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Sukhanandan RamdhIn Vs. Maniklal Kanhialal - Court Judgment

LegalCrystal Citation
SubjectContract;Arbitration
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 1126 of 1940
Judge
Reported inAIR1941Bom82; (1940)42BOMLR1135
AppellantSukhanandan Ramdhin
RespondentManiklal Kanhialal
Excerpt:
.....of the by-law no. 38 of the east india cotton association, limited, subject to which the contract note of november 6, 1939; was accepted by the plaintiffs, was wide enough to cover the dispute in suit which was in respect of an unpaid claim in relation to the contract of november 6, 1939; and that the suit must, therefore, be stayed. - - thereafter owing to fluctuations in the market the defendants demanded margin money but the plaintiffs failed to pay the same. they therefore claim damages between the contract price mentioned in the contract note dated november 6, 1939, and the prevailing market rate on march 19, 1940. this claim in, my opinion clearly falls within the words of by-law 38 of the east india cotton association, ltd. the defendants purported to close the transaction on..........transaction in cotton. it is admitted that there was an initial sale of 200 bales of cotton and a contract note dated november 6, 1939, was sent by the defendants to the plaintiffs and signed by the plaintiffs. thereafter owing to fluctuations in the market the defendants demanded margin money but the plaintiffs failed to pay the same. thereupon the defendants closed the transaction on february 3, 1940. on receipt of intimation thereof the plaintiffs repudiated this closing transaction. the defendants thereupon offered to resell, if the margin, as demanded, was paid. to that there was no reply. the defendants thereupon sent a contract note with their letter of february 6, 1940, to the plaintiffs. the plaintiffs retained the same with them. on february 20, 1940, the defendants sent a.....
Judgment:

Kania, J.

1. This is a motion for the stay of this suit on the ground that the matter should be referred to arbitration.

2. The dispute between the parties arises out of a transaction in cotton. It is admitted that there was an initial sale of 200 bales of cotton and a contract note dated November 6, 1939, was sent by the defendants to the plaintiffs and signed by the plaintiffs. Thereafter owing to fluctuations in the market the defendants demanded margin money but the plaintiffs failed to pay the same. Thereupon the defendants closed the transaction on February 3, 1940. On receipt of intimation thereof the plaintiffs repudiated this closing transaction. The defendants thereupon offered to resell, if the margin, as demanded, was paid. To that there was no reply. The defendants thereupon sent a contract note with their letter of February 6, 1940, to the plaintiffs. The plaintiffs retained the same with them. On February 20, 1940, the defendants sent a statement of account showing the balance due by them to the plaintiffs, and requested the plaintiffs to draw up a hundi for that balance. No reply was sent by the plaintiffs to that letter and no dispute was raised at that stage. On March 19, 1940, the plaintiffs sent a telegram to the defendants as follows:-

Kindly settle 200 bales cotton vide your contract note C. 694 purchasing market price to-day wire settlement.

The defendants sent a reply intimating that the purchase had already been effected on February 3 under Contract No. 1553 which was already sent and there was no outstanding business. It is common ground that Contract Note No. C. 694 is the contract dated November 6, 1939. The plaintiffs then filed this suit to recover the amount due to them on the footing of the difference between the price noted in the contract dated November 6, 1939, and the current price in the market on March 19, 1940. The defendants have appeared under protest and now apply for a stay of the suit.

3. In the affidavit in reply the plaintiffs took a point about the defendants submitting to the jurisdiction of the Court. That is given up. The only point which is argued is that the dispute between the parties is in respect of the closing contract which is not signed and therefore there is no written submission to arbitration.

4. In my opinion that is a misstatement of the true facts. The plaintiffs' contention is that by the contract dated November 6, 1939, they had sold through the defendants two hundred bales. When they instructed the defendants to purchase those bales they wrongfully refused to do so. They therefore claim damages between the contract price mentioned in the contract note dated November 6, 1939, and the prevailing market rate on March 19, 1940. This claim in, my opinion clearly falls within the words of by-law 38 of the East India Cotton Association, Ltd., subject to which the contract note dated November 6, 1939, was accepted by the plaintiffs. The words ' All unpaid claims whether admitted or not ... arising out of or in relation to contracts made subject to these by-laws ' etc. of by-law 38 are wide enough to cover the dispute in suit. It is nobody's case that instructions were given for the closing of this transaction which were carried out and the dispute is in respect of such closing. The defendants purported to close the transaction on the footing of the plaintiffs' failure to pay the margin money as they were bound to do. The plaintiffs' case is that the defendants wrongfully refused to purchase and close the outstanding transaction. In either view of the matter therefore the case is in respect of an unpaid claim in relation to the contract dated November 6, 1939.

5. The notice of motion is, therefore, made absolute with costs and the suit is stayed as prayed.


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