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Narandas Sunderlal Rathi Vs. Ghanashyamdas B. Dalal - Court Judgment

LegalCrystal Citation
SubjectContract
CourtMumbai
Decided On
Case NumberO.C.J. Appeal No. 60 of 1932 and Suit No. 2068 of 1931
Judge
Reported inAIR1933Bom348; (1933)35BOMLR640; 147Ind.Cas.412
AppellantNarandas Sunderlal Rathi
RespondentGhanashyamdas B. Dalal
DispositionAppeal allowed
Excerpt:
.....cotton association, by-law 82-teji mandi and mandi contracts in cotton-constituent refusing to sign contracts on the dates of exercise of options-implied contract to sign-valid contracts.;by-law 82 of the east india cotton association provided : 'contracts between members acting as commission agents on the one hand and their constituents on the other shall bo subject to the by-laws and shall be in writing...if a constituent of any such member has agreed to sign the prescribed form of contract but fails or refuses to do so after. terms have been arranged, the contract shall bo treated in all respects as if the form had been signed, and both parties shall have the rights and remedies accorded by these by-laws.';the plaintiff's, who were members of the east india cotton association,..........and remedies accorded by these by-laws.' now the plaintiffs say that the defendant did agree to sign contracts in the prescribed form, and they rely on the second part of that by-law.2. various contracts to sign are relied upon by the plaintiffs, both express and implied. first of all it is said that there was an express contract at the time the teji-mandi transactions were entered into that the defendant would at the duo dates sign the appropriate contracts. as to that the plaintiffs' munim gave evidence, and as far as i can see, there was no cross-examination on that point. the defendant did not go into the witness-box. it is said by his counsel that he was ill. however, the learned judge did not accept the evidence of the munim of the plaintiffs on that point, and i think there is.....
Judgment:

Beaumont, C.J.

1. This is an appeal from a decision of Mr. Justice Mirza. The plaintiffs are suing for moneys due in respect of certain teji mandi and mandi contracts made between themselves and the defendant. The nature of the contracts, which are contained in Exh. A, is not in dispute. On the dates upon which the options became exercisable, the defendant, against whom the options had gone, refused to sign the contracts for taking or giving delivery, that is to say, he refused to carry out the terms of the original bargain. The plaintiffs are members of the East India Cotton Association, Limited, and if they are to succeed in their claim, they must prove contracts which comply with by-law 82 of the Association. That by-law provides that 'Contracts between members acting as commission agents on the one hand and their constituents on the other shall be subject to the by-laws and shall be in writing in the form given in the appendix', and then it is provided, 'If a constituent of any such member has agreed to sign the prescribed form of contract but fails or refuses to do so after terms have been arranged, the contract shall be treated in all respects as if the form had been signed, and both parties shall, have the rights and remedies accorded by these by-laws.' Now the plaintiffs say that the defendant did agree to sign contracts in the prescribed form, and they rely on the second part of that by-law.

2. Various contracts to sign are relied upon by the plaintiffs, both express and implied. First of all it is said that there was an express contract at the time the teji-mandi transactions were entered into that the defendant would at the duo dates sign the appropriate contracts. As to that the plaintiffs' munim gave evidence, and as far as I can see, there was no cross-examination on that point. The defendant did not go into the witness-box. It is said by his counsel that he was ill. However, the learned Judge did not accept the evidence of the munim of the plaintiffs on that point, and I think there is force in the reasons given by the learned Judge for not accepting that evidence, particularly as this express contract has not been pleaded and has not been referred to in the correspondence. I am not prepared to differ from the learned Judge on his finding of fact that no such express contract was made. Then it is said that after the options became exercisable the defendant agreed with a servant of the plaintiffs at Akola and subsequently with the plaintiffs' agents in Bombay to sign these contracts. Again the plaintiffs' servant gave evidence as to these agreements, and there was no relevant cross-examination on that point. But again the learned Judge was not prepared to accept the evidence. He thought that if there was any agreement by the defendant to sign the contracts, it was conditional on the transaction being carried over by way of badlas to the next vaida. I am again not disposed to differ from the learned Judge on that question of fact, and, therefore, I agree with him that no express agreement on the part of the defendant to sign the appropriate contracts was ever made.

3. The question then remains whether there was an implied contract. On that point the learned Judge did not hold that there was no implied contract, but he took the view that an implied contract would not bring the case within by-law 82, and that there must be an express agreement. Now i am unable to accept that view of the learned Judge. The by-law does not in terms require an express contract, and I see no reason why an implied contract should not suffice. The question is whether there was any such implied contract. It seems to me that we must presume that when parties enter into a business transaction such as teji mandi contracts, they intend to enter into an arrangement which will be enforceable. These parties must have intended that the necessary contract to take or give delivery would be executed, otherwise the transaction would have been merely a wagering transaction and void, and the cases show that the presumption is that a teji mandi transaction is not a mere wagering transaction. I think, therefore, we must hold that the parties impliedly agreed that the necessary contracts should bo signed, As the transaction here was in cotton, I think we must further hold that the implied agreement was to sign contracts in the form required by the by-laws; otherwise again the transaction would be unenforceable. That, I think, is the natural inference to draw from the wording of the teji mandi and mandi contracts, but that inference is strengthened by the fact that there had been past dealings between the parties including teji mandi transactions and the defendant always had signed the requisite contracts. That, I think, confirms our view that there was an implied agreement at the time the contracts in suit were entered into that the requisite contracts in the requisite form should be signed. Mr. Kemp for the respondent has, argued that if we take the view that an implied agreement is enough for the purpose of by-law 82, the by-law becomes a farce. 1 rather agree, but then I am disposed to think that the by-law is really a farce directly you provide that the agreement to sign the contract may be verbal. There seems to me to be little sense in having a by-law which requires a written contract in a particular form if it goes on to provide that a verbal agreement to execute such a contract will do instead. It is, I think, plain that a verbal contract is sufficient under the latter part of by-law 82, since there is no provision that the contract is to be in writing. As a matter of fact in the previous corresponding by-law the words 'in writing' were inserted, and presumably they were omitted advisedly from the new by-law. If a verbal contract is all that is necessary, I see no reason why there should not be an implied contract, and, in my opinion, the facts show that there was an implied contract. On that ground, I think the appeal must be allowed with costs.

4. There will be a decree for the plaintiffs for the amount claimed with interest thereon at the rate of seven and a half per cent, from February 28, 1931, costs and interest on judgment at sis per cent. till payment.


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