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Ratilal Tribhiwandas Thakkar Vs. Mowjee Waghjee - Court Judgment

LegalCrystal Citation
SubjectContract
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 733 of 1927
Judge
Reported inAIR1928Bom95; (1928)30BOMLR122
AppellantRatilal Tribhiwandas Thakkar
RespondentMowjee Waghjee
DispositionSuit dismissed
Excerpt:
.....unless the conditions are complied with-rule of the market.;rule 81 of the rules of the east india cotton association required that all contracts governed by the rules should either be in writing and signed or the constituent should agree in writing to sign the contract when presented.;the plaintiff, a member of the east india cotton association, sued to recover damages for breach of contract, alleged to have been made with him by a constituent of his under the rules of the association. the constituent (defendant) did not sign the counter part of the contract, but the plaintiff alleged that the defendant had orally agreed to sign the counter part.;on the construction of the rule, that there was no contract for dealing in cotton under the rules and regulations of the association unless.....kemp, j.1. in this suit the plaintiff, a certified broker and member of the east india cotton association, sues the defendant for loss sustained by the plaintiff owing to the repudiation by the defendant of an order for purchase of 200 fully good machine ginned broach cotton for the april-may 1927 delivery alleged by the plaintiff to have been placed with him on september 15, 1926. the defendant denies that he gave any instructions for the order. it appears that there were some six or seven previous transactions between the parties which were brought about by the sub-broker narotamdas. in those cases the contract which was exchanged between the parties was signed by the defendant. here it may shortly be stated what the procedure is when an order is given. the broker prepares two.....
Judgment:

Kemp, J.

1. In this suit the plaintiff, a certified broker and member of the East India Cotton Association, sues the defendant for loss sustained by the plaintiff owing to the repudiation by the defendant of an order for purchase of 200 fully good machine ginned Broach cotton for the April-May 1927 delivery alleged by the plaintiff to have been placed with him on September 15, 1926. The defendant denies that he gave any instructions for the order. It appears that there were some six or seven previous transactions between the parties which were brought about by the sub-broker Narotamdas. In those cases the contract which was exchanged between the parties was signed by the defendant. Here it may shortly be stated what the procedure is when an order is given. The broker prepares two counterparts of the contract one of which is signed by the broker. The two counterparts are sent to the constituent in order that he may retain the one signed by the broker and sign and return the other to the broker. Usually it is the sub-broker who brings the counterparts to the constituent

2. When an order is given for a transaction in a particular market the inference is that the order is to be placed according to the rules and regulations governing that market. These rules may lay down what is to be regarded as a binding contract in the market, The market in cotton here is regulated by the rules laid down by the East India Cotton Association by virtue of the powers under the Act of 1922 which Act was extended by Government Notification dated December 28, 1922, passed under Section 2 of the Act, Rule 81 is the material rule in this case, for it is to be observed that no counterpart has been signed by the defendant in this case. The plaintiff says that the counterparts were sent by him through Narotamdas to the defendant and that the defendant did not return them but promised to do so from time to time and ultimately, on October 5, 1926, repudiated the contract. What then is necessary in order that there may be a valid contract according to the rules and regulations of the East India Cotton Association? Rule 81, as I read it, requires that the contracts which are to be governed by those rules are to be in writing in the form given in the Appendix mentioned in that rule. The rule then goes on to say, in effect, that a member may regard a constituent who has agreed in writing to sign the prescribed form of contract but fails or refuses to do so after the terms have been arranged as liable in all respects as if he has signed the contract Some force must obviously be given to the words 'in writing' for if any oral undertaking by the constituent to sign the contract were enough there would be no necessity to insist on a writing. To my mind the effect of Rule 81 is that unless there is this undertaking taken from the client in writing the ' principal cannot embody the rules of the Association in the contract of agency between him and the constituent: in other words, there is no contract for dealing in cotton under the rules and regulations of the Association unless either the contract is in writing and signed or there is a written undertaking by the constituent to sign. To hold that there may be a contract for sale or purchase of cotton in this market without a writing would be to enable parties to give the go by to the rules regulating such sales and purchases in this market.

3. Here it may be material to inquire why the Association insisted on this writing. It may be that one of the reasons, though perhaps not the chief one, why they laid down this obligation, was that disputes were constantly coming up in which the constituent denied that he had given any order to the broker. A writing signed by the constituent would be evidence of such an order. Probably, however, the chief reason was unless the terms of the Rules of the Association were embodied by virtue of a writing into the contract between the parties the arbitration clause, which it is the main endeavour of the Association to impose on parties contracting in cotton, would not be incorporated in the agreement. This seems to me to show that there is a necessity for the writing and as the plaintiff in this case cannot allege that the defendant undertook in writing to sign the necessary contract form, and admits that he did not sign the necessary contract form, it seems to me that this suit must fail on that ground.

4. Here I may note that when this point was taken as an additional defence at the hearing-and it was one that I was compelled to take notice of going as it did to the root of the con tract-time was given to the plaintiff to consider his reply to it. General leave to amend the plaint was given although at that time the plaintiff was inclined to amend merely by a prayer for specific performance of the oral agreement. The amendment ultimately took the shape of a claim to be reimbursed for the consequences of the defendant's order which to defendant's knowledge had been placed by the plaintiff in the market and to fulfil which the plaintiff was liable. The certified broker and his constituent are by the well established and long known practice of the market in this position, that if the order is given by the constituent to be placed by the certified broker in the market the broker remains personally liable for the fulfilment of the contracts that he effects with the other members of the Association. Equally he can sue and be sued by his constituent. Therefore it is really a contract of agency, as the form of it shows, coupled with the right of the agent to be indemnified and to sue the constituent to make good any loss that he suffers. Nevertheless that does not alter the contract from being a contract which in order to be a binding one between the principal and the broker must be made subject to the rules of the Association and in my view the amendment cannot better the plaintiff's position.

5. The order was alleged to have been given on September 15, 1926, and the market remained, according to the evidence, steady for some four days after that date. The plaintiff alleges that he received the order by a telephone message given by the defendant himself from the defendant's place of residence, that he immediately put through the order in the market and telephoned back to the defendant that he had done so. Narotamdas then came to his shop and was given the two counterparts to take to the defendants. The plaintiff' says that the defendant retained these counterparts and from time to time promised to return them, and ultimately, on September 30, 1926, the defendant promised to return the signed contract together with the cheque for the amount due at the first clearance. Subsequently, on October 4, 1926, he tried to see the defendant at his residence but was unable to do so, and on the next day the defendant repudiated the transaction when the plaintiff saw him at his (the defendant's) residence. The plaintiff thereupon told the defendant that he would close the transaction and he did so at the rate of Rs. 278-8-0 and informed the defendant accordingly. It, therefore, becomes material to consider, in the event that my decision on the question of law is wrong, whether there was any such order given by the defendant as the plaintiff' alleges, for I consider that it is better to give a decision on the material points in the case rather than to decide a point of law which, if I am wrong, might necessitate the case being sent back to me for further trial. [His Lordship next considered the evidence at some length and expressed his conclusion thus :]

6. Under these circumstances I think it is impossible for me to hold that the plaintiff has established that the defendant gave this order.

7. Suit will be dismissed with costs.


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