Skip to content


Devshi Harpal Vs. Bhikamchand Ramchand - Court Judgment

LegalCrystal Citation
SubjectContract
CourtMumbai
Decided On
Case NumberO.C.J. Appeal No. 32 of 1926
Judge
Reported inAIR1927Bom125; (1927)29BOMLR147
AppellantDevshi Harpal
RespondentBhikamchand Ramchand
DispositionAppeal dismissed
Excerpt:
.....incumbent on him to show that circumstances exist for the reasonable exercise of that discretion.;diwanchand v. weld & co. (1925) 28 bom. l.r. 1488, p.c., followed. - - 2. but although in my judgment the firm had the right, under proper circumstances, to call for margin, the onus clearly lies on them to establish that circumstances arose which justified the exercise of their powers. he has failed to produce adequate evidence on a vital point notwithstanding a specific warning in the written statement. the plaintiff's firm was a mushroom firm, and the transactions in question would seem to have been clearly speculative transactions, oven if they were not wagering transactions as found by the learned judge. but i am not satisfied that it is sufficient merely to plead that the..........but mere allegations in the plaintiff's correspondence do not amount to proof of what the actual market rate was. still less could the court, on the existing evidence, find that the market rate on the alleged date of closing, viz., november 28, was rs. 435, for there is really no evidence to support that statement.5. it was, however, urged for the appellant that we could remand the suit for further evidence on this point and order xli, rule 25, way referred to in this respect. but we have looked at the learned judge's note book and it is clear from his notes of the arguments at the conclusion of the case that counsel for the defendants expressly raised this point as to the absence of evidence to show the market rates at the material dates. and this is borne out by what mr. pettigara.....
Judgment:

Amberson Marten, C.J.

1. The main point in this case is whether the plaintiff's firm of Khemchand Keshavlal were entitled, in the events which happened, to call for margin from their constituents the first defendants and to close the contract in default of that margin being provided. The learned Judge found that the plaintiff's firm acted as pacca adatias in this transaction, and we see no reason to disturb his finding on that point. That being so, it is admitted that, in accordance with the ordinary practice in Bombay, the pacca adatias would be entitled to call for margin, if the rise or fall in the market justified a demand for margin,. The defendants have set up a special agreement not to charge margin, but, in my opinion, that agreement is not made out. In this connection it is material to observe that this special agreement is nowhere alleged in the correspondence before suit, nor is it expressly pleaded. And the defendant's evidence that the moneys were to be paid 'at the end of the time ', viz., the vaida, even if believed, would not necessarily negative the right of the pacca adatia to call for margin. For that expression might merely indicate what would be the normal course of business, viz., payment at the vaida.

2. But although in my judgment the firm had the right, under proper circumstances, to call for margin, the onus clearly lies on them to establish that circumstances arose which justified the exercise of their powers. The decision in Diwanchand v. Weld & Go. (1925) 28 Bom. L.R. 1488shows that even where the contract purports to give an agent an absolute discretion as to calling for margin, it is yet incumbent on him to show that circumstances exist for the reasonable exercise of that discretion. Now in the present case the plaintiff's evidence is strangely deficient in this respect. The contract sued on was made on October 21, 1921, for the purchase by the first defendants of one hundred bales of Broach cotton for April-May 1922 delivery at Rs. 533 per candy. It is alleged that the market went down, and by a telegram of November 14, 1921, Exh. M, the defendants called for Rs. 5,925 for margin at the rate of Rs. 415 to be paid by November 16, in default of which the transaction would be closed on November 18. In fact the contract was purported to be closed on November 28 at Rs. 435, and, according to the particulars, Exh. B to the plaint, there was a loss of Rs. 5,018 in that respect.

3. The only evidence on behalf of the plaintiff's firm is the plaintiff himself, who states that the market was falling after the purchase. But he gives no evidence as to the period during which the market was falling, nor what rate it fell to, if at all, at the material dates on November 14, 16, 18 and 28. This omission is all the more strange in view of the allegations in paras. 8 and 9 of the written statement denying that the market was going down and pleading that on the due date for delivery the price was higher than that on the day of the contract. By the due date I take it the pleading refers to April-May 1922.

4. It is true that in the correspondence there are statements in the plaintiff's firm's latters as to the rates at the time, For instance, the letter, Exh. 3, of October 27, 1921, says that the rate was fixed at Rs. 482 by the clearing house, but that the rate in the cotton market on October 26 was Rs. 518, and on the 27th was Rs. 490, and that the tendency was dull. A letter by defendant No. 2, a deceased partner of the plaintiff, dated November 1, 1921, Exh. 5, states that the rate was then Rs. 475 and expected to go down : but later on to go up to a great deal. But mere allegations in the plaintiff's correspondence do not amount to proof of what the actual market rate was. Still less could the Court, on the existing evidence, find that the market rate on the alleged date of closing, viz., November 28, was Rs. 435, for there is really no evidence to support that statement.

5. It was, however, urged for the appellant that we could remand the suit for further evidence on this point and Order XLI, Rule 25, way referred to in this respect. But we have looked at the learned Judge's note book and it is clear from his notes of the arguments at the conclusion of the case that counsel for the defendants expressly raised this point as to the absence of evidence to show the market rates at the material dates. And this is borne out by what Mr. Pettigara has stated as his personal recollection of what took place at the time. On the other hand, plaintiff's counsel in his final reply does not appear to have asked the Judge for any adjournment to call further evidence. Indeed, from what Mr. Pettigara tolls us the Court asked counsel for the plaintiff whether he had any other evidence on that point available and was given no satisfactory answer. It appears, therefore, to me to be a case where the plaintiff cannot be said to be taken by surprise. He has failed to produce adequate evidence on a vital point notwithstanding a specific warning in the written statement. Nor has he contended at any stage of the trial that he was taken by surprise, or would be able to meet the point if an adequate opportunity was furnished to him.

6. On the other hand, it is clear that it is a point on which the learned Judge largely relies in dismissing the plaintiffs case. He says:-

As to the margin money demanded, apart from the entry of sale, there is no independent evidence before the Court as to the rates of cotton when on November 1 and 2 the demand for margin money was first made by the plaintiff.

7. Then lower down he says:-

As to the exact rate between November 1 and 2, there is no independent evidence and therefore defendant No. 1 was, I think, right in his contention that there was no immediate necessity for margin money, that the so-called closing was a purely nominal transaction which plaintiff was not entitled to do in order to get for himself with a cousin a possible gain of Rs. 5,000.

8. The reference to this closing transaction is that it was alleged to have been made with a firm of Anandlal Keshavlal consisting of the plaintiff and a cousin of his not before the Court. But the circumstances surrounding the alleged transaction with this firm are of a highly suspicious character, and I do not think that the entry of the alleged sale to this firm of Anandlal Keshavlal on November 28 can be said to prove that the market rate at that date was Rs. 435 as alleged.

9. Therefore, in the present case I think it would be wrong of us to send the case back for further evidence or a remand, and that to do so would only open a most undesirable door to loose practices, and in some cases to possible fabrication of further evidence. Nor do I regard it as any hardship on the plaintiff that we should take this particular course, The transactions in question were not of a nature that need excite any particular sympathy from the Court. The plaintiff's firm was a mushroom firm, and the transactions in question would seem to have been clearly speculative transactions, oven if they were not wagering transactions as found by the learned Judge.

10. Accordingly, in my judgment, the plaintiff fails because he does not establish the facts necessary to justify his call for margin and subsequent closing of the contract.

11. In that view of the case it is unnecessary to decide whether the transaction was a wagering one. But if contrary to the view which I take the plaintiff ought still to be allowed to lead further evidence to prove the market rate on the material dates, I should, with all respect to the learned Judge, bo unable to agree with his finding on the question of wagering, as I do not think that on the facts of this case we should hold it proved that there was a common intention to wager. The difficulties in establishing a defence of wager are set out in the judgment of Sir Norman Macleod in Manilal Raghunath v. Radhakisson Ramjiwan. I.L.R. (1920) 45 Bom. 386 And although the Court in that particular case was able to infer from the surrounding circumstances that the transactions were wagering ones, they are insufficient, in my opinion, in the present case, to enable the Court so to do. It is true that the plaintiffs have not satisfactorily established the existence of genuine contracts with third parties as in Bhagwandas Parasram v. Burjorji Ruttonji Bomanji (1917) R. 45 I.A. 29 and Sobhagmal v. Mukundchand. : (1926)28BOMLR1376 But, speaking for myself, I see little: to distinguish the present transaction from a common type of business dealing between a pacca adatia in Bombay and his upcountry constituent. It may be speculative, but it does not follow that it was a wagering contract in the eyes of the law.

12. I should also notice one further defence, viz., as to the form of this action and the. prayer in the plaint. The plaintiff was one of three partners, and he brought this suit in his own name describing himself in the title as 'till lately carrying on business under the name style and firm of Khemchand Keshavlal,' and joining his two partners Nandlal and Madhavlal as defendants Nos. 2 and 3. In para. 1 he pleaded that 'the plaintiff was until recently carrying on business in partnership with defendants Nos. 2 and 3 under the name style and firm of Khemchand Keshavlal,' which firm was dissolved in or about the beginning of the Samvat year 1978 (October 31, 1921) and that 'the defendants Nos. 2 and 3 are at present at their respective native places,' and he did not seek any relief 'against them but they are made mere formal parties to this suit.' In para, 7 he pleaded that there was then duo by defendant No. 1 to the said firm of Khemchand Keshavlal the sum of Rs. 5,583. And after pleading in para. 9 that defendants Nos. 2 and 3 resided at Takadi (in the Ajmer District) and Chandpore (in Jaipore) the plaintiff prayed for the payment of the above sum to himself.

13. In so far as the plaint prays for payment to himself this difficulty can, I think, be got over under Order VII, Rule 7, which provides that it is not necessary to ask for further or other relief. Consequently, 1 think, it would have been open to the Court to treat the plaint as having a prayer for further or other relief, and, accordingly, to decree payment, if at all, not to the plaintiff alone but to the plaintiff and the defendant partners. In this respect I am unable to agree with the view to the contrary which the learned trial Judge took.

14. A further point as to whether it was open to the plaintiff to sue as such making his co-partners defendants is more doubtful. As pointed out in Luke v. South Kensington Hotel Company (1870) 11 Ch. D. 121 by Sir George Jessel, this course may bo adopted where substantial grounds are shown. But I am not satisfied that it is sufficient merely to plead that the co-partners are at their native places. Nor is it shown that the plaintiff made any request to his co-partners to join him as co-plaintiffs and that they refused. On the other hand, the evidence at the trial is to the effect that there were disputes between the partners, and that there were cross-accusations as to misappropriation of partnership property. Under these circumstances, it would hardly be possible for them to join as co-plaintiffs and act by a common solicitor. On the whole, therefore, I should have been prepared to decide this point in favour of the plaintiff subject to imposing some penalty for his defective pleading.

15. There is yet a further point taken by defendant No. 1, viz., that the suit abated by reason of the death of defendant No. 2 after the filing of the plaint and the failure to bring his legal representatives on the record. Having regard to Motilal Bechardass v. Ghellabhai Hariram I.L.R. (1892) 17 Bom. 6 we do not think that that contention is well founded. In that case Mr. Justice Bayley and Mr. Justice Farran decided that, notwithstanding Section 45 of the Indian Contract Act, it is not imperative to add the legal representatives of a deceased co-partner to an action for recovery of a debt by the surviving partners. This follows the English practice as exemplified in Ellis v. Wadeson.(1) Moreover, under the English practice, it is clear from In re Bourne: Bourne v. Bourne,(2) that a surviving partner has the right and indeed the duty to wind up the partnership affairs, and for that purpose to recover the assets and pay the debts.

16. Under these circumstances, I should, if necessary, have been prepared to hold that the alleged debt passed to the surviving partners, and that, accordingly, it was not necessary to bring the personal representatives of the deceased partner on to the record. In the view, however, which I take of the point as to margin, I think that the appeal should be dismissed with costs.

Blackwell, J.

17. I concur.


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