John Beaumont, Kt., C.J.
1. In this case the plaintiff sues the defendant on a promissory note dated January 14, 1928, for a sum of Rs. 9,000 odd. The promissory note is Exhibit A, and it is given by the defendant to one Vajifdar, by whom it was endorsed, in favour of the plaintiff.
2. The defence of the defendant is that the promissory note was given in respect of the balance due by the defendant to Vajifdar in respect of transactions carried out by the latter on the Native Share & Stock Exchange, and he says that those contracts under the rules of the Exchange were void, and consequently, no action will lie on a promissory note given in respect of that consideration. He further says that the plaintiff was at all material times a clerk of Vajifdar and knew the nature of the transactions between Vajifdar and the defendant, and knew that those transactions were invalid, and, therefore, the plaintiff is not a holder in due course,
3. The first question to determine is whet her there is any invalidity in the promissory note, having regard to the transactions on the Native Share & Stock Exchange,
4. The Bombay Securities Contracts Control Act, 1925, provides for the recognition of Stock Exchanges, and the Native Share and Stock Brokers' Association has been recognised under that Act, Then in Section 6 the Act says :-
Every contract for the purchase or sale of securities, other than a ready delivery contract, entered into after the date to be notified in this behalf by the Governor in Council shall be void, unless the same is made subject to and in accordance with the rules duly sanctioned under Section 5 and every such contract shall be void unless the same is made between members or through a member of a recognised stock-exchange.
The contention of the defendant is that the contracts in this case were not in accordance with the rules of the Stock Exchange.
5. It is not disputed that at the material dates Vajifdar was a member of the Stock Exchange, and the plaintiff was his authorised clerk. It is also not disputed that the defendant was the authorised clerk of one Marfatia.
6. Rule 52 provides that a member may employ four authorised clerks, who are not members of the association. Then Rule 54 (a) provides that an authorised clerk may make bargains on behalf of his employer, but shall not make bargains in his own name or sign contract notes in his own name or on behalf of his employer. Then Rule 54 (b) provides :-
A member shall be liable for all acts done and all bargains made on his behalf by any authorised clerk employed by him and he shall fulfil such bargains according to the Rules of the Association in the same manner as if such bargains had been made personally by him.
7. Then Rule 57(a) provides: ' An authorised clerk shall not transact any business on behalf of any member other the his own employer,' Then we come to the heading in big type 'Bargain in the market,' and a sub-heading under that is, ' Dealing with clerks prohibited.' Then Rule 176 says;-
A member shall not transact any business or make any bargain for any one in the employment of another Member and any business transacted or any bargain made by a Member with a clerk of another Member shall be for the account of such Member.
8. Now it is said by Mr. Desai on behalf of the defendant that the transactions in this case infringed that last rule, because Vajifdar entered into a transaction for the defendant, who was in the employment of another member. The rule is not very happily worded, and I am inclined to think that the words ' for any one ' should be read as ' with any one.' On the whole, I have come to the conclusion that the view taken by the learned Judge is the right view, and that that rule does not apply to transactions between a member of the Exchange and a clerk of another member where the relationship is merely that of principal and broker. It only, I think, deals with contracts as between principal and principal. The second part of the rule supports that view.
9. In this case Vajifdar was employed as a broker of the defendant, and they were not dealing in the relationship of buyer and seller; and it is to be observed that Section 6 of the Bombay Securities Contracts Control Act (Bombay Act VIII of 1925) only makes contracts for the purchase or sale of securities void. I think, therefore, that the transactions in this case were not either void or illegal, and therefore there is no defence to the plaintiff's claim on the promissory note.
10. It is, therefore, unnecessary to consider the further question, which was to some extent argued, as to whether, if the transactions in this case had infringed Rule 176, the consideration for the promissory note would have been void or illegal, and what the consequences of the consideration being either void or illegal would be.
11. For these reasons, I think the appeal should be dismissed with costs.
12. I agree and have nothing to add.