeseed but it seems to me, considering the attitude adopted by the defendants, that it was immaterial whether a delivery order or Railway receipt was actually sent to the defendants or not. The market was undoubtedly against the purchaser and taking delivery meant loss to the defendants. Having regard to the fact that the defendants were minors at the date of this correspondence I can quite understand the anxiety of the defendants' advisers to do nothing to their prejudice at that time, but when the case was heard before me the defendants' advisers had much fuller knowledge of the facts and it seems to me no useful purpose was served by putting the plaintiffs to strict proof of several of the questions raised in issues Nos. 5,6,7,8,9,12 and 16.

6. Although a great many questions are raised by the issues the principal questions before the Court seem to me to be:-

First, whether the transactions set out in the plaint and entered into by Gordhandass were his own personal and private transactions or were they transactions entered into by him as managing member of his family and on behalf of his firm.

Secondly, whether the defendants are bound by these transactions of their father and whether they, as the present owners of the family firm of Raghunathji Tarachand, are liable to make good to the plaintiffs the loss it any on these transactions, and

Thirdly, whether the transactions are in the nature of gambling and wagering and as such void.

7. Incidentally other and minor questions arise but, in my opinion, they are of no importance and do not affect the main issues in the case Mr. Robertson has discussed before me various sections of the Contract Act governing the relations of principal and agent and raised questions as to whether the plaintiffs as agents of Gordhandass were entitled to an indemnity, whether as such agents they have sustained any loss and whether on the death of Gordhandass the plaintiffs' authority as his agents did not come to a termination and they were not bound to close the transactions on his death or at the latest on receipt of the defendants pleader's letter of the 18th of April 1904 (Ex. 0).

8. It is necessary at the very outset to remember that the relations established between Gordhandass and the plaintiffs during Gordhandass' life-time were not merely the relations of an ordinary principal and his agents. The deceased Gordhandass in every order he sent to the plaintiffs asked them to act as his Pukka Adatias. By the books of his own firm and by the evidence of his Moonim Moolchand Nanji it is proved before me that Gordhandass began' dealing in cotton, wheat, linseed and rapeseed, in the year 1957 corresponding with 1900-1901. In that year and the following year he seems to have dealt very extensively in these commodities and. as appears from Ex. No. G, he made a large profit in the former year. In 1903 when ho employed the plaintiffs as his agents and asked them to work for him on the Pukki Adut. system he must be presumed to be fully acquainted with the incidents attaching to that system. What that system is and what are the peculiar incidents attaching to the business between parties whose relations are governed by the system of? Pahki Adut as it obtains in the Bombay market and how the ordinary relations of principal and agent arc varied and modified under that system was elaborately proved before Mr. Justice Chandavarkar in the case of Kanji Devji v. Bhagvandas Narotamdas (1904) 7 Bom. L.R. 57. This case was fully argued before the Appeal Court and the learned Chief Justice's very exhaustive and lucid judgment in Bhagvandas v. Kanji I L R (1905) 30 Bom. 205 : :7 Bom. L. R. 61 sets out the relations of the Bombay shroff acting as a Pukka Adatia towards his constituents. Mr. Robertson for the defendants, although carefully refraining from making admissions, has not argued before me or suggested in his cross-examination that his clients are not bound by the relations created by their father or that the incidents of the Pdkki Adut as found in the case mentioned above as regards an up-country constituent, differs with regard to a constituent who resides in Bombay. Having regard to the findings of the Appeal Court in the case I have referred to I hold that when the plaintiffs agreed to act as the Pukka Adatias of Gordhandass, in the words of that judgment, they 'guaranteed that delivery should on due date be given or taken at the price at which the order was accepted or differences paid ; in effect they undertook or guaranteed to find goods for cash or cash for goods or to pay the difference.' Under these circumstances it seems to me that the particular sections of the Contract Act discussed before me have no applicability to the present case and the questions in the case must be determined in the light of the findings in the case of Bhagvandas v. Kanji I L R (1905) 30 Bom. 205 : 7 Bom. L.R. 611.

9. The first question of real importance therefore is, were the transactions entered into by Gordhandass his private and personal transactions or were they entered into by him as managing member of the family on behalf of the family firm. Gordhandass' father Raghnnathji was alive till the 30th of November 1902. In 1900-1901 Gordhandass commenced dealing in cotton, wheat, linseed and rapeseed. Entries relating these transactions appear in the firm's book of account. Moolchund Nanji the Moonim of the firm, in his evidence says :-

I did not know that Gordhnndass entered into Sodas for linseed and rapeseed. I first learnt that he dirt so when entries were made in the firm's books in respect of payments in connection with linseed and rapeseed. This was in 1958. (1901-1902).

10. These entries were put in and are marked collectively Ex. No. 5. He then goes on to say :-

There are items of moneys paid and received in respect of Sutta transactions in linseed, cotton and wheat, entered in the books of 1957 also....The entries are in the fair and rough cash books and the ledgers of 1957 and 1958.

11. All these entries were subsequently put in and they are marked Exs. A 18 to A 36.

12. Referring to Ex. No. 5 Moolchund says :-

Raghunathji was alive at the time when the entries were made. Raghunathji was the owner of the firm. There is a ledger account of Raghunathji Tarachand. The profit and loss of the piece-goods business were carried to that account. The firm and Raghunathji were one and the same. All profits and all losses of all the transactions of the family were brought into this account.

13. The same witness later on says :-

There arc ledger accounts of all the parties mentioned in the entries that have been put in....The ledger accounts of those parties had to be opened because moneys were paid out of the firm at the orders of the master. By the master I mean Gordhandass. Raghunath was also my master. The moneys were paid out at the orders of GordhandasB. I did not ask Eaghunath. He saw the books but did not say anything. He used to see the entries of these payments and receipts in respect of these transactions....He never objected to these payments and receipts....Raghunath and Gordhandass were one and the entries were made in the firm's books therefor.

14. The account in the firm's books in the name of Raghunathji Tarachand is the account of the family according to this witness. To it all the profits and losses of all the businesses of the family were carried. All family expenses, such as for marriages, funerals and pregnancy ceremonies, were paid out of the funds of the firm and carried to the debit of this account. The defendants have participated in this account and all their expenses have been paid out of this account. They have had the benefit of this account and they are the present owners of that account. To this account have been carried the profits and losses of the transactions in cotton, wheat linseed and rapeseed. This account is otherwise spoken of as the Vatav Khata or expenditure account. The witness Moolchand fenced a good deal while answering questions in respect of this account and sometimes allowed his zeal for his young masters to conquer his regard for truth but the admissions extracted from him are clear and unmistakable.

15. From the evidence given by the Moonim and from the evidence afforded by the books of the defendant's firm and by Ex. No. 6 it seems to me quite clear that Gordhandass commenced to do business in cotton, wheat, seeds etc. in the year Samvat 1957. He must be taken to have done so with the acquiescence, if not the active consent, of his father. He and his father were then the only adult male members of the family and there is no reason suggested why if they chose to enter upon a new business they should not do so. There is no evidence that this was Gordhandass' personal business. Moolchand makes a faint attempt to prove that this was Gordhandass' business by saying Gordhandass said 'when I send for money I send them from the firm and debit them to my personal account.'

16. When asked if he did so he said: 'I have not debited them to his personal account. I can't tell why I have not done so.'

17. 'When asked to explain why he opened ledger accounts of Marwarry merchants with whom there were cotton, linseed, rapeseed and wheat dealings in his firm's books if they were not the transactions of the firm he has no explanation to offer but merely contents himself by saying 'I can't say why we opened Marwarri's account in our ledgers. They were opened under Gordhandass' instructions.'

18. I do not believe this witness' evidence where he says Gordhandass asked him to pay moneys out of the firm and debit the same to his personal account. Why should Gordhandass have desired to treat these as his own private and personal transactions? It is to be presumed that when Gordhandass started this business he must have done so in the hope of making profits. Why should he desire to exclude from the benefits of that business his old father and his only son then existing, the first defendant All his acts however and the probabilities of the case point the other way.

19. He does this business not in his own name but in the name of his firm. He draws moneys from the firm for payment of losses and pays the profit into the firm. The profit and loss of this business is carried into the family or expenditure account-the Vatav Khata of the firm-an exactly the same way as the profits and losses of the piece-goods business. He gets ledger accounts of the different firms with whom he deals in cotton, wheat and seed, opened in his firm's books. He makes no secret of the business to his father. His father sees entries in the books and makes no objection. Where then is the evidence of circumstances leading to a presumption that this was Gordhandass' personal business as distinct from the business of the firm An attempt was made to draw an inference that this was Gordhandass' personal business because he signed the orders, Exs. A to F, with the words 'duskut Gordhandass' after the signature 'Raghunathji Tara chand.' It appears that the deceased Gordhandass as well as the firm's Moonim Moolchand used to sign for the firm and it is the most usual thing in native firms, where more than one person is authorised to sign for the firm, for the person who signs to put the words 'Duskut so and so' after the signature. But apart from this the presumption sought to be drawn is extremely weak and shadowy and on this point also the evidence of Moolchand is most unsatisfactory. The presumption, if any, to be drawn from this small circumstance is overshadowed by the other and more important considerations in the case. I find on the evidence that the transactions mentioned in the plaint were transactions entered into by Gordhandass on behalf of his family firm as the sole adult member of the firm and as manager of the family.

20. This finding simplifies the consideration of the next question as to the liability of the defendants. If I am right in my finding that the transactions in the suit were the transactions of the firm of Raghunath Tarachand and entered into by Gordhandass as the manager of the family it follows that the defendants, as the present owners of the firm and surviving coparceners, are bound to pay the losses if any in respect of these transactions. But even if the transactions were the transactions of Gordhandass alone I am of opinion on the authority of chintamanrtav v. Kashinath I L R (1889) 14 Bom. 320 relied on by Mr. Setalvad that the whole of the family property new in the hands of the defendants is liable to pay the loss in respect thereof, provided the transactions are free from the taint of illegality or immorality.

21. I find that what was held in this case has been even more clearly and definitely established in the case of Ramchandra v. Fakirappa (1900) 2 Bom. L R. 450 where the Court consisting of Justices Parsons and Ranade held that 'it was an established rule of law that ancestral property is available for the payment of the debt of the lather unless the son can prove that the debt was contracted for an illegal or immoral purpose.'

22. The only question therefore that remains to be discussed is whether the transactions in the plaint set out were wagering and gaming transactions and as such tainted with illegality. On this portion of the case I must acknowledge that the defendants' counsel, Mr. Robertson, has expended a good deal of care and labour and has, by his searching cross-examination of the plaintiffs' Moonim Misrilal and a thoughtful discussion of the cases, placed his side of the case before the Court in the light most favourable to his client.

23. The question of wagering contracts has of late so frequently arisen before this Court and has been so fully and amply discussed that I do not consider it necessary for me to discuss at any length the authorities on the point. I propose shortly to refer to the principal cases decided in recent times and to apply the tests laid down in those cases to the facts established in this case and consider, whether the transactions of Gordhandass with the plaintiffs firm were genuine mercantile contracts or whether they were merely agreements by way or wager.

24. The first case or importance on the subject is that of Tod v. Lakluiiidas I L R (1892) 16 Bom. 441 decided by the late Sir Charles Farran, then Mr. Justice Farran, in January 1892. In the course of his judgment the learned Judge states the contracts are not wagering contracts unfess it be the intention of both contracting parties at the time or entering into the contracts under no circumstances to can for or give delivery from or to each other.' In many subsequent cases in this and other Presidencies this case has been constantly referred to and it has often been argued that the words 'under no circumstances' were much too wide. This statement of the law coining as it did not from such high authority was always regarded with much respect although in many cases it embarrassed the Courts having to decide questions as to whether a particular class of transactions were or were not agreements by way of wager. In 189G, however, the House of Lords decided the case of The Universal Stock Exchange Limited v. David Strachan [1896] A.C. 166 and this case was followed in 1899 by the decision of the Appeal Court in In re Gieve [1899] 1 Q.B. 794. These two English cases have afforded great assistance in the consideration of questions as to wagers and have been accepted by Courts in India as safe and reliable guides to the Judges in deciding questions on the subject. It is on the authority of these two cases mainly that the Appeal Court decided the case of Doshi Talalcshi v. Shah Ujarnsi. I L R (1899) 24 Bom. 227 : 1 Bom. L.R. 786. In the course of his judgment the learned Chief Justice refers to Tod v. Lakhmidas I L R (1892) 16 Bom. 141 and another case also decided by the Bombay High Court and says that the 'conclusions in those cases turned on findings of facts that the intention to gamble was not established by the evidence.' It does not appear that the particular words in Mr. Justice Farran's judgment referred to by me were pressed upon the attention of the Appeal Court in this case. The next important case is that of Sassoon v. Tokersey I L R (1904) 28 Bom. 616 ; 6 Bom. L.R. 521 and in my opinion that case and the case of Talakstvi v. Ujamsi I L R (1899) 24 Bom. 227 : 1 Bom. L.R. 786 afford most valuable assistance to the Court in deciding the contentions of the defendants in this case. Another very useful case on this subject is the case of Alotilal v. Govindram I L R (1905) 30 Bom. 83 : 7 Bom. L.R. 381 decided by Mr. Justice Batchelor in April 1905. This case is noteworthy for the reason that for the first time, so far as I am aware, the words of Mr. Justice Farran in Tod v. Lakhmidas I L R (1892) 16 Bom. 441 referred to above are discussed in a reported judgment. The learned Judge, in the course of a very careful review of the authorities, referring to the passage in question says : ' It may perhaps be doubted whether the phrase ' under no circumstances' is not rather an overstatement of the requirements of the law.' I have no hesitation in saying that the expression ' under no circumstances ' is much too wide and, if the words of Mr. Justice Farran were to be taken too literally, their effect would be to render the provisions of Section 30 of the Contract Act more or less nugatory. I think I ought not to leave the discussion of the oases without referring to Chandulal v. Sidhruthrai I L R (1905) 29 Bom. 291 : 7 Bom. L.R. 165. In that case Mr. Justice Starling excluded the evidence tendered by the plaintiffs to prove that although they had not taken delivery of goods on a particular vaida involved in the suit, they had given and taken delivery of goods on other vaidas. The Appeal Court sent back the case holding that the evidence tendered was very relevant as showing the general character of the plaintiffs' business. After hearing the evidence Mr. Justice Starling adhered to his finding relying on the judgment of the Privy Council in Kong Tee Lone v. Lowjee Nanjee I L R (1901) 29 Col 461 : 3 Bom. L.R. 476 which reached this country while Mr. Justice Starling was recording the excluded evidence wherein it was held that one portion of a man's business may consist of genuine mercantile transactions whereas another portion of his business may consist merely of wagers on the rise or fall of the market.

25. On a careful consideration of the authorities, both English and Indian, referred to above, it appears clear that what the Court has to do when it has to decide questions as to whether the transactions in a suit are genuine mercantile transactions, or mere agreements by way of wagers, is not simply to look at the transactions as they appear on the face of them, but to go behind and beyond them and ascertain the true nature of the dealings between the parties by probing into surrounding circumstances and minutely examining the position of the parties and the general character of the business carried on by them. The Court must be careful not to be misled by the mere rectitude of the documents evidencing the transaction, or the mere protestation of one of the parties as to his real intention. The Court must for itself find out what were the primary intentions of the parties when they entered into the transactions in question before it. The attitude generally adopted by the party to the transactions, who on the due date stands to make a profit and his protestations that he is or was always ready to give or take delivery, or that he always intended to do so, ought not to weigh with the Court, but the Court must with the materials placed before it endeavour to find out what both parties originally intended to do when they first entered upon the business. If the Court is satisfied that when the parties entered into the agreements before it both of them intended neither to take or give delivery, but merely intended to adjust the transactions on the due date or dates by the payment or receipt of differences as the case may be, at the prices of the commodities ruling at the market at such due date or dates, then the Court should have no hesitation in holding that the transactions were mere agreements by way of wagers and as such void in law.

26. In the light of these tests let us examine and ascertain what were the intentions of Gordhandass and the plaintiffs when the former gave his orders (Exs. A. to F)to his broker Amichand and the latter aecopted and registered them. Let us take the case of Gordhandass first. He is unfortunately dead and cannot speak for himself. His sons, the defendants, can say nothing to help themselves. One is an infant and the other, although he has now attained majority, was at the date of the transactions much too young to know anything about his father's business or his intentions. It is to Moolchand Nanji's evidence therefore that we have to turn for any light as to Gordhandass' intentions and I am afraid he throws very little light on the subject. All he says in the course of his evidence on the point is:-

As far as I know Gordhandass never gave or took delivery of cotton or seed.

27. This statement is preceded by another. When speaking about the entries in his books ho says:-

I had no conversation with Gordhandass when these entries were made. I had no conversation, with him at any time about these transactions.

28. Then again at a later stage he says:-

I don't know whether he gave or took delivery of cotton or seed. I had nothing to do with his personal transactions.

29. This evidence does not help one very much. The defendants say there are no books relating to cotton, wheat and seed transactions. Although it is difficult to believe that Gordhandass kept no books relating to these transactions, I am not prepared to accede to the suggestion that these books really did exist and are suppressed by the defendants. A study of Ex. No. 6, however, forces one to believe that there must have been some book or books from which that statement of profit and loss was prepared by Gordhandass. If those books were forthcoming they may have thrown some light as to whether Gordhandass ever took or gave delivery of the commodities in question. I will, however assume that Gordhandass did not do so. The fact that during the years 1900. 1901, 1902 and 1903, when he is shown to have dealt in cotton, wheat and seed, he neither gave nor received delivery is by no means conclusive proof that he did not intend to do so if he wished it. Giving or taking delivery of a few hundred bales of cotton or a few hundred tons of wheat or seed is a matter of the greatest ease in Bombay. A large number of well-to-do men in Bombay carry on very extensive business as Muceadums. They lease large godowns and in those godowns they store their constituents' goods. Many merchants, who receive large quantities of cotton and produce for sale in Bombay, instead of having their own godowns employ Muccadums who, for a stipulated rate of remuneration, store their goods, attend to the sale and weighment of the goods and give and take delivery of those goods on behalf of their constituents. They have always on hand orders for the sale and purchase of goods on behalf of their employers, and, if they have not the goods in hand required to be delivered on behalf of a constituent to a party, they can easily procure them in the market. If it had suited Gordhandass to take delivery of say 200 or 300 tons of linseed or rapeseed. all he had to do was to go to one of these Muccadums and ask him to take delivery of these goods on his behalf. Gordhandass could not be said to have found it difficult to pay for the goods because the resources of his firm were at his absolute disposal; but apart from that, on furnishing a small margin, he could al. ways get his Muccadum to advance moneys against the goods. If it had suited Gordhandass to give delivery, all he had to do was to go into the market, buy the goods and direct delivery to be made to his purchaser and receive the price from him. So that the mere giving or taking delivery of goods like linseed and rapeseed is a matter of the greatest ease in the Bombay market. Having regard to all these circumstances and in the absence of any evidence to that effect, I am not prepared to hold that it is proved that when Gordhandass entered into the transactions mentioned in the plaint he had no intention of giving or taking delivery.

30. When, however, we turn to the case of the plaintiffs the question presents no difficulty whatever The plaintiffs are merchants of good repute and large means. They have, as observed at the outset. fifteen or twenty branch firms at various large centres of trade in India. Their branch firms send down large quantities of goods such as cotton, seed, wheat and other produce, to Bombay for sale. They deal very largely with European Officewallahs such as Messrs. Ralli Brothers, Volkarts etc. They supply ready wheat to various flour mills in Bombay. In 1903 though they had no godowns of their own they employed four or five principal Muccadums in Bombay for the storage of their goods. Their Bombay firm appears to be one of considerable influence and good repute. They have numerous constituents for whom they act as Pakki Adut agents. All this appears very clearly from the examination of the books off account. In the course of their Moonim Misrilal's evidence, I called for and examined their accounts with European Officewallas and flour mills. I. also examined the accounts of their Muccadums. I specially called the attention of Mr. Robertson to these latter accounts and directed that full inspection should be given of those accounts to his solicitors and clients. It is a pity these accounts were not translated and exhibited in the case. They would more than any other thing show the general character of the plaintiffs' business. That business appears to be truly commercial and highly respectable. There can be no doubt that the plaintiffs have given and taken delivery of large quantities of goods. They have paid full prices for goods taken delivery of by them and have received the value of goods from merchants to whom they have sold goods. The tenders of goods they made to the defendants' firm were not more pretences. They did not go out of their way to obtain delivery orders and Railway receipts for the purpose of tendering them to the defendants. They got them in the usual course of business in connection with transactions entered into by them long before the disputes with the defendants arose. Their Moonim Misrilal Hiralal, who gave his evidence in a manner that carried with it the confidence of the Court, in the course of his examination, stated:-

When we registered Raghunath Tarachand's Sodas we intended to give and take delivery of the goods as the case may be, we did not intend merely to pay or receive differences on the due dates. When the Sodas were registered we had no reason to think that Raghunath Tarachand's people did not intend to receive or give delivery. On the contrary we believed that they would do so. For the May 1904 delivery of linseed and for April-May 1904 delivery of rapeseed our firm did enter into contracts with their people. We have given and taken delivery of actual goods. I am prepared to point out from my books entries showing that we took and gave delivery. We had other goods besides those we tendered to Iiaghunath Tarachand.

31. These and other statements of the plaintiffs' Moonim have been most carefully tested by Mr. Robertson in a searching and skilful cross examination. On the evidence afforded by the books of account of the plaintiffs, it is impossible to hold that the plaintiffs could be fixed with an intention not to give or take delivery on the due dates. The question which forces itself on one's mind is why should they intend not to give or take delivery They have command of money: they have their own goods. They have their Muccadums and they have the market in Bombay to resort to in case they needed a particular class of goods. Why should they in the face of these facilities desire merely to give or receive differences ?

32. Mr. Robertson has pointed out to the Court that a great many of the plaintiffs' transactions were settled by the payment or receipt of differences. This, in the case of merchants who act as Pdkka Adatias of a large number of constituents, must be so. They are every day in the market either buying or selling. For instance, on receipt of a telegram or letter from a constituent, they would go into the market one morning and buy a hundred tons of linseed. The same afternoon they may be selling a hundred tons of linseed for another constituent. This may happen more than once on the same day and certainly many times in the course of a week. It very often does happen that the same quantity of goods of the same kind for the same vaida is sold and purchased by the plaintiffs from the same firm. In that case the transactions must be adjusted by the payment of differences. It may happen that one day the plaintiffs sell 100 tons of say linseed to a merchant on behalf of one constituent. They receive instructions to buy 100 tons of linseed for another constituent for the same vaida and it may happen that the plaintiffs' broker goes and purchases these goods from the same merchant. As a matter of fact in the case of a merchant working for a large number of constituents this constantly does happen. Would it be reasonable to expect the plaintiffs to cart a hundred tons of linseed to the godowns of that merchant or his Muccadums and receive the price say at Es. 5 per cent and then for that merchant to cart back the same or another lot of 100 tons of linseed to the plaintiffs' godown and receive the price at say Rs. 5-1-0 per cwt? Would not the more natural and reasonable course be to adjust the two transactions by payment and receipt of the difference of 4 As per cent. And because they prefer to follow the course that is both easy and inexpensive is it fair that an inference should be drawn that when the transactions were entered into, the parties did not intend to take or give delivery The evidence recorded in this case is very clear and explicit as far as the plaintiffs' case is concerned and I do not think any useful purpose will be served by going into a discussion of the details of various transactions of the plaintiffs' firm as are opened up in the evidence of the plaintiffs' Moonim.

33. Then again Mr. Robertson has picked out a few transactions of the plaintiffs' which are called Nazarana transactions. Compared with the bulk of the plaintiffs' transactions they are very few and very rare. Not more than two or three were discovered though plaintiffs' books were very carefully searched. Mr. Robertson said they were clearly wagering agreements. Mr. Setalvad contended they were genuine mercantile transactions. They are so very few and rare that I do not think they ought to affect my mind as to any finding as to the general character of the plaintiffs' business. Assuming for argument's sake they were wagering transactions, I do not think they could affect my decision in this case, having regard to the judgment of the Privy Council in the Rangoon rice case (Kong Yee Lone & Co. v. Lowjee Nanjee I L R (1901) 29 Cal. 461 : 3 Bom. L.R. 476. discussed in the previous portion of my judgment.

34. I have given my most anxious consideration to all that has been urged by Mr. Robertson on behalf of the defendants. Though the amount involved in this case is not a large one, I cannot ignore the fact that there are other claims of a similar nature made against the defendants by other merchants. This consideration has added considerably to my anxiety. I am, however, unable to find that the transactions in the suit were or are agreements by way of wagers. I find that it is not proved that Gordhandass when he appointed the plaintiffs his Pakka Adatias and asked them to register his contracts that he then did not intend to give or take delivery of the goods in which be dealt and merely intended to gamble in differences. I prefer, however, to base my judgment on surer ground and find that it is proved to my entire satisfaction that when the plaintiffs consented to act as the commission agents of Raghunath Tarachand's firm on the Pakki Adut system and registered that firm's orders and did business for the firm they fully intended to give and take delivery of the goods dealt in and were prepared to find goods for cash or cash for goods, as the case may be, whenever called upon to do so.

35. I pass a decree for the plaintiff for Rs. 4,218-0-3 with interest at 5 13/16 per cent per annum from date of the filing of the plaint (28th of July 1904) up to date and the costs of the suit. Interest on judgment at six per cent per annum till payment.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //