1. The plaintiff has brought the present suit to recover from the defendants as the result of certain transactions in Japanese camphor the sum of Rs. 50,751-4-0 together with interest thereon at nine per cent, from 25th April 1919 together with costs and further interest on judgment at six per cent, per annum until payment.
2. The defendants have not denied the alleged transactions but have pleaded that they were wagering contracts and have asked that the suit be dismissed with costs.
3. The following issues were framed by Mr. Khan, the defendants' counsel:-
1. Were the transactions in the suit wagering transactions ?
2. Is the plaintiff entitled to any and, if so, what relief?
4. The facts of this interesting case are a little complicated and I shall go into them as fully as I can in order to help the reader to understand them.
5. There are three common forms of speculations in Bombay. They are known respectively as teji-mandi, teji, and mandi. The word teji means brightness, the word mandi means dulness. Thus teji is used to signify a rise in the market price of goods or stock, and mandi to signify a fall. In the teji-mandi transactions, which have been very carefully examined by Beaman J. in Jessiram Juggonath v. Tulsidas Damodar I.L.R (1912) Bom. 264; 14 Bom. L.R. 617, one party buys what is known an a double option. For this he pays a certain premium, say Rs. 20 per Rs. 1000. On the settling day the buyer has the right to declare himself either a seller or a buyer. If the market falls he will declare himself a seller. If it rises he will declare himself a buyer, e.g., if it be supposed that by the contract price a bar of silver or a bale of goods is worth Rs. 100, A buys the double option for Rs. 20. If the goods rise to Rs. 1.10 he will declare himself a buyer and will lose Rs. 10. If the goods fall to Rs. 90 he will declare himself a seller and will lose Rs. 10. But if the goods rise to Rs. 150 or fall to Rs. 50 he will declare himself a buyer and a seller respectively and in each case will make Rs. 30 profit. In other words, to use Beaman J'S phrase, 'the party buying the double option (the teji-mandi) is backing the fluctuations of the market against its stability.' Conversely, the party who sells the double option backs the stability of the market against its fluctuations.
6. The teji transaction is quite a different one. In it the buyer of the teji (lagadanaro or applier) pays the seller (khanaro or eater) a premium or teji over and above the contract price of the bar of silver or bale of goods. If the market rises the buyer of the teji who is also a buyer of the silver or the goods can ask the seller of the teji to give him the goods or their value at the market rate on settling day whatever it be. If the market falls, the buyer of the teji merely loses his premium, e.g., A buys Rs. 100 worth of bar silver from B and also buys teji by the payment of Rs. 20 premium. If the market rises to Rs. 150, A will make a profit of Rs. 50 minus his Rs. 20. If the market falls to Rs. 50, A will lose his Rs. 20 premium or teji only. A thus insures himself against a big fall. B is not insured against a big rise.
7. The third kind of transaction is a mandi. It is the exact onverse of the teji. The buyer of the mandi or premium is a seller of the goods and the mandi is the premium which he pays against a possible rise, e.g., A sells Rs. 100 worth of bar silver to B and buys mandi by the payment of Rs. 20 premium. If the market falls to Rs. 50 A will make a profit of Rs. 50 minus his premium. If the market rises to Rs. 150 A will lose his Rs. 20 premium or mandi only.
8. The transactions with which we are concerned are teji transactions. On the 6th January 1919, the plaintiff bought from the defendant twenty-five cases of Japanese camphor at the rate of Rs. 2-12 a tin for delivery on the 15th April 1919. On the 7th January 1919 the plaintiff paid the defendant Rs. 125 as teji at the rate of one anna on every Rs. 2-12-0. On the 7th February 1919 the plaintiff bought for the same delivery one hundred cases of Japanese camphor at Rs. 2-13-0 a tin and on the 8th February paid Rs. 500 as teji at the rate of one anna on every Rs. 2-13-0. On the 15th February 1919 the plaintiff bought one hundred and fifty cases of Japanese camphor for the same delivery at Rs. 2-15-0 a tin and on the same day paid the defendant Rs. 750-0-0 as teji at the rate of one anna for every Rs. 2-15-0. Now if the price of the camphor had fallen, no matter how little or how much, the plaintiff would have forfeited his teji, Unfortunately for the defendant the price of camphor had risen by settling day to Rs. 5-2-0 per tin. The plaintiff, on the 14th April 1919, wrote to the defendant an attorneys' letter saying that he would take delivery the next day (Exh. A). On the 15th he went to the defendant's firm, tendered the contract price, and asked for delivery of the camphor. The defendant had no camphor to deliver. At the same time he wrote in reply to the plaintiff's letter that the plaintiff was not entitled to any delivery and that the transactions were invalid. After some correspondence the plaintiff filed the present suit for the difference between the rate at which he bought the camphor and its price on the settling day.
9. Before discussing the arguments advanced by the learned counsel, I wish to record my appreciation of the assistance which they have both given me in this difficult and intricate case.
10. Mr. Khan for the defendant has relied on the judgments of Beaman J. in a series of teji-mandi suits. The first in order of time was Hariram v. Trikamdas O.C.J. Suit No. 100 of 1908 (Unrep.). Therein the learned Judge has observed :-
While, therefore, I am now prepared to admit that it is open to any party suing upon a Teji Mandi transaction to satisfy the Court if he can that the particular instance was a genuine transaction in which the parties did intend, at the time of entering into it, that delivery should be given and taken, I still think that the presumption would be very strong against Teji Mandi transactions as a class being genuine and lawful.
11. In Jessiram Juggonath v. Tulsidas Damodar I.L.R (1912) Born. 264: 14 Bom. L.R. 617. Beaman J, observed in regard to teji-mandi business (p. 624):-
From the very nature of the transaction, from the fact of a man being utterly indifferent whether he is going to buy or sell, there must arise a very strong presumption that he is not doing a genuine business and that the whole contract is really in the nature of a pure wager. I have already pointed out that that presumption may in special cases be rebutted; but as a rule, I think, it will be extremely difficult to do so.
12. Finally, in Basantlal v. Shivnarayan O.C.J. Suit No. 666 of 1915 the learned Judge observed at the outset of his judgment:-
I take this opportunity of re-affirming emphatically, and now virtually stripped of any qualifications whatever, the opinion that in this market Teji Mandi transactions are all wagers. The more closely I look into the true character and intention of these transactions even when they are put forward as between shroff and shroff, the more evident it becomes that they are essentially by way of gaming and wagering.
13. On the strength of these authorities Mr. Khan has strongly pressed on me to hold that the present transaction must be a wagering contract, until plaintiff has proved the contrary. But the learned counsel has not realised the substantial difference between teji-mandi and teji transactions. With all deference to the eminent Judge who tried the three quoted cases, I am not sure that he did not go too far in his condemnation of teji-mandi dealing. But whatever their character, there is no resemblance between them and the dealings in the present suit. The main ground on which Beaman J. held teji-mandi business to be wagering was the 'utter indifference of one party whether he was going to buy or sell.' That ground is absent in teji transactions. Therein the party who 'applies' the teji is always a buyer.
14. Mr. Khan has next relied on two English cases : Universal Stock Exchange v. Strachan  A.C. 166 and In re Gieve  1 Q.B. 794. In the former case the jury found that the real meaning of the parties was that there should be merely a payment of differences. In the latter, the Judges found that 'the conduct of the parties led almost necessarily to the inference that they only intended gambling transactions.' These two cases have been the foundation of a number of decisions in the Bombay High Court of which the tenor has been much the same.
15. In J.H. Tod v. Lakhamidas Purshotamdas I.L.R (1892) Bom. 441 Farran J. observed (pp. 445, 449):-
Contracts are not wagering contracts, unless it be the intention of both contracting parties, at the time of entering into the contracts, under no circumstances to call for, or give delivery, from or to each other. There is DO law against speculation, as there is against gambling.
16. In Sassoon v. Tookersey I.L.R (1914) Bom 616 Sir Lawrence Jenkins C.J. remarked (p. 621):-
In cases of this description there is a danger of confounding speculation, or that which is popularly described as 'gambling, with agreements by way of wager; but the distinction in the legal result is vital...To make an agreement a wager there must be a common intention to bet.
17. In Mathuradas v. Narbadashankar (1909) 11 Bom. L.R. 997 Beaman J. observed (p. 1004):-
I believe that before a Court can hold a contract, on the face of it genuine, or at any rate not clearly wagering as the contract in In re Gieve was, to be a wagering contract, the Court must be satisfied that the intention of the parties was in no circumstances either to give or take delivery.
18. In Motilal v. Govindram I.L.R (1905) Bom. 83 : 7 Bom. L.R. 385 Batchelor J. held a transaction to be a wagering contract because he held 'it to be distinctly proved that in the contracts in suit neither party ever intended to give or receive delivery, but both parties intended to settle by the payment and receipt of differences.
19. In the earlier case, Hurmukhrai v. Narotamdas : (1907)9BOMLR125 , Davar J. laid down the following principle (p. 138):-
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,...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.
20. Finally, in the recent decision of Manalal v. Radhakison (1920) 22 Bom. J.R. 1018 Macleod C.J. observed (p. 1032) :-
The defendants must prove that there was an understanding between them and plaintiffs (1) that they were not only speculating but gambling, (2) that, if they ordered the plaintiffs to buy cotton, they would never call upon them to deliver it, and if they ordered them to sell, they would never themselves deliver it.
21. From these authorities the principle is clear. The defendant in this case has to prove that there was an agreement or under standing between him and the plaintiff that in case the market rose the plaintiff should not require the defendant to deliver to him any camphor. But such an agreement or understanding requires, in my opinion, strict proof. A defence that the contract was a wagering one is not one that an honourable man would advance on his own behalf. It is a dishonest man's defence; for if he won the defendant would never object to the wagering character of the contract; and such a defence should not be lightly allowed. In this connection I would rely on the observations of Beaman J. in Jessiram Jugannath v. Tulsidas Damodar (p. 628):-
Nor do I think the Courts ought lightly to favour gambling defences. My own leaning has always been very strongly against them...I think it is only too clear that if dishonest gamblers know that they can evade their liabilities upon every occasion without much trouble by merely pleading wagering, the worst class of gamblers will gamble more desperately and with a greater sense of impunity than they ever did before. The Courts by countenancing such gamblers in receiving their winnings when they win and refusing to pay them when they lose, confident that they will not be compelled by process of law to pay may indeed foster the evi which both the Legislature and the Courts would desire to see altogether suppressed.
22. I have, therefore, to see whether the defendant has adequately proved the existence of a definite understanding between him and the plaintiff that in no circumstances whatever was there to be any delivery. Beyond the defendant's own word he hasled no evidence whatever. Both parties, however, tried to prove the existence or non-existence of such an understanding by reference to a previous transaction between the defendant and plaintiff.
23. In January 1918 the plaintiff made a purchase of seventy-five cases of camphor from the defendant. The contract rate per tin was Rs. 1-15-0 and the plaintiff paid teji at the rate of one anna per tin. The price of camphor rose with the result that whereas the contract price of the seventy-five cases of camphor was Rs. 11,595, it amounted on settling day to Rs. 13,840-5-0. According to the plaintiff he took delivery of the camphor. Unfortunately his account shows a debit entry of Rs. 13,840-5-0 (Exh. L) against the defendant and a subsequent entry of Rs. 2244-6-0 (Exh. M) to the defendant's credit. The plaintiff has explained that on the settling day he was in a great hurry and feared that unless he paid for the camphor before closing time the defendant would repudiate his contract. He did not know exactly what he owed him, he only knew the approximate amount. He, therefore, gave him a number of chittis or drafts on other firms. Afterwards he found that he had overpaid the defendant by Rs. 2244-6-0 and the latter repaid him this sum later. Now it is most unlikely that a business man would overpay for camphor bought by him by Rs. 2,244-6-0. It is, moreover, absurd for the plaintiff to say that he only knew the approximate price of the camphor. That had been paid in January and the settling day was in April. The defendant's story is more credible. The defendant and Gopalji Gangji have deposed that as regards fifty cases Vithaldas Asharam sold them to Gopalji Gangji, Gopalji Gangji sold them to defendant, defendant sold them to plaintiff who re-sold them to Vithaldas Asharam. As the price of camphor had risen considerably on the settling day the parties, instead of delivering camphor from one to the other, simply paid each other the differences. Vithaldas Asharam and the plaintiff settled with each other and defendant and Gopalji Gangji settled with each other. The last two settled at Rs. 2-6-0 a case. But, instead of defendant paying Gopalji Gangji and the latter paying the plaintiff, the defendant paid the plaintiff direct the difference between Rs. 1-15-0 and Rs. 2-6-0 a case, i.e., 0-7-0 a tin. Each case has admittedly eighty tins. 50 multiplied by 80 is equal to 4000. 4000 multiplied by 7 is equal to 28000. 28000 annas are equal to Rs. 1750. If from this rebate at one-fourth per cent. (Rs. 4-6-0) be deducted the difference on fifty cases was Rs. 1745-10-0. As regards the remaining twenty-five cases the defendant sold them to the plaintiff who sold them to one Ramanlal and settled with him. The defendant settled with Ramanlal at Rs. 2-3-0. He, therefore, paid the plaintiff' the difference between Rs. 2-3-0 and 1-15-0 equal to four annas. Now 25 multiplied by 80 is equal to 2000. 2000 multiplied 4 is equal to 8000 annas equal to Rs. 500. If rebate be deducted the amount due was Rs. 498-12-0. If to Rs. 498-12-0 Rs. 1745-10-0 be added the total comes to Rs, 2214-6-0 the amount paid by the defendant to the plaintiff in Exh. M. Therefore I am forced to the conclusion that the plaintiff's story of dealing in this transaction is false and that the parties merely settled differences. The learned counsel for the defendant has also laid great stress on the omission of the word teji from the contract and the plaint. But the plaintiff has explained that he worded the contract and the plaint in the way he did because he was afraid that if he inserted the word teji in the contract or the plaint the Courts could at once jump to the conclusion that the contract was a wagering one: and in view of the decisions of Beaman J. in the teji-mandi cases, this was not a wholly unreasonable point of view. And, although I agree with Mr. Khan that in the January transaction the parties settled differences, I am not thereby forced to conclude that in the transaction before me the parties bound themselves not to make or take delivery. Before I could come to that conclusion I should have to feel certain that in no teji transaction is delivery ever given. But Dayal Lalji's Munim Nagindas Manickchand has deposed that his firm often gives delivery in teji transactions and similar evidence was given by Ali Mahomed Abdulla, a partner in the firm of Abdulla Maoji. In one of the cases mentioned by them the plaintiff had a teji contract with the firm of Dayal Lalji, They delivered to him one hundred and twenty-five cases and he delivered them again on a vaida contract to Ali Mahomed Abdulla. Nor is there anything strange in this. Behind all vaida and teji contracts there is a vast genuine business. Camphor or other goods may be sold and re-sold a thousand times before they pass from A, the importer, to Z, the distributor. But in the end they reach their destination. There is no speculation in articles that are not imported into India. It has thus been rightly held that speculation in forward contracts is not necessarily wagering. Now what is the difference between ordinary vaida speculation and teji contract Only this, that the teji contract is the less speculative of the two. For he who applies teji ensures himself by the payment of a teji or premium from a heavy fall in the price. I am thus of opinion that teji and vaida transactions are on exactly the same footing and that unless it can be positively proved that the parties agreed neither to ask for nor to give delivery the transactions are not wagering contracts. No such agreement has been proved here.
24. Since no such agreement has been proved and the transactions are not wagering contracts it remains for me to fix the rate of damages. The plaintiff has stated in his evidence that the rate of the camphor on settling day was Rs. 5-2-0. The parties agree to fix the rate at Rs. 5-1-0. The parties have also agreed that the teji was wrongly debited by the plaintiff to the defendant in the particulars. The plaintiff paid the teji by way of insurance and cannot ask for it back.
25. I award the plaintiff a decree for Rs. 48,000 with costs and interest on judgment accordingly.