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Balchand Ishwarlal Vs. East India Cotton Association Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtMumbai High Court
Decided On
Case NumberSuit No. 2 of 1956
Judge
Reported inAIR1956Bom476
ActsForward Contracts (Regulation) Act, 1952 - Sections 4, 7, 11(2), 12 and 13; Code of Civil Procedure (CPC), 1908 - Order 39, Rule 1
AppellantBalchand Ishwarlal
RespondentEast India Cotton Association Ltd. and ors.
Appellant AdvocateN.P. Engineer, ;J.B. Kanga, ;K.T. Desai, ;P.P. Khambatta, ;Sanghvi and ;Nariman, Advs.
Respondent AdvocateB.M. Seervai and ;J.C. Bhatt, Advs.
Excerpt:
a) the case discussed the exercise of discretion by the board of association in the matter of declaration of emergency- the board of the east india cotton association exercises very wide discretion under the rules & under the constitution of the association respecting declaration of emergencies, but this discretion is not an untrammelled discretion- it was a discretion that has to be exercised within the ambit of certain statutory rules and by-laws and the test was whether acting within those statutory rules and by-laws, there has been a valid exercise of this discretion or whether this discretion was so crippled by the directive of the government that there was no room for any exercise of the discretion vested in them. ; b) it could not be held that the emergency contemplated by.....coyajee, j.1. this is a notice of motion taken out by the plaintiff who has filed this suit against the east india cotton association and the defendants who are some of them members of the board of the association and others. the suit arises in the following circumstances which arose in the forward contracts market in cotton under the aegis of the east india cotton association. the east india cotton. association under its bylaws and rules regulates the conduct of the merchants dealing through the 'association by making rules from time to time and enforcing certain rules under the by-laws and rules referred to by me above.it is stated by the plaintiff that under by-law 52 of the by-laws of the association it is provided that if in the opinion of the board an emergency has arisen or exists,.....
Judgment:

Coyajee, J.

1. This is a notice of motion taken out by the plaintiff who has filed this suit against the East India Cotton Association and the defendants who are some of them members of the Board of the Association and others. The suit arises in the following circumstances which arose in the forward contracts market in cotton under the aegis of the East India Cotton Association. The East India Cotton. Association under its Bylaws and Rules regulates the conduct of the merchants dealing through the 'Association by making Rules from time to time and enforcing certain Rules under the By-Laws and Rules referred to by me above.

It is stated by the plaintiff that under By-Law 52 of the By-Laws of the Association it is provided that if in the opinion of the Board an emergency has arisen or exists, the Board would have the power by resolution to prohibit from a date to be fixed in that behalf trading under hedge contracts in cotton at the rate or rates above, the maximum or below the minimum for such period as may be fixed by the Board. It is admitted that any decision under By-Law 52 is to become effective subject to the concurrence of the Forward Markets Commission constituted under the Act.

2. I shall have to refer to the Forward Contract Act and the constitution of the Forward Markets Commission and its power in discussing the dispute between the parties before me. But before I come to that the facts as set out and which are not complicated may be set Out very shortly. It is alleged that on 22-12-1955 the second defendant who was at the relevant time president of the Association and Chairman of the Board received a direction from Government, namely through the Forward Markets Commission asking the Board to take appropriate action and to take it immediately under its By-Laws so as to prevent the price in respect of hedge contract in cotton for February settlement from rising above Rs. 700/- per candy.

It is alleged that this direction from the Forward Markets Commission was considered at a meeting of the Board on the 23rd of December when the Board carefully considered the prevailing market conditions and resolved that no emergency had arisen. It is alleged that in fact the ceiling price, in respect of hedge contracts in cotton for February and May 1956 settlements as fixed by the Central Government was Rs. 840/- per candy and that the prevailing prices of cotton for the said settlements were about Rs. 100/- and more below the ceiling price at this particular time.

It is also set out and it is not disputed that the spot price of cotton at this stage was ruling somewhere about Rs. 800/-. It is said that on 23-12-1955 namely the same day the Government exercised its powers which are vested in it under the statute namely the Forward Contracts Act and the rules and closed the hedge contracts market for one week from the 23rd of December.

Thereafter it appears that the Committee of the Association had a meeting and it was resolved to make a representation to Government that this direction from the Government was unwarranted nor was it in the best interests of the trade and to ascertain as far as possible what would be the conditions on which the Forward Markets Commission would allow the market in hedge contracts in cotton to be reopened.

It is stated that in the above circumstances on 6-1-1956 the Board was coerced and compelled against its views and its opinion and against the expressed opinions of the President of Association and the members of the Board to pass a resolution to the effect and which resolution falls in two parts namely it declared under By-Law 52 of the By-Laws of the Association that first an emergency had arisen and secondly it fixed the price of February and May settlements at Rs. 700/- per candy prohibiting any transaction above that ceiling.

3. It is alleged that in coming to that decision namely that an emergency had existed or had arisen, the Board did not act in the exercise of its own independent judgment, but only acted at the dictates of the Forward Markets Commission and inasmuch as the Board merely followed the dictates of the Government the resolution virtually is not the resolution of the Board and therefore it should not be allowed to be acted upon by the Association and it is also argued very strongly that taking all these circumstances into account the Board did not apply its mind to the situation before arriving at the decision as reflected in the resolution of 6-1-1956.

4. In dealing with this it is necessary to refer in some detail to certain minutes and resolutions of the Board which have been handed up to me by consent of the parties and I propose to refer to each of these as it certainly has a great deal of bearing on the arguments advanced by both the sides. It must be remembered that the action of the Board in giving a direction came somewhere after the third week of December 1955.

It cannot be denied however that sometime prior to that there was a certain amount of uneasiness in the market and the manner in which the market was behaving in its undue rise in the opinion of some people and that independently of the Board was reflected in the minute dated 16-12-1955 of the Board of directors of defendant 1 association and it runs as follows:

'The Chairman informed the Board that he had been worried for the last two weeks about the behaviour of the Forward Market and said that the situation appeared to be heading for a crisis and this situation was also partially due to the unbridled option business going on in the market. He added that it was apprehended that if option business was legalised by Government in one market, they may have to do so in other markets also.

He therefore suggested to the members to give serious thought to this vital problem and say what they honestly felt should be done in this matter in the interest of the trade.'

It appears that it is about this time that the Forward Markets Commission also started taking notice of this situation.

Now it is emphasized on behalf of the plaintiff that if the minutes of the Board of this Association are scrutinised they indicate a clear leaning not only on the part of the Chairman and the President but also on the part of the members towards noninterference with the situation in the market and a very strong leaning to that effect. They first relied upon the minutes of the meeting dated 23-12-1955 and that meeting was presided over by defendant 2.

In that item No. 12 of the minutes states that a letter D. O. dated 22-12-1955 from the Chairman, Forward Markets Commission addressed to defendant 2 as President of the Association, conveying a directive from the Government of India namely that the Board should take appropriate action immediately so as to prevent the price of the February 1956 contract from rising above Rs. 700/-, was noted.

Evidently there was a discussion and the growers' representative opposed very strongly the proposed move by the Government to prevent the price of Indian Cotton February delivery rising above Rs. 700/- inasmuch as the ruling price at that time was Rs. 90/- below the ceiling price.

On the other hand it was noted that the Government representative, Shri A.S. Rao, speaking on behalf of the Board evidently stated that the Government considered that the present prices are manipulated prices inasmuch as the supply position was good. That was the situation as on 23-12-1955.

On the same day a note was issued by the Government of India, Ministry of Commerce and Industry, New Delhi. A copy of that was also handed up to me whereby it was declared that forward contracts for February settlement were suspended for a period of seven days from that date and in the note the Government pointed out that they have been watching the trend of the cotton market for several weeks with great concern. They, conceded that to some extent this situation is due to the statistical position in the current season.

Nonetheless they felt that the prices had been artificially rigged up to the present level entirely due to heavy speculation and option dealings. The Government noted that taking advantage of this position the speculators have been rigging up the market and the market had risen to such an extent that such a point had no relevancy or relationship with the supply and distribution position of the Indian cotton market at that stage, and the Government pointed out that unless special steps are taken the situation which has already deteriorated would get out of hand, and declared that as a first step, they have therefore decided in the general public interest to close the market for a week.

In pursuance of this on the 24th of December a notice was issued by the Secretary of the Association. Four days thereafter a special meeting of the Board of Directors was convened. On the 27th of December at the meeting the Chairman stated that telegrams had been received from the growers representative on the Board who had been asked to attend the meeting and all the directors present agreed with the suggestion made by Ramdas Kilachand that a certain committee or a special committee be appointed for the purpose of interviewing the Government and to find out what the Government's true intentions and objects were and to report the same.

It appears that on the 30th of December a weekly meeting of the board of directors was convened. At that meeting item No. 7 of the minutes shows that the situation arising out of the Government's action in directing suspension of hedge contract trading for seven days was considered. A further letter dated the 30th of December from Messrs. Amulakh Amichand & Co. and 73 other members of the Association requesting the Board to take necessary steps for immediate resumption of hedge trading was also recorded.

Also a telegram from another party asking that the Government be requested to allow resumption of trading as early as possible. Chimanlal B. Parikh who had also acted as chairman on several occasions spoke at that meeting & said that the Government wanted the Association to work out measures to end the emergency by preventing the price rising above Rs. 700/- and that the Commission was prepared to give necessary powers to the Board for the same by amending the By-Laws.

After a certain discussion it is recorded that the Board was generally in favour of resumption of trading with a reasonable ceiling after making sure that that would be legal & would not lead to any litigation. The defendants rely very strongly on this part of the minutes where it is recorded that the Board very strongly disapproved of the step taken by Government but in view of the feeling in the bazaar and the deadlock created, in up-country in marketing the crop, they resolved that efforts be made for resumption of hedge trading without delay with a ceiling not lower than Rs. 700/-.

The plaintiff also relied upon the speech of Sir Purshotamdas Thakurdas, defendant 2, President of the Association dated 30-12-1935 in which ho referred to the situation arising out of the directive of the Government suspending business for seven days in the forward contracts market. He reviewed the situation and opined that although the level of price preceding the suspension of business might have been influenced to some extent by speculative dealings, it cannot be said that it needed immediate emergency treatment in view of the prices ruling in the spot market.

In other words, he partly repeated what is stated and which was recorded in the minutes of the 16th of December. He protested against this action, of the Government by saying that the action taken by the Government appears to set a dangerous precedent of interference in the normal work-tag of the market and he said that the Association had appointed a Committee to ascertain the intentions of Government. It appears that thereafter on 4-1-1956 another meeting of the Board was held at which the Board's legal advisors were present.

The position arising out of the closure of the market and the results from an enforcement of the By-Laws was considered. But it is important to note that Shri Rao representing the Board paid that the Forward Markets Commission was fully aware that the position in the market was leading to a crisis and still as the Board did not take any action as desired by the Forward Markets Commission, Government had to act under the Forward Contracts (Regulation) Act & he appealed for co-operation between the Forward Markets Commission and the Board.

The plaintiff pointed out to me that the minutes closed by stating that the consensus of opinion was clearly in favour of leaving it to the Forward Markets Commission to take whatever action it may consider necessary to solve the present deadlock with a view to early resumption of Hedge trading, but it was also decided that this question be further discussed at a meeting to be held on the next day. A meeting was in fact held on 5-1-1956.

Certain telegrams were recorded protesting against the action of the Government suspending business in hedge trading. The Chairman, Chimanlal B. Parikh informed the meeting of the Board that the position had been fully discussed at the meeting held on the previous day and he therefore suggested that they should agree to taking action under By-Law 52 and declare an emergency under that By-Law at a special meeting to be convened the next day and prohibit until further notice trading in hedge contracts above maximum rate of Rs. 700/- per candy subject to concurrence by the Forward Markets Commission.

It is important to note that this suggestion of the Chairman was unanimously agreed to and a resolution was drafted to be considered the next day to the effect that the Board resolves under By-Law 52 that an emergency has arisen or exists and prohibits, until further notice, from 7-1-1956 trading in hedge contracts for February and May 1956 deliveries above a maximum rate of Rs. 700/-per candy. On 6-1-1956 a meeting was held & this resolution was duly passed which is now impugned in this suit,

5. Before I come to the main arguments advanced, I may for myself say at once that one point very strongly made on behalf of the plaintiff is to my mind untenable. The first point which was emphasized was that in passing this resolution the Board did not apply its mind thereto.

It is possible in certain circumstances to say that an officer who has certain powers for passing certain orders did not apply his mind where for instance ex-facie the order is signed by another person or in other circumstances the officer had not applied his mind, hut where a Board consisting of almost a dozen persons has debated the question at several meetings and heard the pros and eons of it, to say that in arriving at a decision mind was not applied can hardly be supported.

I do not say that because I negative this position the other point taken is not necessarily affected by it. The next important point taken is that this resolution is not the resolution of the Board in asmuch as it was dictated by a directive of the Government itself and therefore it is not the action of the Board but the action of the Government itself and therefore this resolution is bad. This is alleged in the affidavit in support and much is made of the fact that this particular allegation has not been traversed in terms by stating the negative of that position.

In this connection it is stated that both parts of the resolution namely the fact that an emergency has arisen was not a decision of the Board at all and the figure at which the ceiling was fixed was not a figure determined and arrived at by the Board.

In the affidavit in support in para 6 they stated as follows:-- namely that the resolution passed by the Board on 6-1-1956 and put up on the notice board of the Association on 7-1-1956 is invalid, inoperative and of no effect and is not at all a decision of the Board and that the said resolution was passed by the Board at a very brief meeting in the circumstances above set out and under threat of the Board being wrongfully super, sided by the Central Government in the event of the Board maintaining its views.

Before I come to the reply made to this by the defendants it is necessary to negative two parts of this statement as not being supported by record before me. The first that the said resolution was passed at a brief meeting is true, but not accurate, because it was necessarily passed at a very short meeting, the position having been fully considered and debated upon at the prior meetings of the Board and the second part of it which I say is not correct is that the Government held out any threat.

The threat may have been sufficiently inferred by members of the Committee under the statutory powers that tan be wielded by the Forward Markets Commission, but as far as the record goes, there is neither any letter nor any statement by the representative of the Forward Markets Commission during the meetings of the Board holding out any such threat, but on the contrary the minutes show that Shri A.S. Rao far from threatening them tried to induce then to co-operate with the Government in fixing a ceiling for the forward market contracts for February and May 1956.

In the affidavit in reply it is stated that under the circumstances as appearing after the closure of the market on 23-12-1955 that an emergency not only arose but existed. The members of the Board at their meetings came to the conclusion that the suspension of business was entirely detrimental to the interests of the trade, and had not only affected the forward cotton market but had created a deadlock in marketing the crop and its continuance would have resulted in great harm and inconvenience inter alia to the growers, traders and the employees in the trade, They further say that the only way of solving the deadlock and allowing the hedge market to function and continue functioning was to prohibit trading in the market above a maximum of Rs. 700/- per candy.

Then he asserts that the Board had acted legally, bona fide and in the due exercise of its powers under By-Law 52 and honestly attempting to meet the emergency they had decided to prohibit trading above a maximum of Rs. 700/- per candy in view of the emergency and to meet the emergency.

6. In these circumstances the question is whether this is a resolution of the Board or extraneous pressure has been brought on them to such an extent as to make them a mere conduit pipe for the Government to carry out this directive. I am unable to accept the plaintiff's contention that the Board's resolution was not theirs nor the contention raised by counsel that the assertions made in the affidavit in support have been traversed by negative declaration.

On the contrary apart from a negative declaration a positive statement is set out in the affidavit in reply to the effect that the Board fully considered the situation and in the best interests of all elements in the trade they thought that the only Way was to allow the market to function again by fixing Rs. 700/- as the ceiling price at which forward contracts could be entered into. It is a matter to note that much has been made of the point that the figure Rs. 700/- was the figure mentioned in the Government directive and that is the figure taken and accepted by the Board in its resolution.

Apparently at a first blush it would appear as if the same figure has been accepted and I dare say that that has been accepted, the question being whether it is a figure of the Board or the figure of the Forward Markets Commission commended by them to the Board, Now it is quite clear that the Board could not fix if they wanted the market to be reopened any amount under the figure of Rs. 700/-. Therefore the maximum they could fix as desired by people like the plaintiff was Rs. 700/-

I can illustrate that by stating that this argument could not have been advanced if for instance the Board had fixed the figure of Rs. 699-8-0, it would have appeared to be their own figure which they fix but eight annas below the ceiling that the Government had suggested. Therefore merely because the figure of Rs. 700/- is fixed it does not to my mind indicate that the dictation of the Government had been swallowed and the Board were merely carrying out administratively the orders of the Government.

7. Apart from arguing this point very strenuously it was contended and with some emphasis on behalf of the plaintiff that the discretion vested in the Board has not been exercised at ail and inasmuch as that discretion has not been exercised or not properly exercised, the resolution of the Board is bad and should be set aside as invalid.

Now it must be remembered that the Board does exercise very wide discretion under the Rules & under the constitution of the Association, but this discretion is not an untrammelled discretion. It is a discretion that has got to be exercised within the ambit of certain statutory rules and By-Laws and the test to my mind is whether acting within those statutory rules and By-Laws there has been a valid exercise of this discretion or whether this discretion was so crippled by the directive of the Government that there was no room for any exercise of the discretion vested in them.

For this purpose the argument is two-fold and I shall disclose the other part of it after I have disclosed the first part which I shall set out here. The true position as regards the exercise of this discretion can only be possible after referring to the Forward Contracts (Regulation) Act and to the By-Laws of the Association.

Under the forward Contracts (Regulation) Act 1952, the Act is enacted for the regulation of certain matters relating to forward contracts, the prohibition or option in goods etc. and Section 4 deals with functions of the Commission namely the Forward Contracts Markets Commission and under Sub-section (b) the function of this Commission is to keep forward markets under observation and to draw the attention of the Central Government or of any other prescribed authority to any development taking place in, or in relation to such markets which, in the opinion of the Commission, is of sufficient importance to deserve the attention of the Central Government and to make recommendations thereon.

Under Section 7, the Central Government is granted the power to withdraw recognition of any association should it be necessary to do so 'in the interest of the trade or in the public interest.' It is clear that this Act is enacted not only in the interests of the trade but it is specifically enacted in the interests of the general public.

Not only that under this Act the Government may recognise an association but it has reserved to itself powers to make or amend By-laws of recognised associations under Section 12, and in fact By-Law 52 was amended as recently as 30-12-1955 and under Section 13 powers are reserved to the Central Government to supersede the governing body of any recognized association after giving them an opportunity to show cause.

In these circumstances, I take it that the directors were fully conversant with their position vis-a-vis the controlling authority namely the Central Government and it is with the limitations indicated above that they were to consider the position that had presented itself in these circumstances to the Board. The directors knew fully that they function under the statute and a statute which was intended for the regulation not only of the trade but for the protection of public interests.

Therefore to my mind the test is whether looking at the situation in which they were placed by the trend of the market in the forward contracts market, the directive of the Forward Markets Com-mission the statutory limitations under which they were functioning, they acted as reasonable men would act in those particular circumstances in passing this resolution.

As I have indicated there were certain opinions held in the market one way and another way as regards the situation that was developing in the rise in the prices of the forward market contracts. As I have stated even prior to the intervention by the Forward Markets Commission the President had as far back as 16-12-1855 sounded a note of warning against the rise in the market. The commission took notice of the rise in the market and intervened and that they did under Section 4 as in duty bound.

Thereafter the position developed further and the matter was discussed at several meetings of the Board where both the views were put forward before the members of the Board and after considering, that resolution was passed unanimously by the Board fixing the ceiling price at Rs. 700/- per candy. Considering this I am entirely satisfied that the resolution was passed after due consideration of the whole picture by the Board and they passed it as reasonable men would pass such resolution in the very peculiar situation in which the market round itself at that time.

Although I have no experience of the working of markets, I may say that if I had been a member of the Board at that time with these particular facts and circumstances before mo in the interests and in the larger interests of the cotton trade and also in the interests of the forward cotton market, I believe I would have voted with the Board for the reopening of the market at the figure of Rs. 700/- per candy and I would have arrived at the figure of Rs. 700/- not because that was the figure indicated in the directive, but because that was the highest coiling I could go to, under the directive from the Forward Markets Commission.

8. It has been argued on behalf of the plaintiff that in fact the resolution was passed owing to the fact that extraneous circumstances were taken into consideration and that such extraneous circumstances had affected their mind in passing of the resolution and I have been referred to certain authorities in that connection. I shall only refer to two of these authorities.

The first is the case of R. v. Bowman' (1898) 1 QB 663 (A). The head note says that 'at a general annual licensing meeting an application was made for a licence to sell intoxicating liquors. The justices granted the licence upon the applicant paying to them a sum of money which money they intended to apply in reduction of the rates of the borough, or for some other similar public purpose.

It was held that a rule for a mandamus must be made absolute, on the ground that the objectors had a right to be heard before the licensing justices according to law, that the justices in annexing to the grant of the licence the condition of the payment of money shewed that they had allowed their decision to be influenced by extraneous considerations & that the hearing under such circumstances was equivalent to no hearing at all'. Justice Wills at page 666 stated as follows:

'In the present case the justices stated that they were prepared to grant the licence upon the terms that the three existing licences then held by the applicant should be surrendered, and that he should further pay to them a sum of 10001 for some public purpose. As to whether the justices were entitled to attach the condition of the surrender of the old licences I will express no definite opinion. But the condition of the payment of 10001 was wholly unjustifiable.

If authority were needed it is enough to refer to the case of -- 'Rex v. Athay' (1758) 2 Burr 653 (B). The justices had no more right to require the payment of money for public purposes than to require that it should be paid into their own pockets. If the attachment of such a condition were allowed to pass without objection there would soon grow up a system of putting licences up to auction.'

Here in this case two points arose, firstly that in fact the condition, was not within the powers of the licensing authorities and secondly that the ruling was entirely contrary to an authority namely 'Rex v. Athay', (B). This judgment to my mind has no application to the question before me. The case of -- 'R. v. Winder' 1900 2 QB 666 (C), was also cited.

There it was clear that the order was bad because on the face of it the order directs a sum to be paid which is the sum due to Robert Winder for the costs to which he was put, whereas as set out at p. 674, under the statute it ought to have ordered that there should be paid to the justice or to whomsoever he should appoint such sum as should in the opinion of the Court be sufficient to indemnify such justice from all costs and charges. Here no discretion at all which is a condition of the order was exercised and in these circumstances this case also does not help the plaintiff.

9. The attack on this resolution is renewed from another point of view and that is that Rule 52 should be read with Section 11, Sub-section 2(o) and therefore it only should be restricted to emergency arising in the transactions put through in that particular trade, namely it must emanate from the trade difficulties that might arise in that particular trade or section of the trade. Rule 52 says that if in the opinion of the Board an emergency has arisen or exists the Board may by resolution prohibit trading in hedge contracts except in certain circumstances.

Section 11, Forward Contracts (Regulation) Act provides for the power of recommending the association to make By-Laws and Sub-section (2) starts with the words 'In particular and without prejudice to the generality of the foregoing power, such-by-laws may provide for' and then instances are given and Sub-section (o) talks of emergencies in trade which may arise and the exercise of powers in such emergencies including the power to fix maximum and minimum prices.

From this it is argued that the emergency must be restricted to emergencies in trade. Now it is quite clear that Sub-section (2) opens with the words 'without prejudice to the generality of the foregoing power' namely the powers set out under Section 7 and Section 4. The instances given in (a) to (r) are all as pointed out --illustrations of instances and cannot control the other sections under which the emergency may be held to be valid emergency

In that connection' Mr. Seervai relied upon the case reported in -- 'Emperor v. Sibnath Banerji' (D), the relevant discussion being at pages 159 and 160 where in considering the analogous position their Lordships of the Privy Council held that this was merely an illustrative one setting out one of the functions of Sub-section (2) there and held that the main rule making power was conferred by Sub-section (1). In these circumstances I am unable to accept the contention on behalf of the plaintiff that emergency contemplated is only in respect of the illustration in Section 11, Sub-section 2(o).

10. Now the question as to what is the relief asked for as the main relief in the suit. The main relief in the suit asked for is for a declaration that the resolution dated the 6th of January 1956 is invalid, void & of no effect. Then it says in prayer (b) that in any event that part of the resolution which fixes the maximum rate of Rs. 700/- per candy may be declared to be invalid and the defendants be restrained by an order and injunction from carrying out the resolution or giving effect thereto.

The plaintiff has in his affidavit himself set out in detail the injury which he is liable to suffer and that is set out in his affidavit in rejoinder dated 13-1-1956 in para 7. In that he states that the members or the East India Cotton Association and merchants have effected hedge contracts in cotton for February 1956 and May 1956 settlements at rates exceeding Rs. 700/- and upto Rs. 748/- prior to 24-12-1955.

If the clearing takes place at or below the ceiling rate the members of the Association and merchants would be wrongfully put to the necessity of paying about Rs. 70 lakhs and great hardship would be caused to them for no fault of theirs and for trading under the Association's By-Laws. In other words however extensive the claim may be, the claim can be compensated for by monetary compensation and in fact it is nothing more than monetary loss that the plaintiff would suffer in company with other merchants.

On the other hand there is a further affidavit put in on behalf of the defendants of one Mangesh Mulky which says that on 16-1-1956 the Chairman of the Forward Markets Commission received a representation from 208 members of the first defendant Association. In that it was pointed out that the undersigned members of the East India Cotton Association request the Chairman to make the necessary arrangements to see the trading in hedge contracts continues permanently and that they do not support the plaintiff in the suit filed.

It is obvious to my mind that if the plaintiff's grievance is that he would have to pay into the clearing house under the contracts entered into by him and suffer by payment which should not be made if the resolution is held to be invalid, if that payment is stopped quite a number of other merchants claiming through the clearing house the same equivalent amount in the same contract would suffer.

I do not see why and on what grounds a plaintiff in these circumstances should be allowed an injunction. The averment which is always made when an injunction is asked for is certainly contained in the plaint namely in para 14, that unless an interim injunction is granted irreparable injury will be caused to the plaintiff.

That is not amplified or justified in any affidavit in support of this notice of motion and all that is said is what I have stated, as set out in para 7 of their affidavit in rejoinder. In these circumstances to my mind no case at all is made out of any irreparable loss or the right of obtaining an injunction from this Court pending the hearing and disposal of the suit.

It is not proper that a party should come to the Court and ask for an injunction unless he can show that irreparable injury would be caused to him and the Court will never be able to put him into the status quo which he would have enjoyed, and if this payment under the contract is proper and correct the remedy is to recover the moneys or to refuse to pay and suffer the consequences, but this is not the class of cases where I am prepared to grant an injunction.

11. At the cost of repeating what I have stated above I may say that there were two closures of the market on the directions of the Government, first was from the 23rd to the 30th of December and the second from the 31st to the 6th of January 1956. It is clear to my mind and very clear that this was the action which precipitated the emergency and it was entirely an effort on the part of the Board to meet the emergency and find a way out.

That way out is found after hearing the representatives of all sections in the market and after taking into consideration not only the interests of the parties dealing in the forward contract market but taking into consideration the interests of the traders, the growers and the employees and that was taken after due deliberation and as indicated by me above without there being any coercion in the sense that they followed entirely the dictation of the Government.

On this no prima facie case being made out by the plaintiff no question arises of granting any interim relief to the plaintiff and in these circumstances the notice of motion must stand dismissed with costs. The plaintiff will pay the costs in two sets taxed on a long cause scale.

12. Notice of motion dismissed.


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